I have a USD money market account with which i received a T3 slip for (Canada). I made $7 dollars and 83 cents for 2011 off the account. It is not dividends but classified under box 26 or the T3 as 'other income'.
The top of the T3 slip from RBC says STATEMENT OF TRUST INCOME ALLOCATIONS/DESIGNATIONS
My problem is this....do i fill this account information out on part 1 or part 2 of the 8938 form?
If part 2, do i classify this account as a 'trust'?
Is there any additional reporting or forms i need to fill out for this fund...ie: do i have to fill out a 3520 form??
USD Money Market Account & 8938
Moderator: Mark T Serbinski CA CPA
interesting...but there are other 'boxes' on the T3 slip that specify payment in dividends...this actually says 'other income'.
Basically this is a treasury bill account, based on the strength of the us dollar...thats why the return is so poor.
i just dont want to spend 3 hours doing up forms for such a small account.
Basically this is a treasury bill account, based on the strength of the us dollar...thats why the return is so poor.
i just dont want to spend 3 hours doing up forms for such a small account.
Money market investment instruments are a quagmire.
[From another thread] IRS Publication 17, at
http://www.irs.gov/publications/p17/ch08.html
says this:
Money Market Funds
Report amounts you receive from money market funds as dividend income. Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest.
So it makes a difference whether it's a money market account (which is a bank account) or a money market mutual fund held in a mutual-fund account.
Complicating things more than that, nelsona says (somewhere on this site that I am unable to find at the moment) that Canadian money market fund payouts (which frequently seem to be Other Income), possibly might not meet the US definition of "dividend", so those payouts might be ordinary income. I don't know precisely what that means as regards entry on form 1040 and/or Schedule B.
As regards the PFIC question, which is a separate issue, I'm not qualified to make any remarks on that.
You might consider the possibility of liquidating that money market fund (if it *is* a fund) in the hopes of eliminating continuing problems with it as regards US taxes in the future.
[From another thread] IRS Publication 17, at
http://www.irs.gov/publications/p17/ch08.html
says this:
Money Market Funds
Report amounts you receive from money market funds as dividend income. Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest.
So it makes a difference whether it's a money market account (which is a bank account) or a money market mutual fund held in a mutual-fund account.
Complicating things more than that, nelsona says (somewhere on this site that I am unable to find at the moment) that Canadian money market fund payouts (which frequently seem to be Other Income), possibly might not meet the US definition of "dividend", so those payouts might be ordinary income. I don't know precisely what that means as regards entry on form 1040 and/or Schedule B.
As regards the PFIC question, which is a separate issue, I'm not qualified to make any remarks on that.
You might consider the possibility of liquidating that money market fund (if it *is* a fund) in the hopes of eliminating continuing problems with it as regards US taxes in the future.
Don't answer these questions if I'm invading your privacy too much:
Specifically on the Canadian T3 form, what institution issued the T3?
(1) Is it a bank? Is the MM instrument a bank account?
(2) Is the MM instrument held inside an investment account where the investment account itself has an account number or a plan number?
If it's (2), then you do not report the MM instrument itself, you report only the investment account in Part I of the 8938:
* 1 is probably Custodial
* 2 is the number (on the T3) of the overall investment account, regardless of what's in it.
* 3b gets checked if you in fact closed the entire investment account in 2011.
* 7,8,9 = name & address (on the T3) of the institution holding the account for you
==> It doesn't make any difference whether it's labelled as a "mutual fund account": if it's an investment account, then it can hold a MM instrument, mutual funds in general, stocks, bonds, savings bonds -- investment instruments in general.
It was my mistake to write "mutual fund account" in my preceding post. I should have written "investment account".
Specifically on the Canadian T3 form, what institution issued the T3?
(1) Is it a bank? Is the MM instrument a bank account?
(2) Is the MM instrument held inside an investment account where the investment account itself has an account number or a plan number?
If it's (2), then you do not report the MM instrument itself, you report only the investment account in Part I of the 8938:
* 1 is probably Custodial
* 2 is the number (on the T3) of the overall investment account, regardless of what's in it.
