RRSP reporting on form 8891 -

Sent: Sunday, February 11, 2007 4:51 PM
To: Centapede-questions
Subject: RRSP

Can you handle one more question about Canadians residing in the US who hold RRSPs??
 
Thanks to your info, I have been filing form TDF 90-22.1 and 8891 since 2002.  On form 8891, I made the election to defer income in 2002 and have been declaring the current December 31 year-end value on that form every year since 2002.  I thought I had it figured out but now I'm reading all the other questions from your other readers and I guess it's tax time so I have to freak out just a little.  My RRSPs have gained value since I've been here, but I thought as long as the earnings stay within the RRSP and I am not withdrawing any, all I need to do is declare the year-end value on the 8891 and the TDF 90-22.1  ??
 
Just double-checking.  Thanks.  One day I will have to think about how to report and take some of that money as income, but not this year!
 
Thank you.
------------------------------------------------
david ingram replies:
 
The internal undistributed earnings of the RRSP must be reported on the 8891 on line 10 - a - b - c - d - and e
 
However, the form is poorly written and tells you to put the income on Schedule B.  If you stop there, you end up paying tax on the money because the form does not tell you how to take it off. What you do is put it on and deduct it immediately (per line 6 form 8891). 
 
In the last couple of years, the gain has been mostly from exchange rates.
 
I put the difference between Dec 31 of last year and Dec 31st of the current year on line a0 with the following statement written in the explanation space, "A combination of internal earnings and changes in exchange rates have resulted in a paper profit (or loss) of $XXX,XX
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