Canadian RRSP


H

Hank Youngerman

My wife became a legal permanent resident of the USA in November 2011, and physically moved here and assumed employment in 2013. She has a Registered Retirement Savings Plan in Canada, their equivalent of an IRA. She contributed to that in 2011, 2012, and 2013, but of course did not take a deduction for it.

I believe however there is something she has to do, to make an election to not be taxed on the earnings until they are withdrawn. We did file jointly for 2011-2013, and will probably be legally separated by 12/31/13 so she'll file as single.

What is that form, what are her requirements to not pay USA taxes each year on the accrual? For some reason I think it's a one-time election. Should she have filed that with our 2012 tax return? I don't think we did.
 
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A

Arthur Kamlet

My wife became a legal permanent resident of the USA in November 2011,
and physically moved here and assumed employment in 2013. She has a
Registered Retirement Savings Plan in Canada, their equivalent of an
IRA. She contributed to that in 2011, 2012, and 2013, but of course did
not take a deduction for it.

I believe however there is something she has to do, to make an election
to not be taxed on the earnings until they are withdrawn. We did file
jointly for 2011-2013, and will probably be legally separated by
12/31/13 so she'll file as single.

What is that form, what are her requirements to not pay USA taxes each
year on the accrual? For some reason I think it's a one-time election.
Should she have filed that with our 2012 tax return? I don't think we
did.

I'm not well acquainted with this area, and cannot answer.



Just a comment about being legally separated. Be sure it is a
legal separation in lieu of a divorce. It would allow either of
you to remarry.


Two years ago a client insisted she had been legally separated
as of October, so Head of Household was appropriate.



After further questioning, it turned out she had obtained a keep-away
order from the court against her spouse, and did not otherwise meet
HoH.


I had to explain a keep away order is not legally separated ....
 
M

Mark Bole

My wife became a legal permanent resident of the USA in November 2011, and physically moved here and assumed employment in 2013. She has a Registered Retirement Savings Plan in Canada, their equivalent of an IRA. She contributed to that in 2011, 2012, and 2013, but of course did not take a deduction for it.

I believe however there is something she has to do, to make an election to not be taxed on the earnings until they are withdrawn. We did file jointly for 2011-2013, and will probably be legally separated by 12/31/13 so she'll file as single.

What is that form, what are her requirements to not pay USA taxes each year on the accrual? For some reason I think it's a one-time election. Should she have filed that with our 2012 tax return? I don't think we did.
The form you want is Form 8891, Canadian Registered Retirement Plans

The election can be made via this form. I've only prepared this form
once, some years ago, so I don't remember the details of making a late
election, but I suspect the form instructions and/or the IRS web site
will have more info.
 
A

Alan

My wife became a legal permanent resident of the USA in November 2011, and physically moved here and assumed employment in 2013. She has a Registered Retirement Savings Plan in Canada, their equivalent of an IRA. She contributed to that in 2011, 2012, and 2013, but of course did not take a deduction for it.

I believe however there is something she has to do, to make an election to not be taxed on the earnings until they are withdrawn. We did file jointly for 2011-2013, and will probably be legally separated by 12/31/13 so she'll file as single.

What is that form, what are her requirements to not pay USA taxes each year on the accrual? For some reason I think it's a one-time election. Should she have filed that with our 2012 tax return? I don't think we did.
As Mark Bole said the form is 8891. This from should have been filed
with the first tax return that made her subject to US tax. That appears
to be the 2001 joint return. My advice is to file an amended 2011 tax
return and attach the 8891 and keep your fingers crossed. The IRS has
been lenient on this and has authority under Treasury regulations to
grant extensions.
 
H

Hank Youngerman

My wife became a legal permanent resident of the USA in November 2011, and physically moved here and assumed employment in 2013. She has a Registered Retirement Savings Plan in Canada, their equivalent of an IRA. She contributed to that in 2011, 2012, and 2013, but of course did not take a deduction for it.



I believe however there is something she has to do, to make an election to not be taxed on the earnings until they are withdrawn. We did file jointly for 2011-2013, and will probably be legally separated by 12/31/13 so she'll file as single.



What is that form, what are her requirements to not pay USA taxes each year on the accrual? For some reason I think it's a one-time election. Should she have filed that with our 2012 tax return? I don't think we did.



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Maryland (where my wife lives and where our last joint home was) has something called "limited divorce" which is the equivalent of legal separation in most states. It's normally used by people who have issues of spousal or child support or custody. It's different than "absolute divorce" and does not permit remarriage.

Just out of curiosity, has this law changed? I have been divorced twice before. In 1993 my wife and I were on very good terms and filed jointly with no issues. In 1989 I recall having a separation agreement that required us to agree to file jointly. So I'm asking, is it true that in 1989 you had to file jointly even if you were legally separated, but that's not true in 2014?

========================================= MODERATOR'S COMMENT:
Hank, you know the guidelines for this group ask you to remove
extraneous text, even our own boilerplate,
 
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D

D.F. Manno

Mark Bole <makbo@pacbell.net> said:
The form you want is Form 8891, Canadian Registered Retirement Plans

The election can be made via this form. I've only prepared this form
once, some years ago, so I don't remember the details of making a late
election, but I suspect the form instructions and/or the IRS web site
will have more info.
The instructions for Form 8891 say this:
If you did not make the election under Article XVIII [of the
U.S.-Canada tax treaty] to defer income tax on income earned by
an RRSP or an RRIF in a previous year, you cannot make a late
election on Form 8891. However, you may be able to seek relief
from the IRS for failure to timely elect the deferral of income
on Form 8891 in an earlier year.
 
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