Hi everybody, brand new here, I received the link to this forum from the Financial Webring forum and I also posted there.
I have some questions and was wondering if anyone might be able to provide some direction? Here is the scenario:
My wife is a US Citizen in Canada as a permanent resident. She first arrived in Canada under a student visa in July of 2005. Once able, I sponsored her for permanent resident status under the common law class and she became a Canadian PR in May 2007 - she had no income during this time period as she was unable to work here.
Her first employment was in September of 2007, since then we have been filing with the IRS using the 1040 form as well as the 2555-EZ. We are up to date to with regards to those filings and we have been using an account here to prepare those.
Are there other forms that we need to fill out? This is where I am a bit concerned......
We have:
A couple of joint bank accounts, one is a regular savings account and the other is a checking account where our pay checks are deposited and bills are paid from as well as day to day banking.
My wife receives the Canada Child Tax benefit ($100/mth) for our young daughter.
We have some investments: I have a LIRA in my name with my wife as the beneficiary, I have an RRSP in my name with my wife as the beneficiary, we have a spousal RRSP in my wife's name with me as the beneficiary.
In all 3 of these cases the investments are Dynamic Value Balanced Fund (series A, FE).
We do not have any TFSA's or RESP's yet....
What other forms would be required to cover the above in addition to the 1040 and 2555-EZ
I read in this thread about mutual funds and ETF's that may be in my RRSP's - would my RRSP's contain these?
I also read about FPIC's, but I'm not sure if our RRSP's contain those.....
I am just trying to educate myself a little bit before the tax season, I'm hoping that the accountant is also aware!!
Thanks,
FrankFrankd1
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Need some advice for an American in Canada
Moderator: Mark T Serbinski CA CPA
Ok, I have been doing a lot of research today and stressing a great deal....
Let me know if I'm on the right track here:
We have been filing the regular 1040 and 2555-EZ and will continue to do so. we have never missed a year for 1040.
It is the other requirements that we are just finding out about and are concerned with:
As far as the checking account and savings account these need to be shown on FBAR TDF 90-22.1 My wife has been on the accounts since 2006 and they are joint accounts.
Do the RRSP's go on the TDF 90-22.1 as well or do they only go on the 8891? We have had the spousal RRSP since 2008.
Please help!! Thanks!
Let me know if I'm on the right track here:
We have been filing the regular 1040 and 2555-EZ and will continue to do so. we have never missed a year for 1040.
It is the other requirements that we are just finding out about and are concerned with:
As far as the checking account and savings account these need to be shown on FBAR TDF 90-22.1 My wife has been on the accounts since 2006 and they are joint accounts.
Do the RRSP's go on the TDF 90-22.1 as well or do they only go on the 8891? We have had the spousal RRSP since 2008.
Please help!! Thanks!
You need 8891 for each RRSP/LIRA/RRIF that she has a share in.
And she needs to submit scghedule B, in order to answer the questions at the bottom.
Your CPA should be shot for not having filled the FBAR requirements all these years. Ask him to do those for free now, back file 3 years.
As long as she only has RRSP, PFIC etc is not an issue.
So, she should not get a TFSA or RESP. You can do those.
And she needs to submit scghedule B, in order to answer the questions at the bottom.
Your CPA should be shot for not having filled the FBAR requirements all these years. Ask him to do those for free now, back file 3 years.
As long as she only has RRSP, PFIC etc is not an issue.
So, she should not get a TFSA or RESP. You can do those.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thank you nelsona for your response, I appreciate it! Please bear with me as I work through this as I am going to have questions! I will be having a chat with the CPA.....
Questions:
for the 8891 and the RRSP's, we have 3..... 2 are in my name (RRSP, LIRA) but she is the beneficiary and the spousal is in her name with me as the beneficiary. For the ones where she is a beneficiary does that mean she has a share?
Also what is schedule B? is this schedule B from the 1040?
Since we set up the RRSP's in 2008, I would require 8891's for 2008, 09, 10 and current filing year 2011?
For the FBAR, my wife was added to the checking and savings account once she became a PR in 2007. We have 3 accounts that are joint - 2 checking and one savings. Do they need to be included only if the balance was $10,000 on each account or are they included if the combined balances are greater then $10,000? Eg chking 1 at 7000, chking 2 at 6000 and savings 1 at 10,000. total of 23,000.
