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David,
Hello! I'm a US Citizen(Montana) on temp resident permit who worked in Alberta for the whole year. I want to contribute to an RRSP and I assume I have about $6000 eligibility to do so this year because I made about $40K.( I have not received any documentation regarding RRSP contribution)
In addition, I have a Canadian born Citizen wife who has eligibility to contribute $55k to an RRSP based on ten past years of income.
We have the available cash to invest and would like to do a spousal RRSP for me using her deduction and contribute to hers as well. Any recommendations on a strategy to carry forward tax deductions to future years? Her income for this year is minimal due to being on maternity leave and we predict future years having more income for each individual. Would like to split evenly in two accounts for each other this year...
In addition, are there any implications reporting on my US tax return if I contribute to an RRSP in Canada. Also, are there any problems with me contributing to a US Roth IRA even though I did not make any US income? I'm assuming because I made Canadian money which is considered worldwide income I'm eligible to do a Roth ?
Sorry for the long winded note, but appreciate the help.
Regards,
BXXXXXXXXX
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david ingram replies:
You can NOT contribute to a Canadian RRSP in your first year. Your RRSP room for "this" year is based upon "last" year's Earned income reported to Canada.
You can NOT use your wife's deduction room on your return.
You Can contribute to a ROTH but don't - it would be silly.
You can give your wife money for her RRSP but only she can use it as a deduction so make sure she has enough taxable income to make it worthwhile. It does not sound like she has enough.
You have extra reporting duties if you buy a Canadian RRSP. You are always (in my opinion) better off paying down a Canadian non-deductible mortgage first.
Read the November 2001 Newsletter at www.centa.com for details on making a Canadian Mortgage deductible.
Read the August 2003 Newsletters (2 parts) for details about your reporting requirements if you buy a Canadian RRSP.
You also, of course, have to file a 1040 and likely a 2555 and 1116 and maybe a 2350 (to extend your return deadline long enough to qualify for the earned income exemption). You can find all these forms at www.irs.gov
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