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brianosborne
New Member

Problems with T2205 and Carry Forward

It looks to me like there is a problem with T2205 and Carry Forward amounts in TurboTax.

First, according to the CRA instructions for T2205 t2205-18e.pdf both spouses need to include this form in their return. TurboTax only created one for my spouse and none for my return.

Second, when calculating how much of the spouses RIF income is to be added to the person who contributed to the RRSP over the past 3 years, excess amount are to be carried forward to the following year. It looks like that is not happening in TurboTax.

I can give an example of what I am talking about if you wish, but the description could be lengthy. ....thanks....brian

2 Replies
brianosborne
New Member

Problems with T2205 and Carry Forward

Here are details regarding the T2205 Carry-Forward bug in TurboTax 2018 Version 00.01.51 Build 5003. This problem only occurs when creating a tax return for both an individual and spouse at the same time, and the tax returns from the previous year were imported into the current year.

This is best shown as an example. Jack and Jill are married. Jack contributed to Jill' spousal RRSP as follows:

  • 2015 - $7000
  • 2016 - $9000
  • 2017 - $ 700
  • 2018 - $0

In 2017, Jack retires, and Jill converts her spousal RRSP to a RIF. She received $16,500 in 2017. According to the attribution tax rules, some or all of Jill's income must be attributed to Jack since the spousal RRSP contributions were made over the past 3 years.
So for 2017 tax year, Jack must add $16,500 to his income on his tax return and pay taxes on the total amount.
Jill's tax return shows she has $0 taxable income.

In 2018 tax year, Jill receives $22,000 (RRIF box 16) of which $14,000 is in excess (box 24) of the required minimum spousal RRIF withdraw. The attribution rules require some of that income to be attributed to Jack.
The Carry-Forward form in Turbo tax should report that $9000 of the 2016 spousal contribution has already been attributed to Jack in 2017, and $500 of the 2017 contribution has also already been attributed. Thus for 2018 only $200 of Jill's income is added to Jack's taxes, and Jill has to pay tax on the remainder,

BUT...the Carry-forward form in turbotax in fact says none of the 2016 contribution has been attributed, and $700 of the 2017 contribution has been attributed. This error results in too much of Jill's income being attributed o Jack's return.

I spoke to Canada Revenue and they confirmed my understanding as to how attribution should work. Fortunately, I was able to edit the TurboTax Carry-Forward form , re-enter the T4RIF receipts to correct our tax returns.

colindwyer
New Member

Problems with T2205 and Carry Forward

Thanks Brian, I wish I had seen this in 2019, my situation is exactly what you describe in your Jack and Jill example.  CRA has just reassessed my wife's 2019 return and have increased her taxable income.  I don't fully understand it yet, I guess they should have increased my income but because we are sharing pensions it probably does not make any difference -- I don't think.

My concern now is our 2020 returns, has Turbotax fixed this problem?  I think we should be OK because I did not make any spousal RRSP contributions after 2017.

I must say that this has shaken my confidence in Turbotax.  I just blindly follow their instructions, guess I need to pay more attention in future.

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