FW: RRSP ROTH IRA rules T1161 T1243 T1244 - T DF-90.22

David,
Here is another quick question which I'm sure requires a long answer,
but I
hope you can help.
For a US citizen living in Canada as Temporary Resident am I still
able to
contribute to a Roth IRA if I had no US Income for the Year?  I Made
all
Canadian Income, and  report taxes in US and get the credit back to
Canada ,
but I like the long term benefits for the return on the Roth IRA if I
were
ever to move back or pass it onto my dual citizen kids when I die.
Thanks,
B xxxxxxxxx
=============================
david ingram replies:
You can buy the Roth IRA if you want.  Your income is taxable to
Canada first and the US second.  In spite of the extra reporting
rules, I would be more inclined to buy a Canadian RRSP instead.  I do
not like ROTH IRA's, but then, I do not like RRSP's either.
You should consider a leveraged account.  If you are in Vancouver or
nearby, come out to one of our seminars when we cover alternatives to
RRSP's or IRA's
Every Thursday evening Fred Snyder and I hold a free seminar at Fred's
office at 1764 West 7th (corner of Burrard in the Spence Diamond
building) in Vancouver.
The topics are:
  Seg funds and an alternative to the traditional RRSP.
   Making your mortgage income tax deductible
  Critical Care insurance for disasters.
coffee and cookies of course.
Phone 604-731-8900 to reserve your seat -and, you are welcome to bring
your brother, your sister, your mother or father, your children, your
best friend, your worst enemy or your own financial advisor who hasn't
explained how to make your mortgage deductible.
>From: centapede at lists.centa.com
>Reply-To: taxman at centa.com, centapede at lists.centa.com
>To: "CENTAPEDE" <centapede at lists.centa.com>
>CC: "Webmaster at Jurock. Com" <webmaster at jurock.com>
>Subject:  RRSP rules T1161 T1243 T1244 - T DF-90.22 -
income
>tax,real estate & immigration IRA 401K experts david ingram & mutual
funds
>RRSP RESP expert Fred Snyder on CKBD 600AM Sundays at 9:00 AM
www.600am.com
>international preparers consultants preparer
>Date: Sat, 26 Feb 2005 20:00:30 -0800
>
>Sent: Saturday, February 26, 2005 6:50 PM
>To: David Ingram
>Subject: RRSP
>
>
>Hi David,
>I've got a quick question which probably will require a looong
answer.
>We have relocated to the United States last year but still have our
>RRSP in Canada.  What are the steps involved with continuing our RRSP
>in Canada while living in the United States?  How do we deal with
this
>issue of RRSP on our US income taxes?
>
>Thanks so much for your help!
>  XXXXXX
>
>
>---------------------------------------------------------------------
-
>----------
>
>  david ingram replies:
>
>Toooo loooong but I am including an old answer.
>
>If you left this year you have to file Canadian Forms T1161, 1243 and
>1244 - There is a Canadian penalty of $2500 for not filing the T1161
>if required and if you leave enough of the wrong assets in Canada,
>there could also be a large immediate tax bill if the 1243 and 1244
>are late.
>
>The following are the Canadian forms which you should print out and
>read carefully
>
>
>http://www.cra-arc.gc.ca/E/pbg/tf/t1161/t1161-04e.pdf
>
>
>http://www.cra-arc.gc.ca/E/pbg/tf/t1243/t1243-04e.pdf
>
>
>http://www.cra-arc.gc.ca/E/pbg/tf/t1244/t1244-04e.pdf
>
>The RRSP question is answered below from an old question.  If you
want
>to send it all to us, we are pleased to help you at a distance. As I
>sit here, I have American returns to file from Dubai, Kuwait, Chicago
>and Boston - two by PDF files in email and two by courier.
>
>The following question is from Dec 2004.
>
>-------------------------------------------------------------
>
>
>Ask a cross-border International real estate rental mutual funds
>immigration
>non-resident income tax expert - David Ingram 's CE-NTA Services in
>North
>Vancouver BC Canada on It's Your Money CKBD AM600 Fred Snyder's Radio
>Show
>
>My_question_is: Applicable to both US and Canada
>Subject:        RRSP: leave or pull
>Expert:         taxman at centa.com
>Date:           Sunday December 12, 2004
>Time:           04:17 AM -0800
>
>QUESTION:
>
>I have several RRSP accounts.
>I hold a green card and have resided in the US for 4 years. My only
>travel
>to Canada is vacation, 2 weeks per year.
>
>What should I do with the RRSPs?
