Cashing RRSPs at 25%

I've read a lot about cashing in RRSPs and it does sound like a great idea, but I haven't seen any reference to whether that becomes US income that has to be claimed on our US tax return. We are non-...

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Canadians in the USA

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perkyj
CanuckAbroad Regular

CDN in Illinois

Joined: 21 Mar 2008
Posts: 73
Location: Illinois

Posted: Thu Apr 10, 2008 8:02 am

I've read a lot about cashing in RRSPs and it does sound like a great idea, but I haven't seen any reference to whether that becomes US income that has to be claimed on our US tax return. We are non-residents of Canada for taxation purposes and we do not have Canadian income. If we cash in our RRSPs and take the 25% hit, are we done with Canada and is it also exempt from US taxes. If it's taxed again here, I'm not sure that it would make financial sense, so I'm wondering if I'm missing something.

Reba
Moderator

Canuck in NC

Joined: 16 Jul 2004
Posts: 1031
Location: North Carolina

Posted: Fri Apr 11, 2008 3:12 am

Yes, you will have to claim it as income on your US taxes. Whether or not you're taxed on it again will depend on what tax bracket you're at.
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