Form 8621

DougF · Post by **DougF** » Fri Apr 06, 2012 10:18 am

I am a Canadian citizen living in the U.S with permanet residence status. I have three accounts in Canada that each hold two mutual funds. These are non-RRSP accounts.

My question: do I file one 8621 form for each account or do I file one form for each mutual fund? I will be electing to Mark-to-Market.

The total market value in each of these accounts is very small - all less than $1500. I also have an RRSP account that along with these 3 non-RRSP account brings the aggregate value to over $10,000 so I am presuming I have to file a 8621 for these (along with a 8891 form for my RRSP).

DougF · Post by **DougF** » Fri Apr 06, 2012 5:30 pm

Nevermind, I think I got it. What a hassle for such small amounts.

CdnAmerican · Post by **CdnAmerican** » Fri Apr 06, 2012 6:17 pm

DougF - I have 3 different RESP's, each of which contains 2-3 mutual funds. I did 3 8621's, and then described the holdings within each RESP in a page appended to the 8621. That seemed more reasonable then doing a separate 8621 for every single mutual fund.

And, my RRSP's are covered by the 8891. I didn't do an 8621 for them.

I found that once I knew what I was doing, the 8621 itself wasn't that hard to do. It's actually kind of beneficial in the very long run to be claiming the income as I go (which is covered under my 2555 at my income level anyway), rather than in a lump sum when I withdraw it when my kids are in college.

nelsona · Post by **nelsona** » Fri Apr 06, 2012 9:20 pm

Just to clarify, 2555 only applies to wages. I presume you meant having your wages excluded by 2555 makes your other income not taxed.

CdnAmerican · Post by **CdnAmerican** » Fri Apr 06, 2012 9:29 pm

Thanks nelsona - Yes, that's correct. The 2555 takes care of my wages, and the std deduction and exemptions basically take care of the rest. My presumption is that if I had more income, I could use the 1116 to bring my tax back down to zero, but I haven't made enough income yet to warrant it!

nelsona · Post by **nelsona** » Fri Apr 06, 2012 9:37 pm

Its a presumption, but its not assured, given that your mark-to-market may or may not be long-term gain, and only Cdn tax against passive income is covered. You might want to be making dsure you report Cdn passive income and file 1116 even in years when you pay not US tax in order to build up your passive tax carryforward.

DougF · Post by **DougF** » Sat Apr 07, 2012 8:47 am

CdnAmerican - thanks for the reply. You are right, the 8621 form really isn't that difficult (at least the mark-to-market election). I plan to liquidate my three litte accounts this year, file again next year, and be done with this.

Filo · Post by **Filo** » Sun Apr 08, 2012 12:02 am

@DougF:

(a) I thought that to use mark-to-market, your Cdn mutual fund corporations had to each send you written information satisfying specific U.S. IRS requirements. Did you actually receive such information?

(b) Since Cdn mutual funds have only recently become PFICs, and since they are governed under U.S. Code section 1298(f), and since the IRS instructions for section 1298(f) haven't been released yet (according to the instructions for form 8621), I thought that submission of form 8621 had been temporarily suspended until the IRS issues the necessary instructions for a suitably revised form 8621. (???)

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Oceansunshine · Post by **Oceansunshine** » Tue Apr 10, 2012 11:16 am

@DougF - I'm in the same situation - I had tiny mutual funds in Canada (income on my nr4 is only $10) and the 8621 seems like such a pain for such small funds.

My question: I already cashed them out in 2011. So what option do I choose on the 8621? All of the choices (A through H in part I) seem to be determinations for going forward, or 'deemed sales' (instead of actual sales), and I won't be dealing with this again in 2012.

I also don't know if it matters that 2011 is the first year I'm filing taxes in the US, so there's no previous history of these RSPs even though I've had them in Canada for years...

DougF · Post by **DougF** » Tue Apr 10, 2012 7:05 pm

@Oceansunshine

Since this is your first time reporting it (already sold) I am not sure what section you would fill out on form 8621. I used the Mark-to-Market section for 2011 but my mutual funds will not be liquidated until 2012 at which time I will again use the mark-to-market section - line 8 ("If you sold or otherwise disposed of any section 1296 stock during tax year"). Maybe this applies to you?? Wish I could give you something more definitive.