Where do I enter my RRSP contribution into Turbo Tax Home and Business 2018? This is driving me NUTS!!!

[thrashertm]

I am a dual US and Canadian Citizen and have resided in Canada full time since 2012. 

[Cindy0H · Accepted solution]

Generally, an RRSP contribution is not deductible on a US tax return. Because an RRSP is not a "qualified" plan for U.S. tax purposes, there is no deduction allowed for contributions to such a plan in the U.S. and earnings of the plan are taxable annually to the beneficiary.

There is, however, an exception under the Canada-US tax treaty that allows a RRSP deduction in certain situations. In particular, if the RRSP contribution is made via employee contributions to an employer sponsored group RRSP plan, then the contribution is deductible on the US tax return. This would be through a W2.

But there is a limit on how much you can contribute. Specifically, the RRSP contribution is limited to the lower of your RRSP deduction limit in Canada or your 401(K) limit (currently at $17,000 for those under the age of 50). 

In addition, you will need to notify the IRS that you are lowering your taxable wages by the RRSP contribution. You do this by filing a Form 8833 with your US return and claiming an exemption under the tax treaty.There is, however, an exception under the Canada-US tax treaty that allows a RRSP deduction in certain situations. In particular, if the RRSP contribution is made via employee contributions to an employer sponsored group RRSP plan, then the contribution is deductible on the US tax return. 

But there is a limit on how much you can contribute. Specifically, the RRSP contribution is limited to the lower of your RRSP deduction limit in Canada or your 401(K) limit (currently at $17,000 for those under the age of 50). 

In addition, you will need to notify the IRS that you are lowering your taxable wages by the RRSP contribution. You do this by filing a Form 8833 with your US return and claiming an exemption under the tax treaty.

IRS form 8833:

https://www.irs.gov/pub/irs-pdf/f8833.pdf

If you have other questions about this, ask in the comment section below.

[thrashertm]

Thank you! So where is the proper place to document the income taxes I paid to Canada? I tried entering it in a few different areas and it isn't having any impact on the amount owed to the USA.

[Cindy0H]

Foreign Tax credit.

[seksenov]

In your answer you stated that:

"There is, however, an exception under the Canada-US tax treaty that allows a RRSP deduction in certain situations. In particular, if the RRSP contribution is made via employee contributions to an employer sponsored group RRSP plan, then the contribution is deductible on the US tax return."

I am US citizen that lives in Canada and I contribute to my Canadian employer sponsored group RRSP plan. Where can I claim this contribution in TurboTax?

[KarenJ2]

:As long as you are attaching Form 8833 (Treaty -Based Return Position Disclosure Under Section 6114 or 7701(b)), you can add your RRSP contributions as a negative number as follow

The easiest way to report this income is to convert it to USD and then enter it as miscellaneous income under Federal taxes

1. Under Wages & Income, Scroll down to Less Common Income, and the last item , Miscellaneous Income and click on start 

2. Scroll down to Other Reportable Income and click Start 

3. Enter your RRSP contributions as a negative number and enter a description

For Form 8833, you need to know the Article number of the treaty.  Please see below:

Furthermore, Article 18, Paragraphs 8 through 14, provide for a Reciprocal Retirement Contribution Deduction. In other words, if an American contributes to a Canadian Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF), that contribution will be deductible in computing U.S. gross income subject to limits on retirement plan contributions under the Internal Revenue Code.

[seksenov]

Thank you very much for your answer! - it is very helpful.

I have a follow up questions:

Can we claim all RRSP contributions or only RRSP contributed through an employer's sponsored RRSP?

If we claim RRSP using the method you suggested how do we attach the form 8833 in TurboTax?

Here is some background information:

We are dual US and Canada citizens and we both live in a border city in Canada. I commute daily to work in US and receive W2. My wife works for Canadian employer and receives a T4 that is Canadian equivalent of W2. She contributes to RRSP at work plus to additional RRSP on her own.

In our US tax return in TurboTax we assign her income as a foreign income exclusion. 

Questions:

Do we need to declare her gross income or net income for exclusion? 

What is the best way to reduce the US tax obligation in our situation?

[KarenJ2]

• Only if the RRSP contribution is made via employee contributions to an employer sponsored group RRSP plan, can the contribution be deductible on the US tax return.
• You will have to complete Form 8833 outside TurboTax as TurboTax does not support this form. You will need to print your return and attach Form 8833 and then mail your return.  You cannot e-file.
• For the foreign earned income exclusion, you need to declare her gross income. Then in the foreign tax section, you can claim her income tax if iincome is not totally excluded by the foreign exclusion.
• Using the foreign earned income exclusion and the foreign tax credit is the best way to reduce your US tax obligation.

Form 8833     

How do I print and mail my return in TurbotTax

[seksenov]

Thank you again.

Her foreign income is completely excluded but the amount of income affects the tax due since it is combined with my US income.

Can we claim the employer sponsored RRSP using the method you suggested above when we choose foreign income exclusion?

Is there be a problem if we e-file but just mention in the explanation for RRSP that this is based on form 8833?

[DaveF1006]

Please review the entire comments in this thread  to determine how to treat your RRSP contribution. Regardless, you will need to file the 8833 and print and mail your return.  i wouldn't suggest to efile..

[seksenov]

Thank you. It will be nice if TurboTax adds support for form 8833 in the future. I am sure there are many people in my situation that will like this.

[estebao]

Hello,

I tried to figure out what the maximum amount is of my employer pension plan contributions that I can exclude on form 8833. Would anybody here know the answer?

Thank you very much for your help! 

[MarilynG1]

Form 8833 is for Excluding Income under a Tax Treaty.

If you are trying to exclude your pension income distribution, report the entire pension amount as 'Other Reportable Income',. 

Make another entry in the same place with a negative amount to exclude the income, with a description of 'Tax Treaty Excluded Income'. 

Click this link for more info on entering Tax Treaty Excluded Income. 

Your employer's contributions to your pension plan are not reported on your return.

[AM_1]

This is great information, solves my headache which I had from 2 days. Thank you!

Is there an example of 8833 filled out for individuals? preferably for RRSP. 

Some items on 8833 are confusing. Instructions in the form are inadequate and refer to other documents.

Thank you!