dual US-Can citizens in Canada - annual temperature check

Go Back   Expat Forum For People Moving Overseas And Living Abroad > Expat Forum General and International > Expat Tax

Expat Tax This forum is for tax related queries and discussions for all expats.

Like Tree8Likes

dual US-Can citizens in Canada - annual temperature check


Reply
 
Subscribe to this Thread Thread Tools
  #1 (permalink)  
Old 14th April 2014, 09:55 PM
Member
 
Join Date: Jul 2011
Location: Canada
Posts: 2,406
Rep Power: 0
Nononymous is on a distinguished road
446 likes received
10 likes given

Users Flag! Originally from canada. Users Flag! Expat in canada.
Default dual US-Can citizens in Canada - annual temperature check

As another tax seasons passes by without my doing anything to become compliant with US filing obligations, it's possibly a good time to take a temperature check of Canadian residents.

Assuming it isn't delayed by court challenges of course, FATCA is coming on 1 July (Canada Day - how ironic) but to me it seems pretty toothless - most registered tax-protected savings vehicles are excluded, plus the limits for triggering proactive collecting of citizenship information for existing accounts are, I believe, fairly high. (In other words, I'm not expecting any calls from my bank.)

On the one hand, given the streamlined program and apparent reluctance of the IRS/Treasury to punish ordinary folks for coming in from the cold, which may not last forever, it's not a bad time to begin compliance.

On the other hand, FATCA is not likely to rat too many of us out, and as we know, the US government cannot assess penalties against dual citizens living in Canada (US assets are another matter of course). So I don't see huge incentives to become compliant if it means a lifetime's paperwork, plus the possibility of paying money in edge-case scenarios.

So in honour of tomorrow being 15 April, what are the Canadian duals doing this year: becoming compliant, planning to renounce, or staying off the radar?
Vangrrl likes this.

Reply With Quote Quick reply to this message
  #2 (permalink)  
Old 15th April 2014, 03:14 AM
Member
 
Join Date: Apr 2012
Location: canada
Posts: 697
Rep Power: 0
maz57 is on a distinguished road
139 likes received
7 likes given

Users Flag! Originally from usa. Users Flag! Expat in canada.
Default

Well I never was a dual, having unilaterally declared my US citizenship terminated as of the day I became a Canadian. The USG might beg to differ with me as I haven't bothered to go through the rigamarole of trying to get a CLN because I couldn't stand suffering all the obnoxious security paranoia at a consulate. Besides, I didn't believe I needed to ask for their permission. My US passport sits unused in a drawer where it will expire. Some day it will be a rare museum item. Somewhere in the vast US Code it actually says getting a CLN is not required.

Naturally I not only quit filing 1040s, 8938s, and FBARs, I skipped the 8854 business as well. So from the perspective of the IRS am I a "covered expatriate" or did I simply drop into a black hole? Who knows? Who cares? Trying to get a CLN might actually increase my risk.

So I'm feeling pretty good about things. CBT has been called many things but after agonizing over this whole mess for a couple of years I've come to realize above all else it is unenforceable. I have taken the trouble to make sure accounts are under 50k, etc., etc. On a hunch I went and checked the records for my online trading account and discovered that when I opened the account decades ago I lied and said I was a Canadian. I remember thinking at the time it would just be simpler that way. Boy was I ever right! For those who might take issue with this small dishonesty, I point out that it has now become a true statement! Sometimes when governments cause problems you have to take executive action.

The ironies of this whole situation are many. The CRA admitted today the personal information of approximately 900 Canadian taxpayers had been breached by the Heartbleed bug. They are wringing their hands over that, yet come July 1st they plan to leak the information of a million Canadians to a foreign government. All because that other government said so. They must have picked July 1st as a special insult to Canada.

So to answer your question Nononymous, for me at least, I'd describe the temperature as seasonally cool. I'd summarize my strategy as; relinquish, reject, refuse, and rejoice.

P.S. Memo to the CRA: your check is in the mail.
Nononymous likes this.

Reply With Quote Quick reply to this message
  #3 (permalink)  
Old 15th April 2014, 03:34 AM
New Member
 
Join Date: Apr 2014
Location: Canada
Posts: 13
Rep Power: 0
DonMurphyCanada is on a distinguished road
3 likes given

Users Flag! Originally from usa. Users Flag! Expat in canada.
Default

For me (well fir my wife actually - she is the USC living in Canada) we just found out about all this. She pure ally has just started earning income the last two years as she's been raising our kids at home. But we backfiled 1040s, 3520s 3520as this year and fully intend on filing the FBARs for the last 6 soon too. Yes it was a pain but to the best of my ability it was done right.

Later thus year we fully instead to liquidate the blasted resp that caused all this work in the first place. Then it's not so bad filing a 1040 every year. We will just watch what we do from a financial perspective moving forward. I don't mind final lying FBAR it's very simple.