To back file 3 years I would be looking at 2010, 2009, 2008 in addition to the current 2011?
PFIC is not an issue so no 8621?
Is this something that I can do on my own? I mean I took care of all of the immigration paperwork for her to gain status in Canada and I also did all the paperwork for our daughter in order to have her US citizenship confirmed at the US consulate in Toronto. But I do realize that taxes are a whole ne ball game!
Questions:
for the 8891 and the RRSP's, we have 3..... 2 are in my name (RRSP, LIRA) but she is the beneficiary and the spousal is in her name with me as the beneficiary. For the ones where she is a beneficiary does that mean she has a share?
Also what is schedule B? is this schedule B from the 1040?
Since we set up the RRSP's in 2008, I would require 8891's for 2008, 09, 10 and current filing year 2011?
For the FBAR, my wife was added to the checking and savings account once she became a PR in 2007. We have 3 accounts that are joint - 2 checking and one savings. Do they need to be included only if the balance was $10,000 on each account or are they included if the combined balances are greater then $10,000? Eg chking 1 at 7000, chking 2 at 6000 and savings 1 at 10,000. total of 23,000.
To back file 3 years I would be looking at 2010, 2009, 2008 in addition to the current 2011?
PFIC is not an issue so no 8621?
Is this something that I can do on my own? I mean I took care of all of the immigration paperwork for her to gain status in Canada and I also did all the paperwork for our daughter in order to have her US citizenship confirmed at the US consulate in Toronto. But I do realize that taxes are a whole ne ball game!
Thanks nelsona, understood!
To keep this thread organized and to keep things organized for myself I am going to start off with getting the FBAR requirements and TDF 90-22.1 up to date for the previous couple of years and then from there I will move on to the 8891 for the previous couple of years.
Thanks again for taking the time to answer questions, it is much appreciated!
To keep this thread organized and to keep things organized for myself I am going to start off with getting the FBAR requirements and TDF 90-22.1 up to date for the previous couple of years and then from there I will move on to the 8891 for the previous couple of years.
Thanks again for taking the time to answer questions, it is much appreciated!
Ok,
1. I am ready to get into the TDF 90-22.1, my banks will be providing me with statements from 2007 so I can determine the highest balance for each year. Since my wife became a Canadian PR in 2007 this is when I added her to my accounts to make them joint accounts. I will back file the TDF 90-22.1, for 2007, 2008, 2009, 2010. 2011 will be an on time filing in the coming months. All good right?
2. Because the 2 checking accounts and the savings account are joint I will fill this information out in part III, correct?
3. As far as the 2 RRSP's and 1 LIRA are concerned: one of the RRSP's is in my name with my wife as the beneficiary and the LIRA is also in my name with my wife as the beneficiary. The other RRSP is a SPOUSAL RRSP in my wife's name (with me as the beneficiary) however, I get the tax break from CRA due to my higher income.
Do all of these RRSP's go on my wife's TDF 90-22.1 in part II - information on financial accounts owned separately or are these considered "joint"?
These were established in 2008 so thats as far back as I will go....
4. We have a line of credit that is joint, is this included on the TDF?
5. I have a life insurance policy from my union for which I pay the premium through payroll deduction. My wife is the beneficiary upon my death, does this need to be included?
Once these TDF's are complete, I will fill out and back file the 8891 for the RRSP/LIRA starting with 2008, 09, 10 along with 1040 schedule B part III, 1040X and a copy of private letter ruling.
I will mail everything at the same time to the respective addresses so that things can be cross referenced if need be between the TDF 90-22.1 and 8891's.
Does it sound like I'm on the right track here? Anything that I may have missed?
Thanks.
1. I am ready to get into the TDF 90-22.1, my banks will be providing me with statements from 2007 so I can determine the highest balance for each year. Since my wife became a Canadian PR in 2007 this is when I added her to my accounts to make them joint accounts. I will back file the TDF 90-22.1, for 2007, 2008, 2009, 2010. 2011 will be an on time filing in the coming months. All good right?
2. Because the 2 checking accounts and the savings account are joint I will fill this information out in part III, correct?
