Discussion:Canadian Pension Plans
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Discussion Forum Index --> Tax Questions --> Canadian Pension Plans
| 11 April 2006 | |
| Doing a return for a married couple. One is a U.S. citizen and the spouse is a Canadian citizen. They live in the U.S.
The spouse receives payments from Canadian pension plans (two different types). This year they also received a lumpsum payment from a Canadian RRSP (cashed out a plan evidently). Does anyone have an idea how the income from these plans are treated in the U.S?
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| 12 April 2006 | |
| It depends on whether your client has basis in the plan contributions.
1. Were all of these distributions made after 10/22/04? 2. Did your client ever make contributions to the plan that were subject to taxation by either Canada or the United States (e.g. nondeductible contributions)? 3. Did your client ever make an election on her 1040 to defer taxation of these plans until the date of distribution? | |
| 12 April 2006 | |
| Here's what I know.
Regarding Spouse (Canadian Citizen): All distributions started before 10/22/04. She's 61 years old in 05. 1st Plan - Payer is Service Canada, Canadian Pension Plan. Income code 46 (Taxable CPP Benefits). IRS says under U.S. Canada Income Treaty to treat as Social Security payments. 2nd Plan - Income code 39 (Superannuation or pension benefits). She tells me 50% employee contributed. So I assume those amounts were subject to either C or US taxation. Regarding taxpayer (US citizen): One lump sum payment from a 100% employee contributed plan. Income code 43 (Registered Retirement Savings Plan - Lump sum payment). I don't know and the client doesn't remember if he defered taxation. He's 61 years old in '05 | |
| 10 October 2006 | |
| To bring this back to life - my client's distribution (RSSP) was after 10/22/04. All the funds in the account were subject to tax by Canada. They did not make an election on their 1040 to defer taxation until the date of distributions. They filed a Canadian return this year strictly for this entire distribution. All other income has been earned in the US and they have lived in the US the entire year. Their basis is actually greater than their final distribution. Do they get to take a loss on their US return? Also box 30 Income Tax Deducted is 10% -is that US tax or Canadian tax? Do they get a foreign tax credit for this?
HELP PLEASE !!! | |
