I moved to canada about 30 years ago and had no idea I ws to file US returns. I did file tax returns for about 10 years in the US before moving to canada, and I have been receiving a very small pension ($200/month) from a US university every since (which I reported here). I was looking forward to collecting social security in three years (I am 62), although now I am wondering if I should renounce my US citizenship (would this make social security out of the question? Can I even renounce my citizenship without being required to deal with this tax issue)).
I just read aout the august 31 deadling in the financial post and was extremely concerned. I have so many questions. I went to see a lawyer and also talked to my account and they both strongly recommended paying the 55 FINE. The problem is that would cost me a great deal of money (six figures), and since I am retired I cannot recover from it.
i have been reading the dual cizenship posts and I'm having a hard time distilling what quiet discosre is and when one would use it. When one should go through the normal OVDI process. I do have about 1/2 of my assets in an RRSP.
I must admit that I am furious that this fine is in place, given I have paid my taxes diligently every year in canada and I am confident no tax is due in the US. If I do nothing and they come after me, what can they do to me, since I live in Canada. Can they attach my assets without their being any fraud on my part?
when there is a history in the US
Moderator: Mark T Serbinski CA CPA
http://www.irs.gov/newsroom/article/0,, ... ?portlet=7
“WASHINGTON — U.S. taxpayers hiding income in undisclosed offshore accounts are running out of time to take advantage of a soon-to-expire opportunity to come forward and get their taxes current with the Internal Revenue Service.â€
Does this apply to you ? Certainly not.. You live offshore, and you keep the money where you live. Not like immgrants here in US if they keep money at home. Or some rich Americans (also US residents) who keep money in offshore banks to avoid pay high tax rate here.
If IRS' goal with OVDI is targeting to those who hide money, then they should treat someone like you differently which they do -- that is 5%. Even 5% on total assents is a lot money..
If you ask CPA/lawyers -- they will have to tell you join OVDI --because they want to make sure you do not get into trouble later -- OVDI is one time to make it clean.
So far, all the prosecution on offshore accounts are those with a lot money plus they use entity -- to cover up..
I do not see you have that risk if you do it quiet. It will be really bad PR for IRS to go after someone like you who makes innocent (non wilful act) mistakes.
The only problem is that the civil penalty on FBAR may cost a lot money -- and IRS has the law on their side. That is uncertain risk you may have to face..
“WASHINGTON — U.S. taxpayers hiding income in undisclosed offshore accounts are running out of time to take advantage of a soon-to-expire opportunity to come forward and get their taxes current with the Internal Revenue Service.â€
Does this apply to you ? Certainly not.. You live offshore, and you keep the money where you live. Not like immgrants here in US if they keep money at home. Or some rich Americans (also US residents) who keep money in offshore banks to avoid pay high tax rate here.
If IRS' goal with OVDI is targeting to those who hide money, then they should treat someone like you differently which they do -- that is 5%. Even 5% on total assents is a lot money..
If you ask CPA/lawyers -- they will have to tell you join OVDI --because they want to make sure you do not get into trouble later -- OVDI is one time to make it clean.
So far, all the prosecution on offshore accounts are those with a lot money plus they use entity -- to cover up..
I do not see you have that risk if you do it quiet. It will be really bad PR for IRS to go after someone like you who makes innocent (non wilful act) mistakes.
The only problem is that the civil penalty on FBAR may cost a lot money -- and IRS has the law on their side. That is uncertain risk you may have to face..
[quote="tsanaha"]
If IRS' goal with OVDI is targeting to those who hide money, then they should treat someone like you differently which they do -- that is 5%. Even 5% on total assents is a lot money..[/quote]
Correct me if I'm wrong (please do - I want to understand this clearly) but the original poster should only* be liable for 5% of his [b]financial [/b]assets under FAQ 52(3):
*only!
"For these taxpayers only, the offshore penalty will not apply to non-financial assets, such as real property, business interests, or artworks, purchased with funds for which the taxpayer can establish that all applicable taxes have been paid, either in the U.S. or in the country of residence."
If IRS' goal with OVDI is targeting to those who hide money, then they should treat someone like you differently which they do -- that is 5%. Even 5% on total assents is a lot money..[/quote]
Correct me if I'm wrong (please do - I want to understand this clearly) but the original poster should only* be liable for 5% of his [b]financial [/b]assets under FAQ 52(3):
*only!
"For these taxpayers only, the offshore penalty will not apply to non-financial assets, such as real property, business interests, or artworks, purchased with funds for which the taxpayer can establish that all applicable taxes have been paid, either in the U.S. or in the country of residence."
because he is expat US citizen whose income from US is less than 10K/year plus he has paid all the local(canada) tax.