3. As far as the 2 RRSP's and 1 LIRA are concerned: one of the RRSP's is in my name with my wife as the beneficiary and the LIRA is also in my name with my wife as the beneficiary. The other RRSP is a SPOUSAL RRSP in my wife's name (with me as the beneficiary) however, I get the tax break from CRA due to my higher income.
Do all of these RRSP's go on my wife's TDF 90-22.1 in part II - information on financial accounts owned separately or are these considered "joint"?
These were established in 2008 so thats as far back as I will go....
4. We have a line of credit that is joint, is this included on the TDF?
5. I have a life insurance policy from my union for which I pay the premium through payroll deduction. My wife is the beneficiary upon my death, does this need to be included?
Once these TDF's are complete, I will fill out and back file the 8891 for the RRSP/LIRA starting with 2008, 09, 10 along with 1040 schedule B part III, 1040X and a copy of private letter ruling.
I will mail everything at the same time to the respective addresses so that things can be cross referenced if need be between the TDF 90-22.1 and 8891's.
Does it sound like I'm on the right track here? Anything that I may have missed?
Thanks.
After spending some more time looking things over I'm confident with the TDF 90-22.1 and what needs to go on it and where.
However, I wanted to clarify in the General instructions where it says a financial account includes an insurance policy with a cash value (such as whole life insurance policy).
My understanding is that this is referring to a life insurance policy that would pay out an annuity or lump sum amount to you after a certain period of time or age, assuming you are still alive then, and until that time or age it's purpose is to pay a death benefit in the event of your death to a beneficiary listed on the policy. This type needs to be reported for FBAR.
The type of policies we have are from our employers. I pay a monthly amount through payroll deduction for a certain amount of insurance and only in the event of my death my wife would get the payout. I would assume these types are not reportable until there is a payout upon death.
just out of curiosity with regards to the 8891 and Line 6, the treaty election:
For us it makes sense for my wife to check off box 6c in order to make the investment earnings inside the RRSP's tax exempt in the USA just as they are in Canada - this just seems to be the most optimal thing to do for tax purposes.
However, I'm curious as to why someone might elect to not invoke the treaty? Not only do you have to complete the entire form but you would then subject the investment earnings to tax in the USA. Just curious....
However, I wanted to clarify in the General instructions where it says a financial account includes an insurance policy with a cash value (such as whole life insurance policy).
My understanding is that this is referring to a life insurance policy that would pay out an annuity or lump sum amount to you after a certain period of time or age, assuming you are still alive then, and until that time or age it's purpose is to pay a death benefit in the event of your death to a beneficiary listed on the policy. This type needs to be reported for FBAR.
The type of policies we have are from our employers. I pay a monthly amount through payroll deduction for a certain amount of insurance and only in the event of my death my wife would get the payout. I would assume these types are not reportable until there is a payout upon death.
just out of curiosity with regards to the 8891 and Line 6, the treaty election:
For us it makes sense for my wife to check off box 6c in order to make the investment earnings inside the RRSP's tax exempt in the USA just as they are in Canada - this just seems to be the most optimal thing to do for tax purposes.
However, I'm curious as to why someone might elect to not invoke the treaty? Not only do you have to complete the entire form but you would then subject the investment earnings to tax in the USA. Just curious....
We have no control over the life insurance policy other than paying the monthly premium so it's not going on the tdf 90-22.1.
I read up on that thread and a few others, thanks! She will be invoking the treaty.
Because her RRSP was first opened in 2008 we will have to back file the 8891 for 08,09,10. My understanding is that even though 2008 is back filed, it is technically the first 8891 filed so therefore that one gets line 6a checked as NO and line 6c checked. All subsequent 8891's from then on will have 6a checked YES and 2008 put in 6b.
I read somewhere on a different website that in order to back file the 8891 a private letter ruling for each year is required from the IRS essentially granting you permission to back file 8891's, otherwise they may not accept them......really? It seems like a ton of work and probably money involved too.
I don't see why we can't just fill out a 1040x, schedule B part III and 8891 for each year in question, put them in one envelope and mail them in.
