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neil-duplantis
Returning Member

Canadian RRSP earning and distribution

I am a dual citizen (US and Canada) living in California.    I know that California requires me to include my RRSP earnings in the tax year earned. 

 

I could use some guidance.

Let’s say my RRSPs increased in value by Cdn$30,000 in 2023

In 2023 I took distribution of Cdn$35k from these RRSPs which was reported on my NR4 statement and will be included as income (in US$) on my US tax return. 

Do I need to report the C$30 increase in value, or does the C$35k reported as taxable income cover this RRSP growth?   Do I only report RRSP/LIRA growth when it exceeds by distribution draw?

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2 Replies
ThomasM125
Expert Alumni

Canadian RRSP earning and distribution

It is a tax-deferred retirement plan from what you describe. As such, you would only pay tax on the distributions from the retirement plan. Income earned in the plan would not be taxed until you took a distribution.  The full amount of a distribution would be taxed, provided you had made no non-tax deferred (after tax) contributions to the plan.

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neil-duplantis
Returning Member

Canadian RRSP earning and distribution

Thanks ThomasM, however the State of California does not allow earnings on Canadian RRSPs to be tax deferred until distribution.   Earnings must be declared as income in the year it occurred.   So, unfortunately my question still stands.  

If my 2023 distribution (which is declared as taxable income) exceeds the 2023 earnings, (ie earnings $30k / distribution $35k) do I need to report the $30k increase in value to California?

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