>
>--------------------------------------------------
>david ingram replies:
>
>I think that having your Canadian RRSP account is likely a good
>financial
>move if they hold significant monies in them.  I f you are talking
>about
>$12,000, cash them in and pay Canada the 25% tax and do something in
>the US
>with the money,  You could put it into an IRA for instance.
>
>However, for the last four years you have likely done significantly
>better
>leaving the money in
>Canada.  I am one of those who thinks that the Canadian Dollar will
>continue
>to do well but I also think we will have a business slow down because
>of
>that.
>
>You must also report the existence of the accounts on form TD F
>90-22.1 at:
>http://www.irs.gov/pub/irs-pdf/f9022-1.pdf
>Failure to fill in form  TD F 90-22.1 for each Canadian financial
>account
>you have can incur penalties of up to five years in jail PLUS
$500,000
>per
>account.
>
>In the meantime, you have to report the internal earnings on your
>RRSP's to
>the US government under the following rules.
>
>I would be glad to look after this if you need help.
>For 2004, the new form 8891 is available at:
>http://www.irs.gov/pub/irs-dft/d8891.pdf
>
>n the meantime, you have to report the internal earnings on your
>RRSP's to
>the US government under the following rules.
>
>In 2001, 2002 and 2003 (and 2004)  you should have reported any
>internal
>earning of your RRSP by following the instructions in REV-Proc
>2003-75.
>
>
>RRSP and RRIF Information Reporting
>
>
>
>2003 IRB LEXIS 474; 2003-50 I.R.B. 1204; Notice 2003-75
>
>
>
>December 15, 2003
>
>
>
>  [*1]
>
>
>
>SECTION 1. BACKGROUND.
>
>Notice 2003-25, 2003-18 I.R.B. 855, and Notice 2003-57, 2003-34
I.R.B.
>397,
>provided guidance to taxpayers regarding their 2002 taxable year
>information
>reporting obligations with respect to Canadian registered retirement
>savings
>plans ("RRSPs") and registered retirement income funds ("RRIFs").
>These
>Notices stated that Treasury and the IRS intended to develop an
>alternative,
>simplified reporting regime for these Canadian retirement plans for
>future
>taxable years.
>
>This notice describes the new simplified reporting regime that
>Treasury and
>the IRS have developed for taxpayers who hold interests in RRSPs and
>RRIFs.
>The new reporting regime, which is effective for taxable years
>beginning
>after December 31, 2002, is in lieu of the filing obligations under
>section
>6048 (Form 3520 (Annual Return to Report Transactions with Foreign
>Trusts
>and Receipt of Certain Foreign Gifts) and Form 3520-A (Annual
>Information
>Return of Foreign Trust with a U.S. Owner)) that otherwise apply to
>U.S.
>citizens and resident aliens who hold interests in RRSPs and RRIFs
and
>to
>the custodians of such plans. The new  [*2]  simplified reporting
>regime is
>designed to permit taxpayers to meet their reporting obligations by
>using
>information that is readily available to them.
>
>SECTION 2. NEW REPORTING REGIME.
>
>.01. New Form. Under the authority of section 6001 of the Internal
>Revenue
>Code, Treasury and the IRS are designing a new form that a U.S.
>citizen or
>resident alien who holds an interest in an RRSP or RRIF must complete
>and
>attach to his or her Form 1040. The new form also will coordinate the
>reporting rules with the procedure set forth in section 4 of Revenue
>Procedure 2002-23, 2002-1 C.B. 744, for making the election under
>Article
>XVIII(7) of the U.S.-Canada income tax convention to defer U.S.
income
>taxation of income accrued in the RRSP or RRIF.
>
>.02. Interim Reporting Rules for Beneficiaries Making the Election to
>Defer
>U.S. Income Taxation on Income of an RRSP or RRIF. Until the form
>referred
>to in section 2.01 of this notice is available, any U.S. citizen or
>resident
>alien who is a beneficiary (as defined in section 2.06 of this
notice)
>of an
>RRSP or RRIF and who has made the election described in section 4 of
>Revenue
>Procedure 2002-23 [*3]  with respect to the RRSP or RRIF, or who is
>making
>such election effective for the 2003 taxable year and subsequent
>taxable
>years, must
>
>(i) attach a copy of each such election to his or her Form 1040;
>
>(ii) indicate the balance in each RRSP or RRIF at the end of the
>taxable
>year either on the copy of the election or by attaching a copy of a
>statement issued by the custodian of the RRSP or RRIF; and
>
>(iii) comply with section 2.05 of this notice if he or she has
>received any
>distributions during the taxable year from such RRSP or RRIF.
