If you’re a Canadian resident who commuted across the border for work and contributed to a qualifying retirement plan with your employer in the United States, you can use the RC268: Employee contributions to a United States retirement plan – cross-border commuters form to deduct some of your contributions.
Your deductions will be based on your actual contributions, the amount you were allowed to contribute under U.S. law, and your registered retirement savings plan (RRSP) contribution limit for the year.
Important: If you’re completing the RC268 page of H&R Block’s tax software, and you also need to file a RC267 and/or an RC269, you won’t be able to NETFILE your return. Instead, you’ll need to file a paper copy of your return.
What is a qualifying retirement plan?Your retirement plan might have been a money purchase plan or a defined benefit plan.
A money purchase plan is one where the employer contributes a specified amount (usually a percentage of the employee’s salary) into the plan. The employer must make these contributions regardless of how the company performed in the year.
A defined benefit plan, on the other hand, is one where the employer contributes to the retirement account (and decides where to invest it), and promises a set amount in payout when you retire. This amount is based on your salary and how long you worked at the company.
A list of qualifying retirement plans can be found here (paragraph 10).
Am I eligible to deduct my contributions?
In order to deduct your contributions to a U.S. retirement plan on your Canadian tax return, you must meet all of the following conditions:
- The amount you were paid for working as an employee in the U.S. is taxable in the U.S.
- Your employer is a resident of the U.S. or has a permanent establishment there
- Your retirement plan contributions* were made because of your work in the U.S. (for which you received taxable pay)
- Your contributions were made while you were working in the U.S.
Note: If your contributions were made as a U.S. resident while you were working in the U.S., you’ll need to report the amount that qualifies for U.S tax relief.
The amount you can deduct can’t be more than the amount of tax relief available in the U.S., or more than your registered retirement savings plan (RRSP) deduction room that’s remaining after you deduct any RRSP contributions for the year.
Where do I claim this?
Follow these steps in H&R Block’s 2018 tax software:
Note: Be sure to report all amounts in Canadian dollars. You can use the average exchange rate given on the Bank of Canada website.
- Under the PREPARE tab, click the IN THIS SECTION icon.
- In the Pension and retirement plans box, click the Add This Topic button.
- Click the PENSION PLANS AND INVESTMENTS icon. You'll find yourself here:
- Under the CONTRIBUTIONS TO A FOREIGN PENSION PLAN heading, select the checkbox labelled, Employee contributions to a United States retirement plan – cross-border commuters (RC268).
- When you arrive at the RC268 page, enter your information into the tax software.