US RESIDENT AND RRSP - 8891 TDF 90-22.1 - international non-resident cross border income tax help assistance expert preparation

Sent: Wednesday, January 24, 2007 1:59 PM
To: [email protected]

hi, my sistser lives in the states and has for many years, she has a green card and was married to an american but is now divorced but still living down there, she has rsp up here that she has done nothing with, i phoned the income tax people for her and they said she didn't have to claim them on her u.s. income tax as she isn't taking any out at this time, and she does not file in canada as she is working in the states, but i am getting confused as i read some of your e-mail's, do i have the right info and do you know of a tax expert in bellingham re u.s./canada income tax, as of the later part of last year starting collecting a jpension up here, thanks in advance--please do not list my name, thanks 
david ingram replies:
I do not recommend any one in the Bellingham area. I could recommend Gary Gauvin in Dallas but for Bellingham, she might as well deal with us.  I can see the Bellingham from my window,
The Canadian CRA person you talked with is incorrect. 
NOT reporting the mere existence of a Canadian RRSP on form TDF 90-22.1 can have a fine of up to $500,000 plus 5 years in jail.
Not reporting the internal earnings on form 8891 can result in a fine of 35% of the total plus 5% a year for every year not reported.
The following will give you an idea of what she has to report.
QUESTION: I am a Canadian citizen working in US on H1B visa for last three
and half years.
Before coming to US I have some investment in RRSPs and also have a bank
accounts in Canada
For last three years I am paying taxes in US. First year I filed papers in
both countries and paid additional tax in Canada
My question is do I have to file any tax papers in Canada for my earnings in
US  or for the RRSP investment in Canada? Or do I have to declare anything
on my US tax filings?
david ingram replies:
If you are living full time in the US with no immediate family (wife and
children) in Canada, you do not need to file a Canadian return.
All of your account holders should Know that you are living in the US. If
any interest or dividends are paid to you by a financial institution, the
institution should deduct withholding tax and remit it to Canada.  No
Withholding is required for RRSP profits BUT,
You have to report the internal earnings to the IRS on US form 8891 and the
existence of ALL your Canadian accounts to the Department of the Treasury on
form TDF 90-22.1
penalty for not filing is 35% of the amount in the plan plus 5% per year for
every year you fail to report it.
 find T D F 90-22.1 here -
penalty for failing to file a TDF 90-22.1 for each foreign account is up to
$500,000 plus 5 years in jail.
I actually had a 105 year old client who was sent a $10,000 fine for not
reporting $38,000 in the Royal Bank of Canada in Edgemont Village in North
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 10 PM 7 days a week  Vancouver (LA) time -
(please do not fax or phone outside of those hours as this is a home office)
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