Living in US ... Withholding Tax on Canadian

Sent: Friday, October 07, 2005 4:36 PM
To: taxman at
Subject: Living in US ... Withholding Tax on Canadian Registered
College Savings Plan ....
David ... we are Canadians living in the US with Greencards and
shortly to
become US Citizens. Whilst living in Canada, my mother set up
College Savings Plans for each our children. Since the plans were
originally set up 13 years ago, Revenue Canada now requires the
Savings Plan to deduct a 15% Withholding Tax from the checks paid
out to the
children living at a US address (plan checks will be written for
each of the 4 years the kids
attend college). As my children don't earn any income in Canada
and insufficient income in the US to pay any US tax  ... there
appears to
be no way for them to claim back this withholding tax (as an
offset against
any US tax liability). I understand the intent of the tax law,
but for a
student on limited means, the 15% represents a big bite ... any
suggestions? can they claim it ... and then show a tax credit
that can be
picked up in a future year after they graduate and start earning
US income
and paying taxes ... thanks  XXXXXy
david ingram replies:
The tax is legally justified.  AND, if you think about it, you
received a 20% credit when you put the money into the plan so it
is not that big a hit.
However, the kids should be able to file a Section 217 CANADIAN
income tax return although RESP payments are not specifically
listed on the form as you can see here at:
If it works, there would be a refund.
I am sending this out to the folks on the list.  Someone else may
have encountered it before.  To tell you the truth, I have not
seen or heard of the situation before although i have now
answered over 8,000 questions on this list.  (thirty five today
alone).  You are the first with this one.
 Gary,  Andrew, Stephen, - anyone got an absolute answer?
Answers to this and other similar  questions can be obtained free
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David Ingram's US/Canada Services
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