Don

Reply With Quote Quick reply to this message
Sponsored Links
Advertisement
 
  #4 (permalink)  
Old 15th April 2014, 03:45 AM
Banned
 
Join Date: Dec 2012
Location: Singapore
Posts: 6,189
Rep Power: 0
BBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to behold
602 likes received
27 likes given

Users Flag! Originally from usa. Users Flag! Expat in singapore.
Default

Quote:
Originally Posted by maz57 View Post
They are wringing their hands over that, yet come July 1st they plan to leak the information of a million Canadians to a foreign government.
No, it's an agreed bidirectional exchange of data, not a leak.

The most severe consequences of previously commenced data exchanges between the U.S. and Canadian governments have been related to Canada's turning away many thousands of Americans from entering Canada. Canada doesn't routinely admit Americans with DUIs, for example. Canadian border officers only know that an American has a DUI because Canada gets huge dumps of sensitive criminal (and "criminal") records from the other side of the border.

For perspective, lots of Americans are quite angry that their government is sharing criminal history data with a foreign government, but that started many years ago. The Canadian government loves receiving those data. But if the Canadian government wants to curtail data exchanges with foreign governments, maybe it ought to start with the records I just described.

Reply With Quote Quick reply to this message
  #5 (permalink)  
Old 15th April 2014, 03:45 AM
Member
 
Join Date: Jul 2011
Location: Canada
Posts: 2,406
Rep Power: 0
Nononymous is on a distinguished road
446 likes received
10 likes given

Users Flag! Originally from canada. Users Flag! Expat in canada.
Default

Quote:
Originally Posted by DonMurphyCanada View Post
Later thus year we fully instead to liquidate the blasted resp that caused all this work in the first place. Then it's not so bad filing a 1040 every year. We will just watch what we do from a financial perspective moving forward. I don't mind final lying FBAR it's very simple.
Could you not have just taken her name off the RESP and ignored all the backfiling?

And if your kids have US citizenship and are the beneficiaries of it, aren't they obliged to report the RESP at some point? (Which I guess is the point of liquidating it.)


Last edited by Nononymous; 15th April 2014 at 03:55 AM.
Reply With Quote Quick reply to this message
  #6 (permalink)  
Old 15th April 2014, 03:54 AM
Member
 
Join Date: Jul 2011
Location: Canada
Posts: 2,406
Rep Power: 0
Nononymous is on a distinguished road
446 likes received
10 likes given

Users Flag! Originally from canada. Users Flag! Expat in canada.
Default

Quote:
Originally Posted by BBCWatcher View Post
No, it's an agreed bidirectional exchange of data, not a leak.

The most severe consequences of previously commenced data exchanges between the U.S. and Canadian governments have been related to Canada's turning away many thousands of Americans from entering Canada...
That one cuts both ways. There have been some truly asinine episodes on both sides of the border crossing.

A particularly good example occurred at the airport here a few years back, where someone heading through the US customs pre-clearance was observed to have a flake of something that looked suspiciously like oregano stuck to the bill of his baseball cap; customs agents marched him across the terminal (definitely Canadian soil there) to an ATM and encouraged him to withdraw $500 to pay a fine, cash on the nail, to avoid being barred entry for the next five years. Nice one.

But we're way off topic. I'm just trying to get a sense of who's complying and who's not.

Reply With Quote Quick reply to this message
  #7 (permalink)  
Old 15th April 2014, 03:56 AM
New Member
 
Join Date: Apr 2014
Location: Canada
Posts: 13
Rep Power: 0
DonMurphyCanada is on a distinguished road
3 likes given

Users Flag! Originally from usa. Users Flag! Expat in canada.
Default

I am not sure how to take her off. It's stupid really we could have just taken it out in my name if we knew.

As for my son reporting the distribution, you are correct. I'm still working on that. It is my understanding that because I filed the 3520 3520as correctly the income was already reported and claimed correctly. He will need to file 3520 and 350a to disclose the distribution but won't pay tax on it is my understanding. If anyone has any guidance here on this it would be greatly appreciated.

Reply With Quote Quick reply to this message
  #8 (permalink)  
Old 15th April 2014, 04:17 AM
Banned
 
Join Date: Dec 2012
Location: Singapore
Posts: 6,189
Rep Power: 0
BBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to beholdBBCWatcher is a splendid one to behold
602 likes received
27 likes given

Users Flag! Originally from usa. Users Flag! Expat in singapore.
Default

Ideally the data exchanges start to lead to some better, more consistent results for residents on both sides of the border. As it has for social security -- the U.S.-Canada Social Security Treaty works rather well, and the systems work together. In particular, it'd be nice if the U.S. and Canada could agree on a Cross Border Retirement Account (CBRA) that unifies and simplifies the complex retirement savings programs on both sides of the border and extends tax benefits across North America -- and eventually beyond. It's not possible to implement a CBRA (or anything like it) without data exchanges, so we're moving a step closer.

U.S. Individual Retirement Accounts (IRAs) and 401(k) are occasionally tax-protected via tax treaties, but I'm talking about something simpler. A combined, single program, ideally, or at least something closer to how social security operates.

