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Recently there has been a surge in the number of clients inquiring about the taxation of inherited qualified accounts, such as: Registered Retirement Savings Plan (RRSP), and Registered Retirement Income Fund (RRIF). Individuals are confused on whether to liquidate the accounts, continue investing or transfer ownership. The situation gets even more complicated in the case...
We posted an article earlier this year regarding the requirements for individuals who have to disclose their RRSP or RRIF accounts to the IRS to elect the deferral of any accrued income. One of the covered topics was the late filing of disclosure Form 8891. The IRS has just released a Private Letter Ruling (PLR, a...
If U.S. citizens or residents own Canadian Registered Retirement Savings Plans (‘RRSPs’) or Registered Retirement Income Fund (‘RRIFs’), the accrued earnings in the accounts are taxable in the U.S. unless a Form 8891 is filed. This form allows for an election pursuant to the Canada-US Income Tax Treaty to defer U.S. income tax on income...
Due to a misunderstanding of the way the Internal Revenue Service treats Canadian RRSPs and RRIFs, many U.S. taxpayers residing in Canada hold a beneficial interest in a Canadian RRSP or RRIF and have failed to file the required annual information returns. They have wrongly assumed that since the Canadian income taxes they paid offset...
There appears to be a widespread misunderstanding of Internal Revenue Service (IRS) treatment of Canadian RRSPs and RRIFs for tax purposes. This article will attempt to explain the reasons why RRSP holdings may have unwittingly put many unsuspecting US taxpayers into a non-compliant situation. US Tax Policy In simple terms US tax policy is predicated...
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