# How do we report RSP withdrawals for US tax returns?



## mchjlh (Jun 6, 2013)

Have always done my own taxes, Canadian and US. Am older now, getting pension income, and just starting to withdraw RSP funds. 

We had an accountant give us help with our US return last year. She said "the US does not tax the portion of the RSP withdrawal that was YOUR contribution, as that money was already taxed by Canada. So, you need to report the amount of the withdrawal that was due to interest accumulated." 

Fine and dandy... but I have no record of what my 36 years of contributions were, and neither does the credit union where I have most of my RSP accounts.

How have any of you dealt with this conundrum? How have you guessed what "your" portion of your RSP withdrawal is, versus interest income? How, if at all, have you documented that? Where does this info go on the 1040 or Schedule B or wherever? Thanks in advance, if you can shed some light.


----------



## Bevdeforges (Nov 16, 2007)

OK, first of all - when doing your US taxes, have you been reporting the gains and earnings on your RSP accounts? Because if you have, it means that you can treat withdrawals just like you were taking the money out of a savings account. If the earnings have been reported (to the US) for tax purposes, then you are truly "living on savings."

If you haven't been reporting the earnings, then yes, the accountant is right, you're supposed to factor your withdrawals into the part you contributed and the part that represents the earnings of the fund over time. You might get some help from IRS Publication 575 Publication 575 (2014), Pension and Annuity Income though it isn't terribly helpful for "foreign" plans. 
Cheers,
Bev


----------



## mchjlh (Jun 6, 2013)

I see in retrospect that I misspoke slightly about our situation, though my question remains essentially the same about reporting withdrawals from our RRSPs (Registered Retired Savings Plan).

Our contributions to our RRSPs were always reported as income to the US, and thus were subject to taxation in the US. Because of the tax treaty, our higher Canadian taxes meant that we paid no US tax. (In Canada, those contributions were an allowable deduction, and were not taxable as I originally wrote). 

Now, when we make withdrawals, the entire withdrawal is subject to tax in Canada. But, only the accumulated interest is subject to tax in the US. 

Thanks, Bev, for the link to 575, and I’ll have a close look at it. But I think I recall from last year that it did not address how a taxpayer like us is to guesstimate the interest portion versus the contribution portion of an RRSP when detailed records are not available. That remains the question for me.

Last year we withdrew over $1000 from an RRSP. Our accountant last year included form 8833 and checked the box stating that we were “disclosing a treaty-based return position as required by section 6114.” But she did not include any wording to explain why the 1040 lines 16a and 16b were different. When we could not provide her any RRSP contribution details, she used a 50:50 breakdown (i.e. assumed 50% of the withdrawal was due to our contributions, and 50% to interest accumulated), but she did not give any explanation in the comment section below part 5 on 8833. We've not heard from the IRS on this matter, but the issue feels like "unfinished business" to me as I do this year's return, and contemplate future returns.

This year our withdrawal is actually under $300. But we still have the issue of how to describe the position we are taking. We are inclined to continue using a 50:50 calculation, unless we can come up with more information about the history of our RRSPs. (We plan to ask the credit union yet again.)

Comments from others who may have dealt with this would still be helpful.


----------

