# IRS on interest earned on Canadian RRSPs?



## vecanusa (May 3, 2021)

Hello! I live in the U.S. as a permanent resident and I have some RRSPs in Canada where I have not withdraw any money. The total amount on the RRSPs is over the IRS threshold so I am reporting them on form 8938. When I report the interest earned on this accounts as income on my 1040, it affects my IRS refund. It is my understanding that U.S.-Canada Income Tax Treaty provides an option to elect to defer current U.S. taxation on the accrued income. I am not sure how to do this. Do I need to enter the interest earned or not? If so, what I should do to get the US taxation deferral?
Thanks in advance!


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## Jca1 (Aug 7, 2019)

I'm not familiar with RRSPs specifically, but if interest in an RRSP isn't taxable by the IRS, I believe the usual way to deal with that type of situation is to omit the interest income from the 1040. Some practitioners also file form 8833 to explain that income is being omitted from the return due to a tax treaty, but the instructions for the form say you don't need to file it to assert that a treaty modifies taxation of a pension.


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## Moulard (Feb 3, 2017)

The US and Canada are close enough that there is a pub that deals with a bunch of treaty stuff specific to Canada.





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Publication 597 (10/2015), Information on the United States–Canada Income Tax Treaty | Internal Revenue Service







www.irs.gov





The page has links to regulations specifically related to RRSPs

But you might want to start off here...for a slightly more digestible text.





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The Ultimate "RRSP and the IRS" Essay


RRSPs are Canadian retirement accounts. Until late 2014, they were semi-toxic for U.S. tax purposes when owned by U.S. taxpayers who were unaware of the paperwork requirements south of the border. These problems bedevilled countless Canadians living in the United States, as well as U.S. citizens...




hodgen.com


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