Reply With Quote Quick reply to this message
  #9 (permalink)  
Old 15th April 2014, 04:41 AM
Member
 
Join Date: Aug 2011
Location: Vancouver
Posts: 186
Rep Power: 176
Vangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant futureVangrrl has a brilliant future
52 likes received
24 likes given

Users Flag! Originally from usa. Users Flag! Expat in canada.
Default

I also just started checking this forum again in my annual "lets see what's new in expat taxes" event.

So I think I'm compliant. I showed up on this forum 3 years ago convinced the IRS was going to hunt me down and levy enormous fines. Here we are, 3 years later, I'm not really concerned about it at all. I have filed tax returns and FBARS from 2007 onwards (quiet disclosure of the first 3, the last 3 on time). I've never owed anything in tax, and likely never will. I've never filed any 3520's or other "foreign trust" forms. I had an RESP and we did move it to my husband's name (I can't remember the details of how it was done). I'm a signatory on my husband's corporation accounts and that's the primary concern I have with FATCA - I don't know how those accounts are going to be reported. Will FATCA reporting involve us receiving a T5 type statement from the bank? Some sort of summary: "The following accounts have been disclosed to the IRS..."? On the one hand, I'm concerned about the zealous over-reporting of information by our banks but on the other hand, a massive dump of data on the understaffed and underfunded IRS's lap is going to bury us all even further.

We cleaned up some accounts that we had, took my name of some joint accounts we had with my mother-in-law (I didn't really need to be there anyways) and opened an account for my husband that we can use for any unusual high-balance events that are none of the IRS's business.

Before I saw a post about filing free tax returns using TaxAct, I was seriously considering not filing this year because I don't feel like paying $20 for TurboTax. I have 6 consecutive years on file that are virtually identical where I haven't owed any tax. I feel like filing every other year would continue to establish my pattern of non-owing.

I'm one of the few people who had been asked on a few occasions about why I am not travelling on a US passport by Border guards. For that reason, I do keep a valid US passport and that's the primary reason I am maintain some form of compliance. I live on the border and we travel to the US often.

I'm not happy about being in compliance. The whole system is ridiculous. But I'm more pragmatic than I am rebellious. It is beneficial to my family and I that I maintain US Citizenship and easy access to the US. If circumstances change, then I'll consider renouncing.


Last edited by Vangrrl; 15th April 2014 at 04:55 AM.
Reply With Quote Quick reply to this message
  #10 (permalink)  
Old 15th April 2014, 07:09 AM
Bevdeforges's Avatar
Super Moderator
 
Join Date: Nov 2007
Location: deepest, darkest Essonne
Posts: 45,775
Rep Power: 23250
Bevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond repute
9520 likes received
1258 likes given

Users Flag! Originally from usa. Users Flag! Expat in france.
Default

From everything that has been said and posted here, it does sound like Canada is under some sort of intensified scrutiny when it comes to US taxation matters. I suppose the same is true for Switzerland, too, in the wake of the big tax "busts" there.

OTOH, we get little if any hype about this stuff in France. I know several "accidental Americans" (both those with one US parent and those born in the US while their parents happened to be there) who don't bother filing at all. One of the accidentals was detained on entry to the US when someone noticed her US birthplace on her French passport while she was traveling with her mother. But basically, I think the result was that she's far less likely to visit the US again - with or without her mother.

Enforcement may change a bit with all this FATCA information floating around, but in general I suspect the IRS will continue to focus their enforcement efforts on cases where it's clear there are hefty recoveries of "evaded taxes" and leave the little people alone (simply because they lower the agent's average collection rate).
Cheers,
Bev
Zendo likes this.

Reply With Quote Quick reply to this message
Reply


Quick Reply
Message:
Options

Register Now

In order to be able to post messages on the Expat Forum For People Moving Overseas And Living Abroad forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.
User Name:
Password
Please enter a password for your user account. Note that passwords are case-sensitive.
Password:
Confirm Password:
Email Address
Please enter a valid email address for yourself.
Email Address:
Location
Where you live
Expat From Country
Please select the country you originate from. This will appear as a flag when you make posts on the site.
Expat To Country
Please select the country you have either moved to or want to relocate to. This will be presented on the site when you make posts.

Log-in


Thread Tools

Posting Rules
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Dual Citizenship for US Citizens mikeshane Philippines Expat Forum 3 20th September 2013 08:23 PM
US taxes for dual citizens - consequences ? Nononymous Expat Tax 1162 12th January 2012 03:28 AM
Work for Dual Citizens? aimpagli Britain Expat Forum for Expats Living in the UK 3 18th August 2011 09:38 AM
UK dual citizens about to be screwed by UK government. Fatbrit General Expat Discussions 2 21st April 2009 09:00 PM

FORUM PARTNERS

ExpatForum.com is owned and operated by VerticalScope Inc.

Retiring Overseas Guides | Moving Overseas Guides | Cost of Living | Health Care Guides


All times are GMT. The time now is 03:12 AM.


Powered by vBulletin®
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
Search Engine Friendly URLs by vBSEO
vBulletin Security provided by vBSecurity v2.2.2 (Pro) - vBulletin Mods & Addons Copyright © 2019 DragonByte Technologies Ltd.