I am a Cdn Citizen, my Wife is Dual US-Cda and we are both resident in Canada. My wifes income is negligible (<$1k last year). Two questions:
1) we have a number of joint accounts (though I am rapidly closing them). Under CRA attribution rules i have to pay tax on 100% of the income in these accounts since I earned the money deposited into them. Can I use this fact on my wife's US filings or is she deemed to be the owner of more than 0% (one advisor suggested 50%, in which case we are going to be double taxed on half the income?). Similarly it seems if I follow the instructions on the new 8938 form she must declare all the income from the joint account?
2) we have an RESP for my son in both our names. What percent of this account if my wife considered to own if I made all the contributions? If I close this account and open one under just my name, does my wife still have trust reporting requirements?
Ownership and reporting of Joint Accts/RESP ?
Moderator: Mark T Serbinski CA CPA
For foreign reporting purposes, it is not the attribuition of income, but the access to the account that is primary. Thus any joint account is to be reported
2. Again, it is any ownership of the account. You should have already made the RESP yours, to avoid 3520 years ago. Time to do this now.
2. Again, it is any ownership of the account. You should have already made the RESP yours, to avoid 3520 years ago. Time to do this now.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
sorry for the repetition, just need a bit more clarification please.
for question 1, I understand we have to report the account on the FBAR (which we have already done), how much of the income do I say belongs to my wife? 0%, 50% or 100% (these seem to be the three logical choices?) It seems by your answer you are advocating 50%?
For question 2, we opened the RESP for our baby in 2010 a few weeks before we read an article that said dual US citizens had onerous reporting requirements. As it turns out RESPs with GICs in them are not easy to close or transfer. I assume by your answer if the RESP is in my name my wife does not have reporting requirements? I read a BDO article that advocated the grandparents opening it rather than the non-US spouse. There is no more detail but I had inferred from the omission that somehow having just me open the RESP did not remove the reporting requirement?
http://www.bdo.ca/library/publications/ ... canada.pdf
for question 1, I understand we have to report the account on the FBAR (which we have already done), how much of the income do I say belongs to my wife? 0%, 50% or 100% (these seem to be the three logical choices?) It seems by your answer you are advocating 50%?
For question 2, we opened the RESP for our baby in 2010 a few weeks before we read an article that said dual US citizens had onerous reporting requirements. As it turns out RESPs with GICs in them are not easy to close or transfer. I assume by your answer if the RESP is in my name my wife does not have reporting requirements? I read a BDO article that advocated the grandparents opening it rather than the non-US spouse. There is no more detail but I had inferred from the omission that somehow having just me open the RESP did not remove the reporting requirement?
http://www.bdo.ca/library/publications/ ... canada.pdf
The reason it was suggested that grandparents open the account, is that it is almost always advantageous (from a tax point of view) for the US citizen and theitr non citizen spouse to file jointly, and it it sometime required to get some benefit.
Also, US citizens have a tendabncy to move to US at some point, making their spouse fully taxablre in US, unlike most grnads. So, it makes sense to remove the non-US spouse from any involvement wi the RESP.
But, if you the non-citizen own the RESP not jointly, then the US spouse has no reporting obligation, nor any tax
As to how much each should report, I think you should prepare her US taxes first, and you will see that it is highly unlikley that your wife will owe any taxes on her Cdn-sourced income, so the splitting is moot. But 50% would be my approach.
Your other solution is to file jointly, of course, wherby the split does not matter.
Also, US citizens have a tendabncy to move to US at some point, making their spouse fully taxablre in US, unlike most grnads. So, it makes sense to remove the non-US spouse from any involvement wi the RESP.
But, if you the non-citizen own the RESP not jointly, then the US spouse has no reporting obligation, nor any tax
As to how much each should report, I think you should prepare her US taxes first, and you will see that it is highly unlikley that your wife will owe any taxes on her Cdn-sourced income, so the splitting is moot. But 50% would be my approach.
Your other solution is to file jointly, of course, wherby the split does not matter.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
[i]But, if you the non-citizen own the RESP not jointly, then the US spouse has no reporting obligation, nor any tax [/i]
My non-US wife opened a RESP for our infant child this year. How will this get reported in 20 years when our child starts making withdrawals.
Won't the IRS ask where this extra, non salary money came from?
My non-US wife opened a RESP for our infant child this year. How will this get reported in 20 years when our child starts making withdrawals.
Won't the IRS ask where this extra, non salary money came from?
I too am wondering about this and I recently read this:
[b]Contributing Parent is Not a U.S. Citizen or Resident but Beneficiary is a U.S. Citizen or Resident[/b]
[i]The income earned within the plan is not taxable to any party when earned. However, if the child is a U.S. citizen or resident, the accumulated income is taxable to the child upon withdrawal of the funds. A special prescribed tax and interest charge is calculated based on the accumulated income distributed from the plan, which achieves roughtly the same result as if the income were taxed as it was earned over the life of the RESP[/i]
at http://www.bdo.ca/library/publications/ ... 05-03f.cfm
This implies to me that US RESP beneficiaries are taxed in a manner that eliminates the benefit of tax deferred compounding. It also doesn't sound like the income is taxed as 'ordinary income' by the U.S as so there will definitely be a tax payable to US even if the beneficiary has no other income.
Does anyone here know if this statement is accurate and how this calculation is really made? Seems to me like this may overshadow the benefits of the CESG to the point where the RESP simply isn't worth the headaches for US subscribers OR beneficiaries.
[b]Contributing Parent is Not a U.S. Citizen or Resident but Beneficiary is a U.S. Citizen or Resident[/b]
[i]The income earned within the plan is not taxable to any party when earned. However, if the child is a U.S. citizen or resident, the accumulated income is taxable to the child upon withdrawal of the funds. A special prescribed tax and interest charge is calculated based on the accumulated income distributed from the plan, which achieves roughtly the same result as if the income were taxed as it was earned over the life of the RESP[/i]
at http://www.bdo.ca/library/publications/ ... 05-03f.cfm
This implies to me that US RESP beneficiaries are taxed in a manner that eliminates the benefit of tax deferred compounding. It also doesn't sound like the income is taxed as 'ordinary income' by the U.S as so there will definitely be a tax payable to US even if the beneficiary has no other income.
Does anyone here know if this statement is accurate and how this calculation is really made? Seems to me like this may overshadow the benefits of the CESG to the point where the RESP simply isn't worth the headaches for US subscribers OR beneficiaries.
"This implies to me that US RESP beneficiaries are taxed in a manner that eliminates the benefit of tax deferred compounding. It also doesn't sound like the income is taxed as 'ordinary income' by the U.S as so there will definitely be a tax payable to US even if the beneficiary has no other income. "
Except the beneficiary will be able to deduct education expenses associated with the withdrawal of funds from the RESP.
Except the beneficiary will be able to deduct education expenses associated with the withdrawal of funds from the RESP.
Maybe but isn't the tuition deduction applied to income?
What I took away from reading this is that the withdrawal isn't taxed as income. It's some sort of "flat " tax payable calculation.
If I knew it was taken as ordinary income in US, I wouldn't even worry about it. My kids (US beneficiaries) wouldn't have enough to owe any US tax in the first place just as they would in Canada.
What I took away from reading this is that the withdrawal isn't taxed as income. It's some sort of "flat " tax payable calculation.
If I knew it was taken as ordinary income in US, I wouldn't even worry about it. My kids (US beneficiaries) wouldn't have enough to owe any US tax in the first place just as they would in Canada.