How to properly report foreign pension income (Canadian RRSP) on US tax return?

This is a great question about reporting foreign pension income. For a Canadian RRSP distribution, you'll need to report it as ordinary income on your US tax return, typically on Schedule 1, Line 8 (Other Income) with "Foreign Pension" noted. Since Canada withheld tax at 25%, you're correct that you can claim the foreign tax credit using Form 1116. You'll want to categorize this under the "General Category Income" section of the form. The withheld tax amount goes in Part II, and you'll need to convert it to USD using the appropriate exchange rate from the date of the distribution. For relatively small amounts like your $1,350 distribution, the IRS generally doesn't require FBAR or Form 8938 reporting if the account balance was below the reporting thresholds, so you should be fine there.

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As someone who dealt with a similar situation last year, I recommend checking out IRS Publication 575 (Pension and Annuity Income) and Publication 54 (Tax Guide for U.S. Citizens and Resident Aliens Abroad). They have specific sections on foreign pensions. My tax preparer told me that the treatment of foreign pensions can vary depending on the specific tax treaty between the US and the country in question. For Canada, you need to look at the US-Canada tax treaty provisions for retirement accounts. I think Article XVIII covers RRSP treatments.

Just FYI, I ran into this exact issue with my Canadian RRSP last year. Initially inputted it on the wrong form and got a notice from the IRS. Had to file an amended return. For RRSPs specifically, the IRS wants this reported as ordinary income (not capital gains, even tho it feels like it should be). Make sure to keep documentation of the 25% withholding too - the exchange rate matters for calculating the exact USD value of the tax credit.

I had a similar situation with my Canadian RRSP withdrawal last year. One thing that caught me off guard was that the IRS requires you to report the full gross amount of the distribution in USD, not just the net amount after Canadian withholding. So if Canada withheld 25% ($337.50 in your case), you still need to report the full $1,350 as income on Schedule 1, Line 8. For the foreign tax credit on Form 1116, make sure you're using the exchange rate from the actual date of distribution, not the year-end rate. The IRS has historical daily rates available on their website. Also, double-check that your Canadian tax slip (T4RSP) shows the withholding amount correctly - sometimes there can be discrepancies between what was actually withheld and what's reported on the slip. Since you're using the free fillable forms, pay close attention to the Schedule 1 instructions - they have specific guidance for foreign pension reporting that's easy to miss.

Great discussion here! I'm dealing with a Canadian RRSP withdrawal myself and wanted to add a few practical tips from my experience: First, make sure to request the T4RSP slip from your Canadian financial institution if you haven't received it yet - you'll need this for accurate reporting. Some institutions are slow to mail these to US addresses. Second, I found it helpful to create a simple spreadsheet tracking: (1) the CAD amount of the distribution, (2) the exact distribution date, (3) the USD exchange rate for that date, (4) the converted USD amount, and (5) the CAD tax withheld and its USD equivalent. This makes filling out both Schedule 1 and Form 1116 much more straightforward. One thing to watch out for - if this RRSP had any growth while you were a US resident, you may need to consider whether any portion should be treated differently for tax purposes. The timing of when you moved to the US relative to the RRSP contributions and growth can affect the tax treatment. Finally, keep all your documentation (T4RSP, conversion calculations, etc.) with your tax records. The IRS occasionally asks for backup documentation on foreign tax credits, especially for smaller amounts where they want to verify the calculations are correct.