Hi David,
I am first time filer of IRS Form 8891 for my RRSP accounts where
all the interests and dividends received are invested within the
RRSP account, no distributions received so far.
If I want to defer all the undistributed earnings within the RRSP
accounts do I check the box 6c and do not have to enter any
amounts boxes from 7a thru 10e, since I did not receive any
distributions? Do I only have to enter the account balance on 8?
Thanks very much for your help.
too busy to answer - this should help
=======
Sent: Wednesday, March 29, 2006 5:49 AM
To: taxman at centa.com
Subject: Question about form 8891
Hi David,
Thanks to your great advice, I know I have to fill out a form
8891 for each of my RRSP's back in Canada. I came to the US on a
K-1 visa and still have RRSP's in Canada.
Can you clarify the part where it asks whether you are a
Beneficiary or Annuitant? The form's explanation isn't clear. I
think I am probably a Beneficiary given that I am not currently
taking an money out of the RRSP and want to defer tax on any
gains until after retirement.
Thanks so much!
---------------------- ----------------------------------
david ingram replies:
It is a disgrace that INTUIT did not manage to include this form
with their PROSERIES program. Filling out five or six of them
and knowing they have to be done again from scratch next year is
just plain silly.
However, You "can" find a fillable (on line) form at:
http://www.irs.gov/pub/irs-pdf/f8891.pdf#search='8891'
This following older Q & A should help you see what to put on
the form.
--------
Subject: Form 8891 - Need reading US smoke/mirrors
Of course as many have probably found out that the IRS form 8891
as clear as
mud. Definitions, the IRS phone agent told me in the box:
"beneficiary"
and "annuitant."; that I should be checking annuitant. However,
if I check
that box according to the instructions I would miss the critical
line 6
step. So which is the correct one to check? Then you just
enter plan
balance? Is that it.
Thanks
---------------------------------------
david ingram replies:
The proper box to check off if you bought it and it is yours is
Beneficiary and then answer all the questions.
For the Earnings, I do NOT break them into interest, dividends,
etc because it does not work cleanly because of exchange.
I use both lines of explanation for line 10e and state the
following:
"A combination of internal earnings, change in value and a 30%
devaluation of the
US dollar relative to Canadian currency has resulted in a
profit/loss of $xx,xxxx.00 "
However, the following came directly to me from the Dept of
Treasury in an informal note last September.
=================
....
Hi there: We are trying to make Form 8891 better. Do you agree
with the
comments set forth below?
For reasons that are not entirely clear, Form 8891 provides
different filing
instructions for the "annuitant" and "beneficiary," even though
they are the
same person under the ITA. Form 8891 defines a beneficiary as
someone who
would have to pay U.S. income tax on RRSP/RRIF investment
earnings if he or
she had not made a treaty election. It defines an annuitant as
the person
designated as the annuitant under an RRSP/RRIF trust. However,
the ITA
defines an RRSP or RRIF annuitant as the person entitled to
receive
retirement income from the trust, or, in the event of the account
holder's
death, the surviving spouse or common-law partner - a definition
that also
includes the trust's beneficiary.
The Form 8891 instructions indicate that an annuitant should not
complete
the treaty election in section 6 of the form. As a result, a
taxpayer who
follows the instructions for an annuitant will not provide
sufficient
information to make the election. RRSP and RRIF owners should
consider
following the instructions for a beneficiary to ensure that they
claim a
treaty exemption from taxes on investment earnings, or should
indicate that
they have previously made a treaty election.
Thanks!
Attorney
Office of Chief Counsel (International)
Internal Revenue Service
===========================================
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
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