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  • Canadian Pension Account

    From Stuart O. Bronstein@21:1/5 to All on Thu Jun 15 16:45:05 2023
    The question has come up whether a Canadian RRSP (similar to an IRA or
    401(k)) account that holds cryptocurrency, needs to be reported on Form
    1040 as a "financial asset." I know they need to be reported on the
    FBAR and Form 8938. But on the 1040?

    My thought is that they don't. According to the IRS such accounts are
    treated the same as an IRA or 401(k) and not considered taxable until
    the money is withdrawan. But I haven't been able to find anything
    dealing with this one particular point.

    Any information would be appreciated.


    --
    Stu
    http://DownToEarthLawyer.com

    --
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  • From Alan@21:1/5 to Stuart O. Bronstein on Mon Jun 19 13:43:53 2023
    On Thursday, June 15, 2023 at 1:46:37 PM UTC-7, Stuart O. Bronstein wrote:
    The question has come up whether a Canadian RRSP (similar to an IRA or 401(k)) account that holds cryptocurrency, needs to be reported on Form
    1040 as a "financial asset." I know they need to be reported on the
    FBAR and Form 8938. But on the 1040?

    My thought is that they don't. According to the IRS such accounts are
    treated the same as an IRA or 401(k) and not considered taxable until
    the money is withdrawan. But I haven't been able to find anything
    dealing with this one particular point.

    Any information would be appreciated.


    --
    Stu
    http://DownToEarthLawyer.com

    Under the treaty, the RRSP is considered a pension. As such, one does not need to answer Yes to the 1040 question on cryptocurrency. As transactions inside a pension are not reported I see no reason why anything would show up on a 1040 until such time
    there is a distribution from the RRSP. The treaty says the US resident reports the taxable amount based on what would have been taxable if the person was a Canadian resident. Canada reserves the right to tax the distribution (this would trigger an FTC
    on the US return) but at a rate no higher than 15%.

    So effectively, only the FBAR and the 8938 would have to be filed to disclose the foreign account.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From Stuart O. Bronstein@21:1/5 to Alan on Mon Jun 19 13:58:45 2023
    Alan <[email protected]> wrote:
    Stuart O. Bronstein wrote:

    The question has come up whether a Canadian RRSP (similar to an
    IRA or 401(k)) account that holds cryptocurrency, needs to be
    reported on Form 1040 as a "financial asset." I know they need to
    be reported on the FBAR and Form 8938. But on the 1040?

    My thought is that they don't. According to the IRS such accounts
    are treated the same as an IRA or 401(k) and not considered
    taxable until the money is withdrawan. But I haven't been able to
    find anything dealing with this one particular point.

    Any information would be appreciated.

    Under the treaty, the RRSP is considered a pension. As such, one
    does not need to answer Yes to the 1040 question on
    cryptocurrency. As transactions inside a pension are not reported
    I see no reason why anything would show up on a 1040 until such
    time there is a distribution from the RRSP. The treaty says the US
    resident reports the taxable amount based on what would have been
    taxable if the person was a Canadian resident. Canada reserves
    the right to tax the distribution (this would trigger an FTC on
    the US return) but at a rate no higher than 15%.

    So effectively, only the FBAR and the 8938 would have to be filed
    to disclose the foreign account.

    Thanks Alan. That was my conclusion too. But while I deal with a
    lot of tax issues, I don't do returns, so I wanted the perspective of
    someone who is close to this issue.

    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

    --- SoupGate-Win32 v1.05
    * Origin: fsxNet Usenet Gateway (21:1/5)