See OVDI FAQ 52/3
Taxpayers who are foreign residents and who meet all three of the following conditions for all of the years of their voluntary disclosure: (a) taxpayer resides in a foreign country; (b) taxpayer has made a good faith showing that he or she has timely complied with all tax reporting and payment requirements in the country of residency; and (c) taxpayer has $10,000 or less of U.S. source income each year. For these taxpayers only, the offshore penalty will not apply to non-financial assets, such as real property, business interests, or artworks, purchased with funds for which the taxpayer can establish that all applicable taxes have been paid, either in the U.S. or in the country of residence. This exception only applies if the income tax returns filed with the foreign tax authority included the offshore-related taxable income that was not reported on the U.S. tax return.
See OVDI FAQ 52/3
Taxpayers who are foreign residents and who meet all three of the following conditions for all of the years of their voluntary disclosure: (a) taxpayer resides in a foreign country; (b) taxpayer has made a good faith showing that he or she has timely complied with all tax reporting and payment requirements in the country of residency; and (c) taxpayer has $10,000 or less of U.S. source income each year. For these taxpayers only, the offshore penalty will not apply to non-financial assets, such as real property, business interests, or artworks, purchased with funds for which the taxpayer can establish that all applicable taxes have been paid, either in the U.S. or in the country of residence. This exception only applies if the income tax returns filed with the foreign tax authority included the offshore-related taxable income that was not reported on the U.S. tax return.
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gerrymeyers
- Posts: 4
- Joined: Tue Aug 23, 2011 6:09 pm
I have never taken any of the funds out of my rrsp, so it is a comfort to know that can be protected from fine.
I appreciate very much your comments and advise. it sounds like the safest way to go is to pay the 5% fine, as i don't want the stress of an unknown or unpredictable outcome that could more seriously jeopardize things for my wife as well as myself.
i still wonder, though, what they could do to me if I do nothing. Can they attach assets? Put me in jail.
Finally, it is too late for me to meet the august 31 deadline. do you know if there will be future provisions, ie next year? The lawyer I spoke to said that probably nothing would happen until at least 2014, when all Canadian banks will give us forms to declare whether we are US citizens. So what routes will we have between august 31 and 2014 to come forward and comply?
I appreciate very much your comments and advise. it sounds like the safest way to go is to pay the 5% fine, as i don't want the stress of an unknown or unpredictable outcome that could more seriously jeopardize things for my wife as well as myself.
i still wonder, though, what they could do to me if I do nothing. Can they attach assets? Put me in jail.
Finally, it is too late for me to meet the august 31 deadline. do you know if there will be future provisions, ie next year? The lawyer I spoke to said that probably nothing would happen until at least 2014, when all Canadian banks will give us forms to declare whether we are US citizens. So what routes will we have between august 31 and 2014 to come forward and comply?
gerry,
you can ask for extension if you are not ready for the whole package to be sent in by Aug. 31.
it is unlikely IRS will have another this kind program. I don't see the risk jail term or even taking away your assets in Canada. CRA can only collect tax due to IRS under the current treaty, but not to impose any penalty (FBAR related).
there are lot folks like you in Canada, so you are not alone. If I were you, I would just try to have this clean now -- so you can sleep well..
you can ask for extension if you are not ready for the whole package to be sent in by Aug. 31.
it is unlikely IRS will have another this kind program. I don't see the risk jail term or even taking away your assets in Canada. CRA can only collect tax due to IRS under the current treaty, but not to impose any penalty (FBAR related).
there are lot folks like you in Canada, so you are not alone. If I were you, I would just try to have this clean now -- so you can sleep well..
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gerrymeyers
- Posts: 4
- Joined: Tue Aug 23, 2011 6:09 pm
I did not mention that I was born in canada....does that make a diffrence? Someone told me that if I ws born in canada they can't come after me (although i might not be able to return to the US).
I was also told that if I just file three years of tax returns (plus FBARs?), that I would probably be left alone with no fine. is that right?
I was also told that if I just file three years of tax returns (plus FBARs?), that I would probably be left alone with no fine. is that right?
gerry,
i do not know (do not think ) birth place matters as far as IRS is concerned -- they even use US person when they apply tax and FBAR law.
even if you just do it quiet, you may have to do 6 years -- because FBAR's statute limitation is 6 years.
it would be like a joke if this were years ago -- nobody paid attention to FBAR, but now it is hard to say --- IRS can apply that law --even to those who do not owe tax (FBAR is not in tax code), OVDI offers no penalty for those who has report offshore account income and pay tax.. but outside OVDI, IRS can still impose penalty just for FBAR violation.
It is your call, and since you are in Canada, it is a bit far reach for IRS to get you.
i do not know (do not think ) birth place matters as far as IRS is concerned -- they even use US person when they apply tax and FBAR law.
even if you just do it quiet, you may have to do 6 years -- because FBAR's statute limitation is 6 years.
it would be like a joke if this were years ago -- nobody paid attention to FBAR, but now it is hard to say --- IRS can apply that law --even to those who do not owe tax (FBAR is not in tax code), OVDI offers no penalty for those who has report offshore account income and pay tax.. but outside OVDI, IRS can still impose penalty just for FBAR violation.
It is your call, and since you are in Canada, it is a bit far reach for IRS to get you.