Cashing a Canadian RRSP to pay for Daughter's tuition in US

QUESTION:

hello.

I am a canadian citizen who is now living in the USA as immigrant, and have about 24,000 c$ in rrsp back in Canada. Will I be taxed if I pull that money out to help my daughter in her university? Is there anyway to take that money without paying so much tax?

please help.
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david ingram replies:

Canada will take 25% of whatever you withdraw as a non-resident. Do NOT get caught by the fact that you can take out $5,000 with only a 10% tax deduction. The CRA will catch up to you and then you have a big bill when you don't expect it and can't afford the hit.

I hope that you have been filling out US forms T D F 90-22.1 and 8891 to report your RRSP to the IRS and the Treasury. Failure to file these two forms can result in extreme penalties of more than the money in the RRSP because the IRS considers your RRSP to be a foreign Trust. See the two questions on the bottom of Schedule B with your 1040 to see where this is coming from.

This older question will help a bit as well.

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