Regarding how far back to go with the TDF 90-22.1, there are references to 3 years and 6 years....in our case my wife became a Canadian permanent resident in 2007 and this was the first year that she worked. 1040's were filed for 07,08,09,10 with no taxes owing so we will back file the TDF for 07,08,09,10 to be consistent with the number of 1040's filed from Canada so far - 4 years. She entered Canada on a student Visa in mid 2005 but had 0 income outside the USA for 2005 and 2006 - she actually only worked the first 6 months of 2005 while still in the US and that income was filed with the IRS through her CPA in the US.
I read up on that thread and a few others, thanks! She will be invoking the treaty.
Because her RRSP was first opened in 2008 we will have to back file the 8891 for 08,09,10. My understanding is that even though 2008 is back filed, it is technically the first 8891 filed so therefore that one gets line 6a checked as NO and line 6c checked. All subsequent 8891's from then on will have 6a checked YES and 2008 put in 6b.
I read somewhere on a different website that in order to back file the 8891 a private letter ruling for each year is required from the IRS essentially granting you permission to back file 8891's, otherwise they may not accept them......really? It seems like a ton of work and probably money involved too.
I don't see why we can't just fill out a 1040x, schedule B part III and 8891 for each year in question, put them in one envelope and mail them in.
Regarding how far back to go with the TDF 90-22.1, there are references to 3 years and 6 years....in our case my wife became a Canadian permanent resident in 2007 and this was the first year that she worked. 1040's were filed for 07,08,09,10 with no taxes owing so we will back file the TDF for 07,08,09,10 to be consistent with the number of 1040's filed from Canada so far - 4 years. She entered Canada on a student Visa in mid 2005 but had 0 income outside the USA for 2005 and 2006 - she actually only worked the first 6 months of 2005 while still in the US and that income was filed with the IRS through her CPA in the US.
PLR is a way for tax lawyers to rake in funds in tough times. Completely unnecesaary gouging of the customer.
No PLR is needed for this, particaularly since the Rev. Proc that intiated the creation of 8891 specifically allowed for back-filing 6 years.
The need to back-file FBAR is determiend by how far back you need to file 1040. If it is 3 years (if no tax is owing on those retruns) then FBAR back 3 years. Otherwise its six years of 1040/FBAR.
No PLR is needed for this, particaularly since the Rev. Proc that intiated the creation of 8891 specifically allowed for back-filing 6 years.
The need to back-file FBAR is determiend by how far back you need to file 1040. If it is 3 years (if no tax is owing on those retruns) then FBAR back 3 years. Otherwise its six years of 1040/FBAR.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thanks for the heads up on the PLR!! I will definately not waste anymore time researching that.
The same online source that talked about the PLR also mentioned the importance of submitting a 1040x with each 8891 that is being back filed (in my wifes case 3, 2008 - 2010), it says to write at the top center of the form: "filed pursuant to T. Regs. Section 301.9100-2"
I know that it is advisable to submit the 1040x in order to properly answer the questions at the bottom of 8891 but I would imagine it is perfectly fine to leave lines 1 to 31 on the 1040x blank and just fill in a reason in part III and not worry about writing that stuff about the T. Regs......
The 3 year and 6 year back filing requirements for FBAR makes sense for those situations.
However, I'm guessing that we are doing the right thing by back filing 4 years on this (2007 to 2010), if anything, just to be consistent with the number of 1040's that were previously filed in their respective years.
I think I will take a break tomorrow and enjoy family day!! Thanks again nelsona for all of your time and help, it is greatly appreciated!!
The same online source that talked about the PLR also mentioned the importance of submitting a 1040x with each 8891 that is being back filed (in my wifes case 3, 2008 - 2010), it says to write at the top center of the form: "filed pursuant to T. Regs. Section 301.9100-2"
I know that it is advisable to submit the 1040x in order to properly answer the questions at the bottom of 8891 but I would imagine it is perfectly fine to leave lines 1 to 31 on the 1040x blank and just fill in a reason in part III and not worry about writing that stuff about the T. Regs......
The 3 year and 6 year back filing requirements for FBAR makes sense for those situations.
However, I'm guessing that we are doing the right thing by back filing 4 years on this (2007 to 2010), if anything, just to be consistent with the number of 1040's that were previously filed in their respective years.
I think I will take a break tomorrow and enjoy family day!! Thanks again nelsona for all of your time and help, it is greatly appreciated!!