How do I determine the Taxable Part of a Canadian RRSP distribution?

The US Taxation of RRSP (Registered Retirement Savings Plans) is similar to a 401K plan.

As with a 401K Plan, the money you deposit into the Canadian RRSP is pre-taxed and grows tax-free until it is withdrawn. The incentive of the RRSP is the same as the 401K, which is to defer the tax now, with  contributions growing tax-free. Then, when the investment is distributed to the beneficiary at the time of retirement, it is taxed at a lower tax rate.

One difference between a 401K and an RRSP is that the RRSP does not carry the automatic 10% penalty for early withdrawal. 

A U.S. citizen with a Canadian RRSP, and who resides in the U.S. may be taxed in the U.S. on the Canadian RRSP, but the amount of pension that is included on the U.S. tax return for tax purposes, cannot exceed the amount that would have been includable in Canada.

For Example:
 

A US citizen withdrew from their Canadian RRSP. The total withdrawal is $10000 and the Canadian government withheld $2500 (25%).  

What would be entered in TurboTax?   

Answer: Enter your Total Distribution as $10,000 and the Taxable Distribution as $7,500 ($10,000 - $7,500). 

You may be able to claim the Foreign Tax Credit for the amount of Canadian Tax you paid. Here's the steps:

• At the right upper corner, in the search box, type in "foreign tax credit" and Enter
• Select Jump to foreign tax credit
• Follow prompts
• On screen, "Tell Us About Your Foreign Taxes", do not check the first box. 
• (First box says -you have no more foreign taxes to enter other than the 1099-DIV, 1099-INT, 1099-OID or a Schedule K-1)". 
• Follow prompts
• Choose the Income Type, select "Passive Income"
• On screen, "Country Summary", add Canada
• On screen, "Other Gross Income", enter Canada RRSP and the Gross Distribution amount 
• On screen, "Foreign Taxes Paid", under foreign taxes on Other Income, enter the amount of Canadian tax you paid