filing forms T D F 90-22.1 and 8891.

QUESTION: My questions concern Canadian RRSP reporting on an IRS tax return.
My U.S. girlfriend, Amanda, now lives with me in Canada (it has been about
two years now), and this year she purchased an RRSP.  I am unsure of a few
things pertaining to form 8891.  Firstly, in Canada, you were allowed to
open/contribute to an RRSP until the end of February of 2006 (to include on
your 2005 Canadian tax return).  This is what Amanda did--she rolled over
her work shares into an RRSP, and she did so in February 2006.  On her
Canadian tax return, she declared this RRSP contribution for the 2005 tax
However, since technically Amanda purchased this RRSP in **2006**, do I wait
until Amanda's 2006 IRS tax return to report this RRSP using form 8891?  OR
does she report her RRSP on her *2005* IRS tax return?  An additional
question: does 8891 really only have to be filed when there have been any
[undistributed] gains?  So far, Amanda hasn't had any undistributed gains in
her RRSP.
Also, I am wondering whether it is possible to report the RRSP, but NOT
elect to defer the taxes immediately with the IRS.  My reason is this:
After the Foreign Earned Income Exclusion, Amanda has a lot of "tax" leg
room under her personal and standard IRS deductions.  Hypothetically, if her
Employement Share Purchase Plan RRSP were to make a whopping $3,000.00 in
undistributed capital gains in 2006, she would still be below her personal
and standard deductions/exemptions on her IRS tax return.  Therefore, it
might make a bit more sense to 1) declare the RRSP undistributed gains, but
2) NOT choose to defer the taxes on it, and instead "pay the taxes now."  Of
course, there WOULD be no taxes on it during the 2006 tax-year, because
Amanda's exemptions would be well-above the 3,000 dollars she made in
undistributed gains on the RRSP.
Is the above scenario possible/advisable, or is it better to just defer the
taxes on form 8891 at the same time she is reporting this RRSP to Canada?  I
hope you understand what I am trying to say.
david ingram replies:
1.	The February 2006 contribution to an RRSP is good for 2005 OR 2006 for
Canadian purposes but is a 2006 contribution for US purposes.
2.	You have discovered the great secret.  Most people get no benefit from
deferring the internal earnings on the RRSP.
3.	The 8891 form also requires you to report the year end balance of any and
all RRSP accounts.  Fill it in whether you defer the earnings or not.
Remember form T DF 90-22.1 -  If her financial accounts combined hold more
than $10,000 combined, every one must reported to the Department of Treasury
on form T D F 90-22.1 -  See basic instructions at bottom of Schedule B of
the 1040.  Failure to file the TDF90-22.1 can be a penalty of up to $500,000
PLUS 5 years in jail.
David Ingram's US / Canada Services
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