Hi all,

Before I renounce early next year I have decided to close my last bank account in the US and then make my appointment at the consulate. What I don't understand is how much of the money will be taxed or confiscated when I transfer it abroad by the US? Without being too specific I am speaking about a large savings account. I have never transferred more than small amounts at a time out of the US so I don't have any experience with transferring huge amounts out and whether or not they they take their cut somehow before letting it pass through.

I can't find any info on current capital controls beyond the ones which FATCA will introduce.

Thanks

If this is a straight forward savings accouint...then you have most likely already paid tax on the accured interest. Its your money, close out the account..no problem.

FATCA will not be here for a couple of years yet...so I wouldn't worry about that. Just keep records as you will have to identify on the 8938 form (if it ever comes out of draft) if you closed that account for a specific year...they dont ask why.

I am sure others with more knowledge than me will help you answer your question as well

The US taxes income. Moving a large account out of the US requires a declaration of the source (i.e. your savings account) and the "purpose" of the transfer (for which you can say something like "opening a bank account in XXXX" or "consolidating my bank accounts"). But there should be no tax on the transaction of the move.

And actually, the bank will do the declaration stuff for you anyhow.
Cheers,
Bev

There are no US capital controls (well, if you're moving billions, maybe . There are none under FATCA as well, AFAIK. No amount will be taxed (let alone confiscated). If you transfer it via normal banking channels (wire, ACH etc.), there should be no issue at all. For transfers > 10K (I think) , banks may require some proof of id from you for reporting purposes when doing transfers (maybe even that may not be required for regular customers). They are required to file reports on transfers.

The only reporting requirement for you is if you transfer more than 10K in cash or bearer instruments across US borders, then you are required to report it (I think most countries have similar requirements these days)

Thanks all for the replies - This was very good news to hear. I plan to transfer everything out in a couple of months and hope that it goes as smoothly as mentioned. Cheers

I have a question as I will also finish renouncing early in 2012. Since the 8938 has yet to be finalized, I would think a renunciate would not be required to file the 8938 for 2011. Does anyone know?

I am also transferring most of my money out of my single US account, a chequing/savings account. I will leave some because I do travel there and I do use it to pay some bills. But I am moving small amounts at a time over the next few months. My bank here (CIBC) seems to have no problem accepting the money into my US$ account here, ie I could have moved the entire amount with apparently no comment from the Canadian bank. I did wonder about the rules in the US about moving money out, so I am moving a few thousand at a time.

Please don't downplay the possibility of confiscation.

Indeed if you do not do the reporting, if you are unaware of the reporting requirement, or if you make an error on the reporting, it may be confiscated. Or rather, you will incur a penalty for the full amount which, to me, is the same thing.

There was an important judgement on this subject, in 2007 in the case of H.K. Bajakajian vs the IRS, a transfer of 357,000$ offshore without reporting resulted in the IRS confiscating the full amount.

In the case above, the taxpayer actually won in court against the IRS using the 8th amendment argument (cruel and unusual punishment); But it shows that yes, the IRS will try to apply penalties and punishments to the full extent even when not allowed by the law, and people should be wary, not reassured.

Who knows how much it cost the taxpayer to defend himself in court against the IRS, I'm guessing not far from the 350,000$ that were - yes, call it what it is - confiscated.


More info: http://www.taxlitigator.com/main/ima...AR_Penalty.pdf

A series of small, related transfers could be assimilated to one large transfer;

What is worse it could indicate that you are trying to hide something by making transfers under the reporting limit. It could indicate intent to avoid declarations or taxes.

Do not do this or if you already have I would recommend you declare it.

You are allowed to take your money out. Just do it in a straightforward way and do the required reporting.

Look into the documents for bank transfers, and don't try to do it by making one 9,000$ transfer every week for 50 weeks...

I think if the transfer is to your own account (same account holder name on both sides) the reporting is simplified.

Ladyhawk, we've always been asked about the source of any money when we've transferred it into the country from abroad. I assume this is to make sure it is drug money or some other such ill-gotten gains. We bank with BNS. I don't think there is any problem with what you are doing on the Canadian end, but I just wanted to let you know you may need to provide something in writing to your bank.