* 3b gets checked if you in fact closed the entire investment account in 2011.
* 7,8,9 = name & address (on the T3) of the institution holding the account for you
==> It doesn't make any difference whether it's labelled as a "mutual fund account": if it's an investment account, then it can hold a MM instrument, mutual funds in general, stocks, bonds, savings bonds -- investment instruments in general.
It was my mistake to write "mutual fund account" in my preceding post. I should have written "investment account".
Hello Filo...first off, thank you so much for trying to clarify this for me.
The T3 was issued by the Royal Bank of Canada RBC and shows a payout of 7 dollars and 83 cents in box 26 under ``other income`` for year 2011
Having said that, the money market is held at RBC and is (invested) in US currency. (probably why the return is so bad).
The US money market account has its own account number, just as my chequing and saving account.
The information i get from RBC shows increase and decrease as a percent, the gains are then re-invested into the account.
When the US dollar is strong, the account goes up, when weak it goes down.
Does any of this info help
The T3 was issued by the Royal Bank of Canada RBC and shows a payout of 7 dollars and 83 cents in box 26 under ``other income`` for year 2011
Having said that, the money market is held at RBC and is (invested) in US currency. (probably why the return is so bad).
The US money market account has its own account number, just as my chequing and saving account.
The information i get from RBC shows increase and decrease as a percent, the gains are then re-invested into the account.
When the US dollar is strong, the account goes up, when weak it goes down.
Does any of this info help
Also Filo....what is a Custodial account
in my reseach it seem the definitiion of custodial is an account created at a bank, brokerage firm or mutual fund company that is managed by an adult for a minor that is under the age of 18 to 21
With this definition in mind, would i not check the box labeled `deposit``
in my reseach it seem the definitiion of custodial is an account created at a bank, brokerage firm or mutual fund company that is managed by an adult for a minor that is under the age of 18 to 21
With this definition in mind, would i not check the box labeled `deposit``
OK, good.
It appears then that you really do have a money market bank-account. I checked the RBC and TD web sites and was surprised to see that in fact they do offer these things. TD explicitly mentioned the possibility of a US-dollar MM account; I didn't see that on RBC, but their site is not the best in the world for finding things, and the fact is that you seem to have an RBC US-dollar MM account.
The only thing that changes in my preceding recommendations for the 8938 (still Part I) is this:
* 1 is probably Deposit.
And on Schedule B, the MM account income is interest (not dividends).
And as for the $7.83 figure, in principle you have to figure out whether that in US$ or in Cdn$. (I have personally seen a T3 slip where that was gotten wrong.) However, since the 2011 exchange rate was almost 1.000, I wouldn't have a heart attack about that minor difference.
As regards your question "What is a custodial account?", that's a question I have not been able to get an answer to on this forum. The "information" in the IRS FAQ responses is a mass of gibberish. The definition you found is the definition you see everywhere, but I can hardly believe that that definition applies to the distinction "Depository/Custodial" (the 8938 *instructions* say "Depository"). I think it is likely that a real investment account (with stocks, mutual funds, etc) is "custodial" because the financial institution is holding investment instruments for you -- in some sense they are "custodians". But don't take my word for it.
In your present case it doesn't matter, since a bank account pays interest, and you deposit and withdraw money directly to and from the account itself (not to instruments held within the account), so it's a deposit(ory) account.
It appears then that you really do have a money market bank-account. I checked the RBC and TD web sites and was surprised to see that in fact they do offer these things. TD explicitly mentioned the possibility of a US-dollar MM account; I didn't see that on RBC, but their site is not the best in the world for finding things, and the fact is that you seem to have an RBC US-dollar MM account.
The only thing that changes in my preceding recommendations for the 8938 (still Part I) is this:
* 1 is probably Deposit.
And on Schedule B, the MM account income is interest (not dividends).
And as for the $7.83 figure, in principle you have to figure out whether that in US$ or in Cdn$. (I have personally seen a T3 slip where that was gotten wrong.) However, since the 2011 exchange rate was almost 1.000, I wouldn't have a heart attack about that minor difference.