>
>.03. Interim Reporting Rules for Beneficiaries Not Making the
Election
>to
>Defer U.S. Income Taxation on Income of an RRSP or RRIF. Until the
>form
>referred to in section 2.01 of this notice is available, any U.S.
>citizen or
>resident alien who is a beneficiary (as defined in section 2.06 of
>this
>notice) of an RRSP or RRIF and who has not made the election
described
>in
>section 4 of Revenue Procedure 2002-23 with respect to the RRSP or
>RRIF, and
>who is not making such election for the 2003 taxable year, must
attach
>a
>statement to his or her Form 1040 that includes the following
>information:
>
>(i) The caption [*4]  "CANADIAN RRSP" or "CANADIAN RRIF," whichever
is
>applicable;
>
>(ii) The taxpayer's name and taxpayer identification number;
>
>(iii) The taxpayer's address;
>
>(iv) The name and address of the custodian of the RRSP or RRIF and
the
>plan
>account number, if any;
>
>(v) The amount of contributions to the RRSP or RRIF during the
taxable
>year;
>
>(vi) The undistributed earnings of the RRSP or RRIF during the
taxable
>year
>in each of the following categories: interest, dividends, capital
>gains, and
>other;
>
>(vii) The total amount of distributions received from the RRSP or
RRIF
>during the taxable year; and
>
>(viii) The balance in the RRSP or RRIF at the end of the taxable
year.
>
>The taxpayer must provide a separate statement for each RRSP or RRIF
>of
>which he or she is a beneficiary. In addition to attaching the
>statement
>described in this section 2.03 to his or her Form 1040, the taxpayer
>must
>report the undistributed earnings for that taxable year of all such
>RRSPs
>and RRIFs on Schedule B (Interest and Ordinary Dividends) or D
>(Capital
>Gains and Losses), as appropriate, and on line 8a, 9, 13, or 21 of
the
>Form
>1040. The taxpayer must also comply with section 2.05 of this notice
>if the
>taxpayer has received [*5]  any distributions during the taxable year
>from
>such RRSP or RRIF.
>
>.04. Interim Reporting Rules for Annuitants of RRSPs and RRIFs. Until
>the
>form referred to in section 2.01 of this notice is available, if a
>U.S.
>citizen or resident alien is an annuitant (as defined in section 2.06
>of
>this notice) under an RRSP or RRIF that has no beneficiary (as
defined
>in
>section 2.06 of this notice), and the annuitant receives a
>distribution from
>the RRSP or RRIF, the annuitant must in the year of distribution
>attach a
>statement to his or her Form 1040 that includes the following
>information:
>
>(i) The caption "ANNUITANT UNDER CANADIAN RRSP' or "ANNUITANT UNDER
>CANADIAN
>RRIF," whichever is applicable;
>
>(ii) The annuitant's name and taxpayer identification number;
>
>(iii) The annuitant's address;
>
>(iv) The name and address of the custodian of the RRSP or RRIF and
the
>plan
>account number, if any;
>
>(v) The total amount of distributions received from the RRSP or RRIF
>during
>the taxable year; and
>
>(vi) The balance in the RRSP or RRIF at the end of the taxable year.
>
>The annuitant must provide a separate statement for each such RRSP or
>RRIF
>from which he or she has received a distribution during the taxable
>[*6]
>year. The annuitant must comply with section 2.05 of this notice with
>respect to such distributions.
>
>.05. Distributions. A U.S. citizen or resident alien who has received
>any
>distributions during the taxable year from an RRSP or RRIF must
report
>the
>total amount of distributions received during the taxable year from
>all such
>RRSPs and RRIFs on line 16a of the Form 1040 and the taxable amount
of
>all
>such distributions (as determined under section 72) on line 16b of
the
>Form
>1040.
>
>.06. Definition of Beneficiary and Annuitant. For purposes of the new
>simplified reporting regime described in this notice, a beneficiary
of
>an
>RRSP or RRIF is an individual who is subject to current U.S. income
>taxation
>on income accrued in the RRSP or RRIF or would be subject to such
>taxation
>had the individual not made the election under Article XVIII(7) of
the
>U.S.-Canada income tax convention to defer U.S. income taxation of
>income
>accrued in the RRSP or RRIF. For these purposes, an annuitant of an
>RRSP or
>RRIF is an individual who is designated pursuant to the RRSP or RRIF
>as an
>annuitant.
