Withdrawal of RRSP as a US Citizen and Resident

Posted on 21. Jan, 2011 by Phil Hogan, CA in Cross Border Tax Q&A

Question

Answer

Hi XXX

Canada will withhold 25% of your withdrawal from the RRSP. If your current tax rate in the US is less than 25% you’ll only pay a total of 25% tax on the withdrawal. If you US rate is more than 25% you may want to calculate your non-taxable earnings in your RRSP to reduce the taxable amount.

If you income is low it’s also possible to prepare a special Canadian tax return (section 217 tax return) to try and reduce the 25% tax, however your RRSP income would have to be at least 90% of your worldwide income for that particular year.

You’ll also have to consider state tax issues if you live in a State with income tax.

Hope that helps. If you need to work out the specifics I can be reached at 250-661-9417.

Regards

Phil

Phil Hogan, CA
250-661-9417

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If you would like to reach me to discuss a tax or accounting matter please call 250-661-9417 or email me at phil@philhogan.com.

The accounting and tax information provided on this website is for informational purposes only and does not represent binding professional advice. Appropriate tax treatment and advice will depend on an individuals particular circumstances and set of facts.

Tags: 217 return, 25%, canada, non-resident withholding.rrsp, rrsp withdrawal, tax, us