RRSPs and exit tax form 8854
Moderator: Mark T Serbinski CA CPA
RRSPs and exit tax form 8854
Anyone have any advice on how RRSPs are treated on form 8854 for the exit tax? Not sure where to put them on the balance sheet. I am not a covered expatriate so I don't have to complete part IV section B that includes deferred compensation items. I'm sure they still go somewhere though, in determining net worth. Thanks.
Thanks Nelsona,
I understand line 7 of the 'Assets" calculation page;
Pensions from services performed outside the United States ...
But unsure what to do about having an RRSP and a Defined Benefit Plan.
Do we add them together and tabulate them?
Do we adjust them for tax purposes?...because if you liquidate them (and in theory that is what you are supposed to do for the value on the day of renumciation), they would be somewhat less after you payout CRA.
And finally...how does one calculate the value of a defined benefit plan?
I understand line 7 of the 'Assets" calculation page;
Pensions from services performed outside the United States ...
But unsure what to do about having an RRSP and a Defined Benefit Plan.
Do we add them together and tabulate them?
Do we adjust them for tax purposes?...because if you liquidate them (and in theory that is what you are supposed to do for the value on the day of renumciation), they would be somewhat less after you payout CRA.
And finally...how does one calculate the value of a defined benefit plan?
Thanks Primo....now that I look at line 9 it would of course make sense that the RRSP would go there!
It IS a foreign trust...thats why we file the 8891 form...so this puts another piece into my puzzle...thanks.
curious...did you place the full amount of the rrsp, or adjust it for tax. I suppose it doesn't matter for me as I am well below the 2 mil mark.
It IS a foreign trust...thats why we file the 8891 form...so this puts another piece into my puzzle...thanks.
curious...did you place the full amount of the rrsp, or adjust it for tax. I suppose it doesn't matter for me as I am well below the 2 mil mark.
I put in the full amount. It didn't put me over either so wasn't worth thinking about. Don't know anything about calculating the FMV of a defined benefit plan since I don't have one. I googled it a little and seems that some people have been able to get a figure from their HR departments. Have you tried that?
Ill give that a try...call the HR dept.
But do you think I am in the right direction placing the DB plan on line 7 (pensions from services performed outside the united states).
of course i will put the full amount of the RRSP on line 9.
One other thing before you go....with respect to line 1 section A;
Enter your U.S. income tax liability (after foreign tax credits) for the 5 tax years ending before the date of expatriation
I was just going to put what I paid in federal income tax to the CRA off my income for the past years. correct?
Not sure what they mean when they say 'after foreign tax credits'
Also....i am assuming one would use the appropriate exchange rate for that year?
But do you think I am in the right direction placing the DB plan on line 7 (pensions from services performed outside the united states).
of course i will put the full amount of the RRSP on line 9.
One other thing before you go....with respect to line 1 section A;
Enter your U.S. income tax liability (after foreign tax credits) for the 5 tax years ending before the date of expatriation
I was just going to put what I paid in federal income tax to the CRA off my income for the past years. correct?
Not sure what they mean when they say 'after foreign tax credits'
Also....i am assuming one would use the appropriate exchange rate for that year?
Ok...that sort of leads me to my next (and final one for tonight...sorry) question.
I was sort of freaking out here because I always thought that as long as you didn't pay more than the 147k threshold income tax per year (for the last 5 years) you were ok....then I realized (at least i think i am correct) that if one has paid 40k income tax every year for the last 5 years...then this puts them over the 147k threshold! (because it is the total right?) and you are now a covered expat!
Now...you are saying that if all my tax was paid in Canada..which it was....and i did not pay any tax in the US i would put all zero's?
are we 100% sure about this....the only reason I ask is the infomation i was given was telling me to put the federal (canadian) income tax payable for the last 5 years...and if i do that i will be a covered expat as it would add up to over 150k:(
I was sort of freaking out here because I always thought that as long as you didn't pay more than the 147k threshold income tax per year (for the last 5 years) you were ok....then I realized (at least i think i am correct) that if one has paid 40k income tax every year for the last 5 years...then this puts them over the 147k threshold! (because it is the total right?) and you are now a covered expat!
Now...you are saying that if all my tax was paid in Canada..which it was....and i did not pay any tax in the US i would put all zero's?
are we 100% sure about this....the only reason I ask is the infomation i was given was telling me to put the federal (canadian) income tax payable for the last 5 years...and if i do that i will be a covered expat as it would add up to over 150k:(
It is $147,000 average annual tax liability. If you paid $40,000/year in tax for each of 5 years, than your average for the 5 years is $40,000 NOT $200,000. Far below the level to make you covered.
You have to have filed 5 years of tax returns to the US to be uncovered. You have to answer whether or not you are compliant with the past five years in question 6, section A. If you are like a lot of Canadians, you will have paid nothing to the US. That was my case, so I put zero. My zero tax liabilty was not a result of not filing. I did file after my relinquishment, though. I did the 5 years, then did the year of expatriation dual tax status return and 8854.
Who advised to enter your Canadian tax amounts in line 1? Hope it wasn't a professional. It clearly says US tax liability. I don't see how it can be interpreted any differently.
[quote="Taxpoor"]
I was sort of freaking out here because I always thought that as long as you didn't pay more than the 147k threshold income tax per year (for the last 5 years) you were ok....then I realized (at least i think i am correct) that if one has paid 40k income tax every year for the last 5 years...then this puts them over the 147k threshold! (because it is the total right?) and you are now a covered expat!
Now...you are saying that if all my tax was paid in Canada..which it was....and i did not pay any tax in the US i would put all zero's?
are we 100% sure about this....the only reason I ask is the infomation i was given was telling me to put the federal (canadian) income tax payable for the last 5 years...and if i do that i will be a covered expat as it would add up to over 150k:([/quote]
You have to have filed 5 years of tax returns to the US to be uncovered. You have to answer whether or not you are compliant with the past five years in question 6, section A. If you are like a lot of Canadians, you will have paid nothing to the US. That was my case, so I put zero. My zero tax liabilty was not a result of not filing. I did file after my relinquishment, though. I did the 5 years, then did the year of expatriation dual tax status return and 8854.
Who advised to enter your Canadian tax amounts in line 1? Hope it wasn't a professional. It clearly says US tax liability. I don't see how it can be interpreted any differently.
[quote="Taxpoor"]
I was sort of freaking out here because I always thought that as long as you didn't pay more than the 147k threshold income tax per year (for the last 5 years) you were ok....then I realized (at least i think i am correct) that if one has paid 40k income tax every year for the last 5 years...then this puts them over the 147k threshold! (because it is the total right?) and you are now a covered expat!
Now...you are saying that if all my tax was paid in Canada..which it was....and i did not pay any tax in the US i would put all zero's?
are we 100% sure about this....the only reason I ask is the infomation i was given was telling me to put the federal (canadian) income tax payable for the last 5 years...and if i do that i will be a covered expat as it would add up to over 150k:([/quote]
Yikes! Tax Professional!
Glad to hear that you are all caught up with the US and you paid nothing. So all of those zeros go on line 1! Yeah!
Hope you get some reasonable number for the present value of your defined benefit pension. I think it is like doing an annuity calculation where you find the present value.
Glad to hear that you are all caught up with the US and you paid nothing. So all of those zeros go on line 1! Yeah!
Hope you get some reasonable number for the present value of your defined benefit pension. I think it is like doing an annuity calculation where you find the present value.