How to report your RRSP on Form TD F 90-22.1 for 2009

Unfortunately, the income tax treaty—and Form 8891—won’t solve the problem that was discussed in Chapter xx. You are a U.S. resident with control over a foreign financial account. You must figure out whether you are required to file Form TD F 90-22.1 for calendar year 2009.

Threshold for filing: over US$10,000

The threshold for filing this form is US$10,000. If your RRSP plus all of your other foreign financial accounts had an aggregate balance over US$10,000 in 2009, you must file Form TD F 90-22.1.

The definition of “foreign financial account” is exceedingly broad. Read the Form TD F 90-22.1 instructions carefully. If you have any doubts at all, hire an experienced U.S. tax advisor.

Let’s assume you are over that threshold and you are required to file Form TD F 90-22.1.

Form 1040, Schedule B

Even though this Chapter is all about Form TD F 90-22.1, you will start your paperwork project somewhere else—Schedule B, Part III, which will be attached to your Form 1040.

Most people think that Schedule B is only required to be filed with your Form 1040 income tax return if you have:

  • more than $1,500 of interest during 2009, or
  • more than $1,500 of dividends during 2009.

Wrong.

There are two other items that trigger a requirement to file Schedule B with your U.S. income tax return. Even if you have zero interest and zero dividends in 2009, you as the owner of an RRSP must file Schedule B:

  • If you are the grantor or beneficiary of a foreign trust; or
  • If the aggregate balance of your “foreign financial accounts” exceeds US$10,000 in 2009.

Line 7: aggregate balance of foreign financial accounts

The instructions for whether you have to file Schedule B for your foreign financial accounts—and how to answer the questions—are confusing. A common-sense “Yes” answer may in fact require you to answer “No” on Schedule B.

Line 7a is where you tell the IRS whether you have control or ownership of a financial account outside the United States. This is a “Yes/No” answer.

Look at all of your “foreign financial accounts” and compute the highest aggregate balance in 2009 in U.S. dollars. Here is how to answer Line 7a:

  • Highest aggregate balance in 2009 is more than US$10,000 = “yes”
  • Highest aggregate balance in 2009 is US$10,000 or less = “no”

The confusing part of this form is that you can have foreign financial accounts (common sense tells you to say “Yes, I have a foreign financial accounts”) yet because the balances are in aggregate under $10,000 you are telling the IRS “No, I do not have foreign financial accounts.”

Line 7b is the “where” question. If you answer “Yes” on Line 7a, the answer to Line 7b is “Canada” for your RRSP. If you have accounts in other countries, list the names of those other countries here, as well. If you answer “No” on Line 7a, do not complete Line 7b.

Line 8: an RRSP is a foreign trust

The answer to Line 8 is “Yes.” An RRSP meets the definition of a “foreign trust” under U.S. tax law.

  • You are the “grantor” (someone who puts money into a foreign trust) because you made a contribution to an RRSP.
  • You are a “beneficiary” because you are entitled to receive distributions from the RRSP.

Results from Schedule B, Part III

By completing Part III of Schedule B:

  • You have told the U.S. government that you have foreign financial accounts with an aggregate balance in excess of US$10,000 (as a result of your answers on Line 7). They will now be looking for Form TD F 90-22.1.
  • You have told the U.S. government that you have a foreign trust. The IRS would ordinarily be looking for Form 3520 and Form 3520-A from you (because you answered “Yes” on Line 8), except for the fact that these forms are explicitly waived for RRSPs. You will instead file Form 8891.

Form TD F 90-22.1, Part I—all about you

Part I of Form TD F 90-22.1 is all about you. Mostly. (Line 14 is not about you; more about that later).

Line 1

This is in the right corner. Put the year in there. You’re doing 2009. This is the original filing for 2009, so do not check the box labeled “Amended.”

Line 2

You are a human. Check the “individual” box.

Line 3

You have a U.S. taxpayer identification number, because you’re living in the U.S. Write it in here.

Line 4

Do not put anything here. Line 4 does not apply because you filled in Line 3.

Line 5

Write in your date of birth, using the U.S. convention of MM/DD/YYYY.

Lines 6 through 8

This is where you provide your last name, first name, and middle initial.

Lines 9 through 13

This is the address you use for U.S. income tax reporting purposes. Whatever address you put on Form 1040, put it here, too.

Line 14

This is the “mostly” part of Part I. This isn’t about you—it’s about your foreign accounts. This is where you declare the number of accounts you have outside the United States. Check the box which accurately reflects how many financial accounts there are in which you have a financial interest.

Lines 15 through 23: all about your RRSP

Part II is where you make the declaration about your RRSP. This is where you fill in the name of the institution that houses your RRSP, the account number, and the address of the institution. Take the information straight from the statement they mail you.

Line 15

Find the highest value of your RRSP at any time during the calendar year. Convert it from Canadian dollars to U.S. dollars.

It may be impossible to figure out your RRSP’s balance day-by-day. That would require tracking stock prices and building exotic spreadsheets. Do the best you can. This isn’t science.

Line 16

Check “Other” and write in “Registered Retirement Savings Plan” on the line underneath it.

Lines 44 through 46: sign and date

All you need to do now is sign and date this form. Sign on Line 44. Ignore Line 45, because it doesn’t apply to people filing this form as individuals. Put the date in the space at Line 46.

Filing place and deadline

Mail your original Form TD F 90-22.1 to:

U.S. Department of the Treasury
Post Office Box 32621
Detroit, MI 48232-0621

Your filing deadline is June 30, 2010. This is a “received by” deadline, not a “postmarked by” deadline. So be sure to send it early so it arrives on or before June 30, 2010.

If you want to send the original by DHL, FedEx, or UPS, here is the street address and telephone number you will need:

IRS Detroit Computing Center
Attn: FBAR Mail Room, 4th Floor
985 Michigan Ave. Detroit, MI 48226

Telephone: 313-234-1062

I recommend that you make a copy of this form and save it carefully. Get every conceivable type of proof of delivery that you can.

Form TD F 90-22.1 does not go with tax return

Do not file Form TD F 90-22.1 with your U.S. income tax return.

Other accounts?

It is likely that you have other reportable accounts that should be included on your Form TD F 90-22.1 filing. Look at the instructions for the form and decide what to do. I have deliberately not talked about these other items because this book focuses only on dealing with U.S. tax requirements for your RRSP.