>
>.07. Record Retention. Taxpayers must retain supporting documentation
>relating to information required [*7]  by the new reporting regime,
>including Canadian Forms T4RSP, T4RIF, or NR4, and periodic or annual
>statements issued by the custodian of the RRSP or RRIF.
>
>SECTION 3. SECTIONS 6048 AND 6677 ARE NOT APPLICABLE
>
>The new simplified reporting regime, instituted under the authority
of
>section 6001, provides the information needed for tax compliance
>purposes.
>Therefore, pursuant to section 6048(d)(4), no reporting will be
>required
>under section 6048 with respect to RRSPs and RRIFs that have
>beneficiaries
>or annuitants who are subject to the new simplified reporting regime.
>Accordingly, the associated penalties described in section 6677 do
not
>apply
>to such RRSPs and RRIFs and their beneficiaries or annuitants. A
>beneficiary
>or annuitant of an RRSP or RRIF may, however, be subject to other
>penalties.
>
>SECTION 4. EFFECT ON OTHER DOCUMENTS.
>
>Notice 2003-25, Notice 2003-57, and section II.E of Notice 97-34
>(pertaining
>to reporting for certain transfers to RRSPs), 1997-1 C.B. 422, are
>superseded to the extent inconsistent with this notice.
>
>SECTION 5. EFFECTIVE DATE.
>
>This notice is effective for taxable years beginning after December
>31,
>2002.
>
>SECTION 6. PAPERWORK REDUCTION [*8]  ACT.
>
>The collection of information contained in this notice has been
>reviewed and
>approved by the Office of Management and Budget in accordance with
the
>Paperwork Reduction Act (44 U.S.C. 3507) under control number
>1545-1865.
>
>An agency may not conduct or sponsor, and a person is not required to
>respond to, a collection of information unless the collection of
>information
>displays a valid OMB control number.
>
>The collection of information in this notice is in section 2. This
>information will be used to compute and collect the right amount of
>tax. The
>likely respondents are individuals.
>
>The estimated total annual reporting burden under the new simplified
>reporting regime for taxpayers who hold interests in RRSPs and RRIFs
>is
>1,500,000 hours. The estimated annual burden per respondent varies
>from 0.5
>hour to 5 hours, depending on individual circumstances, with an
>estimated
>average of 2 hours. The estimated number of respondents is 750,000.
>
>The estimated annual frequency of responses is once per respondent
per
>plan.
>
>The new simplified reporting regime substantially reduces the
>reporting
>burden of taxpayers who hold interests in RRSPs and RRIFs. Under [*9]
>the
>prior regime, the average estimated reporting burden was more than 50
>hours
>per Form 3520 (more than 100 hours per respondent). In addition, the
>new
>simplified reporting regime eliminates the requirement to file Form
>3520-A,
>reducing the burden of a custodian by more than 40 hours per RRSP or
>RRIF.
>
>Books or records relating to a collection of information must be
>retained as
>long as their contents may become material in the administration of
>any
>internal revenue law. Generally, tax returns and tax return
>information are
>confidential, as required by 26 U.S.C. 6103.
>
>SECTION 7. DRAFTING INFORMATION.
>
>The principal author of this notice is Willard W. Yates of the Office
>of
>Associate Chief Counsel (International). For further information
>regarding
>this notice contact Willard W. Yates on (202) 622-3880 (not a
>toll-free
>call).
>
>
>
>
>Send To:  YATES, WILLARD
>
>           IRS CHIEF COUNSEL
>
>           1111 CONSTITUTION AVE NW RM 2116IR
>
>           WASHINGTON, DISTRICT OF COLUMBIA 20224-0002
>
>==========================
>
>REV-PROC 2002-23
>
>
>
>
>
>rev proc 2002-23
>
>
>
>
>
>
>
>
>
>Send to:  YATES, WILLARD
>
>           IRS CHIEF COUNSEL
>
>           1111 CONSTITUTION AVE NW RM 2116IR
>
>           WASHINGTON, DISTRICT OF COLUMBIA 20224-0002
>
>
>
>
>
>
>
>
>
>For 2004, you will fill in the new form 8891
>
>
>
>http://www.irs.gov/pub/irs-dft/d8891.pdf which should have a final
>version
>by the end of the year. In the meantime, you can look at the draft
>version
>above.
>
>
>
>Then you will have to figure out what part of you r withdrawal was
>principal
>and what part was new earnings and report that par ton your US 1040
>schedule
>B (if interest and dividends) or D if it was capital gains.  You will
>claim
>credit for the 25% tax withheld on (on  the earnings portion of the
>RRSP) US
>form 1116.
