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Discussion Starter · #1 ·
Hello,

Every year I file a 1040, 2555-EZ, and FBAR. After sending in my 2011 forms, I decided that I do not want to continue doing this for the next 50 years (or however long I live).

I have been living in Canada since I was 8 (1990) and have no plans on moving to the United States, so I have decided that I would like to renounce my U.S. citizenship.

After researching the renunciation process I started looking more carefully at the FBAR and realized I have made mistakes in my past filings.

First, I didn't convert from Canadian dollars to American dollars. I don't this is too big of a problem, as exchange rates should mean I over-reported.

Also, I started my main checking account in junior high as a joint account with my dad. I never got around to removing him from the account and as he never uses it during past filing I forgot it was joint so I listed it in Section II instead of Section III. I don't think this should be a huge deal either as the account has been reported, just in the wrong section.

Also, about 4 years ago I joined the company pension plan. It is an RPP adminstered by Manulife where they deduct from each pay check. I didn't realize I should be reporting this plan on the FBAR. It is currently valued at about 13000.

Also, about 4 years ago I transferred 5000 from my checking account to a Questtrade account in order to buy shares in Google and Apple. While I don't think I need to report these shares as they are American stock (I will obvious need to report capital gains when I sell them), it never occured to me to include the Questtrade account on my FBAR. It's not like I was trying to hide the money as it came directly from another account which was reported on my FBAR. After buying my shares I had a couple hundred dollars left over which I have left in the account and I didn't think about including it in FBAR filings in subsequent years.

I would like to fix these mistakes by filing amended FBAR forms for the past 5 years with a letter explaining the corrections as I want everything legit tax-wise prior to my renunciation. The mistakes do not result in me owing any more taxes.

However I am worried about incurring FBAR penalties. Do you think it is better to be extra careful with my FBAR forms in the future and wait to renounce until after 5 years of correct reporting or to amend the past 5 years and renounce now. I would like to renounce sooner than later so I can end this pointless paper work.

Any comments or suggestions would be much appreciated.
 

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OK, "over-reporting" your accounts shouldn't be a problem and I'd let that one lie.

Reporting the joint account as a single account also isn't going to draw down any penalties, as long as you reported the interest from the account on your tax return. Again, just let it ride.

I don't know enough about the Canadian pension plan accounts to be certain about where they do or don't go on the FBAR, but for a mere $13,000 I'd just put it on this year's FBAR (if you haven't filed it yet) or next year's when you do file it.

Is Questtrade a US or a Canadian company? If it's a US account, you have nothing to report. FBARs are ONLY for foreign (to the US) investments and accounts. If it's a US company, they are already reporting your holdings to the IRS (and should be sending you a 1099 when there is income to report).

FBARs are simple reports of foreign accounts, not tax filings. As long as you disclose your accounts, I wouldn't worry about minor "errors" or estimations you used to fill them out. The penalties they cite are for failure to disclose, not differences in the balances you report.
Cheers,
Bev
 

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Discussion Starter · #3 ·
Thanks for the reply Bev. Questrade is a Canadian account that I used to buy American equity. So not sure if I should just report the cash balance or include the equity holdings to figure out the maximum amount for a given year. As I haven't sold any shares yet, it doesn't really have income to report as it is just estimated value based on share price at the time of the statement.

My main checking account does not pay me interest. I started a TFSA in 2011 and reported the $60 of interest on my 1040 and added that account to the FBAR. Going forward I will include questrade account and company pension, but since I hope to renounce I'm wondering if I should go back and add these accounts through amended FBAR in case my renunciation makes them audit me or something.
 

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Thanks for the reply Bev. Questrade is a Canadian account that I used to buy American equity. So not sure if I should just report the cash balance or include the equity holdings to figure out the maximum amount for a given year. As I haven't sold any shares yet, it doesn't really have income to report as it is just estimated value based on share price at the time of the statement.

My main checking account does not pay me interest. I started a TFSA in 2011 and reported the $60 of interest on my 1040 and added that account to the FBAR. Going forward I will include questrade account and company pension, but since I hope to renounce I'm wondering if I should go back and add these accounts through amended FBAR in case my renunciation makes them audit me or something.
Personally, I think those are pretty minor adjustments and I wouldn't bother to amend before renouncing. You will find more information on renouncing on a blog called the Isaac Brock Society.
 

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I really wouldn't bother about amending FBARs. Your renunciation application will not trigger an audit. If you have a very high level of earnings or wealth, you might be subject to the "expatriation tax." But the thresholds are pretty high: Expatriation Tax

You've reported all your holdings. Don't "confuse" them with too much detail.
Cheers,
Bev
 
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