Dear David,
I sent a message about a week ago, but it did not show
up in this
mailing list. So, let me repeat it in a somewhat
condensed form.
My wife and I are US permanent residents living in
Washington State. I
commute to work in Vancouver every week day, and the
income from my
employment in Vancouver is the main source of our
household income.
I started working in Canada last year, and I have not
created an RRSP
account. Checking your centa.com web pages, I have
found that there
are some complicated issues about RRSP accounts of US
residents. But I
did not find much about information about opening and
contributing ton
RRSP accounts by US residents working in Canada. Let me
ask two
questions.
1. Is it legal for a US resident working in Canada to
create and
contribute to an RRSP account?
2. If so, does it make sense to do so financially,
especially if the
person is planning to retire in US?
Of course, your wonderful idea and insight beyond these
questions
would be also much appreciated.
Thanks,
S K
============================
david ingram replies:
I remember you well after telling you to get yourself
back across the border to live even if you were working
in downtown Vancouver. By living in the US with your
Green card, you were in no danger of losing it and your
time still contributes to getting your US citizenship.
Answer to 1 - Yes you can buy an RRSP. You will report
the annual internal earnings on the new form 8106 which
has not been released yet. However, if you did not
notice it with the Aug 31st q & a or have erased it,
write back and i will send you one.
Because you will be paying your main tax to Canada, it
does make sense to buy an RRSP when you have room.
I do remember when you came to Canada. You can only buy
a 2004 RRSP based upon your 2003 earnings. As I
remember it, you earned about $55,000 after coming to
Canada on August 1, 2003 and your Pension Adjustment
was around $6,000. So you can buy an RRSP which equals
"approximately" 18% of $55,000 - $6,000. However, you
do NOT need to calculate it yourself. Look for your
RRSP room at the bottom of one of the pages of your
2003 assessment from the Canadian Income Tax Department
(CRA). I expect it will be about $2,000.
You will have to fill out forms TD F-90 and 8106 to
report (and exempt) the RRSP internal earnings on your
US 1040 return.
Hope this helps and I will use this as one of today's
Question and Answers. Your question was overlooked
because you sent it to the newsletter group internally
and I never look at those because it gets dozens of
spams. If you want to get me with a question use
taxman at centa.com.
I am also backed up about 300 questions so all sorts of
people are not getting any answers and I apologize to
them but I have to look after my paying clients first.
david ingram
This from "ask an income tax and immigration expert"
from www.centa.com or www.jurock.com or
www.featureweb.com. David Ingram deals on a daily basis
with expatriate tax returns with:
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=========================
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