Yes, this can get complicated since it involves both inheritance law and cross-border retirement rules. You’re correct, inheritances usually aren’t taxed as income in the U.S. But an RRSP, much like ...
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Yes, this can get complicated since it involves both inheritance law and cross-border retirement rules. You’re correct, inheritances usually aren’t taxed as income in the U.S. But an RRSP, much like a U.S. IRA, holds income that hasn’t been taxed yet. As a result, this is fully taxable to your wife. Here is how to report.
Do not use the "Canadian Registered Pension" section; as you noted, she isn't the owner of a pension. Instead, report it as Miscellaneous Income to keep the entry clean and avoid "1099-R" e-file rejections:
Go to Federal > Wages & Income.
Scroll to the bottom and select Miscellaneous Income, 1099-A, 1099-C.
Select Other reportable income.
Description: Enter "Distribution from an inherited RRSP ".
Then list the amount from the check.
Even though you entered the income as "Miscellaneous," you can still link the 25% withholding (Box 17) to it and receive a foreign tax credit.
Go to Federal > Deductions & Credits.
Select Foreign Tax Credit (under Estimates and Other Taxes Paid).
When the interview asks if you have "other types" of foreign income (after it checks for 1099-INT/DIV), say YES
Choose Passive Income as the category.
Country: Canada.
When you get to a section that says Gross Income, type "Inherited RRSP Income." for a description
Income Amount: Enter the same USD amount you reported in the Miscellaneous section.
Foreign Tax Paid: Enter the amount of foreign tax from the distribution. This will be in a section where you enter the foreign taxes paid
Date Paid: Use the date on the check or 12/31/2025.
Finish out the interview by selecting continue until the end.
[ Edited 03/5/2026 I 7:51am PST]