Expat Forum For People Moving Overseas And Living Abroad banner

1 - 2 of 2 Posts

·
Registered
Joined
·
2 Posts
Discussion Starter · #1 ·
I have a few questions about IRS Form 3520A, which I am filling out for my wife (US citizen, living in Canada). We need Form 3520A for a Tax Free Savings Account that is set up as a trust. They don't file 3520A, so we have to.

Questions:

1. Part III, line 17 "Contributions to trust corpus": I think this means any contributions that she made to the account in that tax year. Is that correct? If a contribution was made part way through 2014, is it entered in column (b) "Beginning of Tax Year", or column (d) "End of Tax Year"?

2. Part III - the account was opened in 2014, so there was zero balance on 01/01/2014. Does that imply that all entries in column (b) are blank?

3. Is the balance sheet in Part III a classical double-entry system, where the assets and liabilities must equal each other? Or, are they using the words "assets" and "liabilities" in the sense that a man on the street would, in which case the Assets and Net Worth would be pretty much the same as the market value from the end of 2014 statement.

4. Foreign Grantor Trust Owner Statement (page 3 of the form), line 4, Trustee: is this the same as the Name of Foreign Trust on Line 1a of that page? Or, is it blank, because there is no U.S. agent in line 3.

5. Foreign Grantor Trust Owner Statement (page 3 of the form), line 7 "Attach an explanation of the facts and law (including the section of the Internal Revenue Code) that establishes that the foreign trust (or portion of the foreign trust) is treated for U.S. tax principles as owned by the U.S. person". What would I write as a statement to cover her situation? She is a US citizen, resident in Canada, who has an account with a trust company. The account holds various mutual funds.

Thanks,

Kevin
 

·
Registered
Joined
·
33 Posts
Questions:

1. Part III, line 17 "Contributions to trust corpus": I think this means any contributions that she made to the account in that tax year. Is that correct? If a contribution was made part way through 2014, is it entered in column (b) "Beginning of Tax Year", or column (d) "End of Tax Year"?

This section is the Balance Sheet, and line 17 is in the equity section. What they want in 17b is the net contributions (deposits less withdrawals) from the date the account was opened until December 31, 2013. In 17d they want the net contributions from date of opening to December 31, 2014. The person analyzing this line will do the math and learn what your net deposits were for calendar year 2014.



2. Part III - the account was opened in 2014, so there was zero balance on 01/01/2014. Does that imply that all entries in column (b) are blank?

Correct, and disregard my previous statement about 17b in Q1 above. But that will come in handy for next year, so be sure to understand the mechanics of this.



3. Is the balance sheet in Part III a classical double-entry system, where the assets and liabilities must equal each other? Or, are they using the words "assets" and "liabilities" in the sense that a man on the street would, in which case the Assets and Net Worth would be pretty much the same as the market value from the end of 2014 statement.

This is the traditional Balance Sheet. The correct formula is assets less liabilities equals net worth.



4. Foreign Grantor Trust Owner Statement (page 3 of the form), line 4, Trustee: is this the same as the Name of Foreign Trust on Line 1a of that page? Or, is it blank, because there is no U.S. agent in line 3.

A trust has a person or a company in control of it, known as the trustee. Unless you are able to get this information, leave it blank.



5. Foreign Grantor Trust Owner Statement (page 3 of the form), line 7 "Attach an explanation of the facts and law (including the section of the Internal Revenue Code) that establishes that the foreign trust (or portion of the foreign trust) is treated for U.S. tax principles as owned by the U.S. person". What would I write as a statement to cover her situation? She is a US citizen, resident in Canada, who has an account with a trust company. The account holds various mutual funds.

Leave this blank. As the account holder, you are not expected to know this information. form 3520-A is meant to be completed by the trustee of the trust, not by the account holder, so it will be asking for information that you are not privy to.


Please remember to also complete Form 3520 which is the form for the U.S. Person account owner, as opposed to the trustee report as I explained above. You also need to include copies of the statements used to prepare the reports.

I hope this helps.


Cheers
Marilyn
 
1 - 2 of 2 Posts
Top