>
>
>
>With regard to the telecommuting, none of the income will be taxable
>in
>Canada unless you actually come up to Canada to do some of the work.
>In
>that case you will have to pro-rate it.
>
>
>
>You "will" have to report it on a schedule C on your US return and
>will have
>to pay US social Security on it as well as Federal and state income
>tax.
>
>
>
>As long as the work is done for a Canadian company, you are okay but
>do NOT
>take on the same job for a US branch office unless you get another TN
>for
>that office.  (I have one client who had eight TN visas for eight
>different
>companies).
>
>
>
>Answers to this and other similar  questions can be obtained free on
>Air
>every Sunday morning.
>
>Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier
>Partners and I will be hosting an INFOMERCIAL but LIVE talk show
>called "ITS
>YOUR MONEY"
>
>Those outside of the Lower Mainland will be able to listen on the
>internet
>at
>
>www.600AM.com
>
>Local phone calls to (604) 280-0600 - Long distance calls to
>1-866-778-0600.
>
>Old shows are archived at the site.
>
>
>
>This from ask an income tax immigration planning and bankruptcy
expert
>consultant guru or preparer  from www.centa.com or www.jurock.com or
>www.featureweb.com. Canadian David Ingram deals daily with tax
returns
>dealing with expatriate:
>multi jurisdictional cross and trans border expatriate gambling
>refunds for
>the United States, Canada Mexico Great Britain the United Kingdom,
>Kuwait,
>Dubai, Saudi Arabia, South Africa,  Thailand, Indonesia, Egypt,
>Antarctica,
>Japan, China, New Zealand, France, Germany, Spain, Italy, Russia,
>Georgia,
>Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida,
>Montana,
>Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali,
>Bangkok,
>Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent,
>Grenada,,
>Virgin Islands, US, UK, GB, American and Canadian and Mexican and any
>of the
>43 states with state tax returns, etc.
>income tax wizard wizzard guru advisor advisors experts  specialist
>specialists  consultants taxmen taxman tax woman planner planning
>
>preparer of Alaska,  Alabama,  Arkansas,  Arizona,
>  California Denver  Colorado, Connecticut,
>Delaware District of Columbia Miami  Florida,
>Garland Georgia,  Honolulu Hawaii,  Idaho,  Illinois,
>  Indiana Des Moines Iowa  Kansas  Kentucky,
>  Louisiana  Bangor Maine  Maryland  Boston, Massachusetts, Michigan,
>Minnesota,
>Mississippi,  Missouri,  Montana,  Nebraska,
>Nevada, New Hampshire,  New Jersey,
>New Mexico, New York, North Carolina,
>North Dakota,  Ohio,  Oklahoma,  Oregon.
>Paris,  Rome, Sydney, Australia Hilton
>Pennsylvania,  Rhode Island,  Rockwall,
>South Carolina, South Dakota, Tennessee,
>Texas,  Utah, Vermont,  Virginia,
>West Virginia, Wisconsin, Wyoming,
>British Columbia, Alberta, Saskatchewan,
>Manitoba, Ontario, Quebec City,
>New Brunswick, Prince Edward Island,
>Nova Scotia, Newfoundland, Yukon and
>Northwest and Nunavit Territories,
>Mount Vernon, Eumenclaw, Coos Bay
>and Dallas Houston Rockwall Garland
>Texas  Taxman and Tax Guru  and wizzard
>wizard -
>
>  David Ingram's US/Canada Services
>US/Canada/Mexico Tax Immigration & working Visa Specialists
>US / Canada Real Estate Specialists
>4466 Prospect Road (Personal residence by appointment only please)
>North Vancouver,  BC, CANADA, V7N 3L7
>Calls accepted from 10 AM to 10 PM 7 days a week
>Res (604) 980-3578 Cell (604) 657-8451
>Bus (604) 980-0321 Fax (604) 980- 0325
>davidingram at shaw.ca www.david-ingram.com
>
>Disclaimer:  This question has been answered
>without detailed information or consultation and
>is to be regarded only as general comment.
>
>Nothing in this message is or should be construed
>as advice in any particular circumstances. No contract
>exists between the reader & the author and any and all
>non-contractual duties are expressly denied. All readers should
obtain
>formal advice from a competent financial, or real estate planner or
>advisor
>& appropriately qualified legal practitioner, tax or immigration
>specialist
>in connection with personal or business affairs such as at
>www.centa.com.
>
>
>
>
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