How are RRSPs taxed in the U.S.?
Allan Madan, CA
For U.S. Citizens or U.S. residents who hold a Canadian RRSP, it should be noted that the IRS treats the RRSP just like any other investment account and therefore, imposes tax annually on the growth of the investments inside the RRSP.
However, an election can be made by completing the Form 8891 annually with your U.S. tax return to have the tax on the growth deferred until the time of withdrawal. In other words, by filing the Form 8891, your RRSP growth will remain tax free in the U.S. and only the withdrawals in the later years will be taxed in the U.S., similarly to how the account is taxed in Canada.
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CA.CPA.CGA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
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