THE QUESTION
----- Original Message -----
Sent: Thursday, December 19, 2002 6:38 PM
Subject: RRSP,S
I have lived and worked in the US since 1994. My wife and I both have Green
Cards. We have RRSP'S in a canadian bank that we have not contributed to or
withdrawn from. We have not claimed the RRSP'S on our tax returns. What
should we do? Need an answer and need this taken care of. Thanks a Lot.
RRRRRRRRR
-----------------------------------------------------------------------------------------
Ingram Replies
The US government does NOT automatically recognize the tax free status of the
Canadian RRSP earnings AND it considers the Canadian RRSP's to be foreign
financial accounts.
1. You should report the internal earnings of your RRSP
accounts on Schedule B. You can then deduct them on the same schedule
by quoting Article XXIX.5 of the US / Canada Tax Treaty which allows you to
defer taxation on the internal earnings until withdrawal.
2. The bottom of Schedule B has a question about Foreign
financial accounts.
3. You should answer "YES" and then:
4. Fill in the Form TDF-90 which is required for each
foreign account when the total of ALL accounts is more than $10,000 US.
THE PENALTY FOR NOT FILING TDF-90 FORMS TO REPORT YOUR FOREIGN ACCOUNTS IS:
UP TO $500,000 PLUS 5 YEARS IN JAIL.
I have attached a form TDF-90 to this form.
I / We would be glad to assist if you want help with this.
I have only met two people penalized under this rule. One was a 105
year old lady with $38,000 in the Royal Bank of Canada in Edgemont Village in
North Vancouver. She received a $10,000 fine.
The other was a 68 year old lady in Phoenix who had significant monies in
Canadian RRSP's and actually denied their existence when questioned by the
IRS and Treasury. She received a $60,000 fine and a six month jail
sentence which was suspended.
Before 9/11, it was rare in my experience to have these questioned.
Today, we see more and more people coming in with official Treasury
Documentation demanding answers.
david ingram -
www.centa.com
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - Fax (604) 913-9123
cell (604) 657-8451 (10 AM to 10 PM 7 days)
US / CANADA Income Tax and Working Visa Matters
