Hello,
My husband and I are US resident with RRSP in Canada. We moved in the USA in 1993. We just learned about form 8891. Since 1993 we have made a letter election under Rev. Proc. 89-45 with our income tax report to report our RRSP accounts. In 2004, we continued to do the same letter election but under Rev. Proc. 2002-03 Article XVIII(7) with the information as requested. This year (2008) we want to use form 8891. Because we did an election letter every year since 2004 under Article XVIII(7), do we answer “yes†to the question 6a? If yes, is 2004 the answer we should put down for 6b?
Thank you in advance for your help,
Joanne
Need Help With 8891
Moderator: Mark T Serbinski CA CPA
As long as you mentionned 2002-03 in your statements, the first year you did this was sufficient. Answer yes and 2004.
Be assured that your previous elections were perfectly valid. The form *should* have been used, but if you followed 2002-03 (and more importantly Notice 2003-75 (includinhg the year-end value), you should be OK.
Be assured that your previous elections were perfectly valid. The form *should* have been used, but if you followed 2002-03 (and more importantly Notice 2003-75 (includinhg the year-end value), you should be OK.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
RP2002-23 election letter copies?
I have a question regarding the old-style deferral-election letters which seemed like it might be somewhat relevant to this thread.
We moved to the US at the very end of 1989. The first year we had to file a US tax return, I called the IRS and was told we did not need to do anything about our Canadian RRSPs because they were covered by the tax treaty. So in 2004, I was shocked to learn about Rev Procs 2002-23 and 2003-75 - not to mention FBARs. Following new advice from the IRS, for the 2004 tax year we wrote a deferral election letter per 2002-23 and attached it to our tax return. We also filed FBARs for 2004, and moved forward from there.
We were also advised that, once the 8891 was released, we should use that, but continue to attach photocopies of the original deferral letters every year as required by RP 2002-23, section 4.02. We have been diligently doing this, but I am wondering if it is in fact still necessary. I would very much like to start using the Free File Fillable Forms, but they have no provision for attaching these photocopies electronically. I am concerned that the paper copies would either not be correctly associated with our return, or that their arrival independent of the return would cause massive confusion - the same sort of confusion that our amended 2011 return with 8938 has resulted in (even though the 2012 1040X with 8938 was processed just fine by a different IRS office <sigh> - but that's another story).
Hmmm ... checking on the FFFF page just now, I see that 8938's are not supported, so we can't use that method anyway. Well, dang. However, I guess my question about whether it is still necessary to attach copies of the original election letters is worth asking nonetheless, even if my original reason for asking it is moot.
Thank you so much for this excellent forum and the many helpful suggestions.
We moved to the US at the very end of 1989. The first year we had to file a US tax return, I called the IRS and was told we did not need to do anything about our Canadian RRSPs because they were covered by the tax treaty. So in 2004, I was shocked to learn about Rev Procs 2002-23 and 2003-75 - not to mention FBARs. Following new advice from the IRS, for the 2004 tax year we wrote a deferral election letter per 2002-23 and attached it to our tax return. We also filed FBARs for 2004, and moved forward from there.
We were also advised that, once the 8891 was released, we should use that, but continue to attach photocopies of the original deferral letters every year as required by RP 2002-23, section 4.02. We have been diligently doing this, but I am wondering if it is in fact still necessary. I would very much like to start using the Free File Fillable Forms, but they have no provision for attaching these photocopies electronically. I am concerned that the paper copies would either not be correctly associated with our return, or that their arrival independent of the return would cause massive confusion - the same sort of confusion that our amended 2011 return with 8938 has resulted in (even though the 2012 1040X with 8938 was processed just fine by a different IRS office <sigh> - but that's another story).
Hmmm ... checking on the FFFF page just now, I see that 8938's are not supported, so we can't use that method anyway. Well, dang. However, I guess my question about whether it is still necessary to attach copies of the original election letters is worth asking nonetheless, even if my original reason for asking it is moot.
Thank you so much for this excellent forum and the many helpful suggestions.
You were never required to attch any old deferals to 8891. Typical IRS telephlunkie response.
You are fine. Just remember that election or not, deferral or not, your cost basis for future US taxation of any RRSP withdrawals remains your 1989 arrival value
You are fine. Just remember that election or not, deferral or not, your cost basis for future US taxation of any RRSP withdrawals remains your 1989 arrival value
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thank you, nelsona, for the reassurance, I appreciate it.
Are you certain about the "never", though? For my second conversation with the IRS, I had the good fortune to be talking to someone decidedly more authoritative than the IRS front-liners (who were responsible for the earlier bad advice). That was about a year before the 8891 was issued, and attaching the original election-statement copy to one's tax return in forward years is specifically described in RP 2002-23 (4.02). My confusion stems from the fact that the later IRS Notice 2003-75 seems to allude to that (in 2.02.2), but the 8891 instructions don't mention it one way or the other, and I haven't been able to find anything else that does. But it would make sense that the "already made the election in year ____" box on the 8891 renders the old copy obsolete.
And thank you also for the reminder about the "deemed disposition" date (as Canada calls it).
Are you certain about the "never", though? For my second conversation with the IRS, I had the good fortune to be talking to someone decidedly more authoritative than the IRS front-liners (who were responsible for the earlier bad advice). That was about a year before the 8891 was issued, and attaching the original election-statement copy to one's tax return in forward years is specifically described in RP 2002-23 (4.02). My confusion stems from the fact that the later IRS Notice 2003-75 seems to allude to that (in 2.02.2), but the 8891 instructions don't mention it one way or the other, and I haven't been able to find anything else that does. But it would make sense that the "already made the election in year ____" box on the 8891 renders the old copy obsolete.
And thank you also for the reminder about the "deemed disposition" date (as Canada calls it).
Re-read what I sad: You were never required to attch any old deferals to 8891.
2002 and 2003 were a complete mess, so no one was in any position to be authoritative. They didn't know what they were doing
As to your comment on "deemed disposition" that has nothing to do with RRSP of course, since it does not apply to RRSPs. What I am refering to in the book value of your RRSP on the date that you became a US taxpayer, plus any RRSP contributions you made thereafter..
Some mistakenly think that for years when they did nothing for the election, and di not report the income, that this gives them a pass later on having to report growth as income. Only reporting of income on 16a/b of your tax return affects this
2002 and 2003 were a complete mess, so no one was in any position to be authoritative. They didn't know what they were doing
As to your comment on "deemed disposition" that has nothing to do with RRSP of course, since it does not apply to RRSPs. What I am refering to in the book value of your RRSP on the date that you became a US taxpayer, plus any RRSP contributions you made thereafter..
Some mistakenly think that for years when they did nothing for the election, and di not report the income, that this gives them a pass later on having to report growth as income. Only reporting of income on 16a/b of your tax return affects this
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best