As regards your question "What is a custodial account?", that's a question I have not been able to get an answer to on this forum. The "information" in the IRS FAQ responses is a mass of gibberish. The definition you found is the definition you see everywhere, but I can hardly believe that that definition applies to the distinction "Depository/Custodial" (the 8938 *instructions* say "Depository"). I think it is likely that a real investment account (with stocks, mutual funds, etc) is "custodial" because the financial institution is holding investment instruments for you -- in some sense they are "custodians". But don't take my word for it.
In your present case it doesn't matter, since a bank account pays interest, and you deposit and withdraw money directly to and from the account itself (not to instruments held within the account), so it's a deposit(ory) account.
Thanks Filo....
so just to clarify on this money market account...is there any additional reporting that i have to do...in other words are there any other forms i have to fill out and attach to my 1040....(with the exception of Schedule B which is already filled out) like 8621 etc.
Also....if you have the time...i have another question regarding another account of mine...here it goes:
I have shares in the company i work for, these shares are held at Computershare trust company in Toronto...the shares in question are publically traded and i receive dividend payments from them which is re-invested. The total dividends i received in 2011 was 24 dollars (as you can see i do not own very many shares).
I received a Canadian T5: STATEMENT OF INVESTMENT INCOME and in box 25 of this i have a value of 24 dollars under TAXABLE AMOUNT OF ELIGIBLE DIVIDENDS
I placed this information on Schedule B under ordinary dividends and tabulated it accordingly on line 9a
I understand that i have to fill in this information on part 2 of the 8938 (at least i am assuming part 2)....but sort of confused of which box to check line 7b type of foreign entity....
i am thinking trust or corporation.
also...is there any additional forms i need to fill out for this account as well
Thank you again for the help...i feel i am making progress here.
so just to clarify on this money market account...is there any additional reporting that i have to do...in other words are there any other forms i have to fill out and attach to my 1040....(with the exception of Schedule B which is already filled out) like 8621 etc.
Also....if you have the time...i have another question regarding another account of mine...here it goes:
I have shares in the company i work for, these shares are held at Computershare trust company in Toronto...the shares in question are publically traded and i receive dividend payments from them which is re-invested. The total dividends i received in 2011 was 24 dollars (as you can see i do not own very many shares).
I received a Canadian T5: STATEMENT OF INVESTMENT INCOME and in box 25 of this i have a value of 24 dollars under TAXABLE AMOUNT OF ELIGIBLE DIVIDENDS
I placed this information on Schedule B under ordinary dividends and tabulated it accordingly on line 9a
I understand that i have to fill in this information on part 2 of the 8938 (at least i am assuming part 2)....but sort of confused of which box to check line 7b type of foreign entity....
i am thinking trust or corporation.
also...is there any additional forms i need to fill out for this account as well
Thank you again for the help...i feel i am making progress here.
For the MM instrument, you're lucky -- it's a bank account, not a mutual fund, so it's not a PFIC, and you can forget the 8621.
For the shares, apparently you do not hold the actual share certificates. Your shares are held by Computershare in an *account* for you. That means you fill in Part I, because it's an account. Holding stuff in an account can save you oceans of trouble, because the account can hold lots of things -- mutual funds, stocks (shares), bonds, GICs, etc. -- and all you have to do is report the account in Part I of 8938; you do not have to separately report the individual securities held in the account. And not that Part I does not have the Type of Issuer or Entity to worry about.
There is one exception to that, but from what I see it does not affect you: if you have an NON-RRSP account that happens to hold a mutual fund, then apparently that mutual fund is a PFIC and has to be reported on an 8621. As I said, from what you have said, it doesn't look like this affects you. As regards the 8621, the "information" available online is wildly contradictory, so avoid TFSAs and mutual funds like the plague.
I will be offline for awhile, until much later tonight.
For the shares, apparently you do not hold the actual share certificates. Your shares are held by Computershare in an *account* for you. That means you fill in Part I, because it's an account. Holding stuff in an account can save you oceans of trouble, because the account can hold lots of things -- mutual funds, stocks (shares), bonds, GICs, etc. -- and all you have to do is report the account in Part I of 8938; you do not have to separately report the individual securities held in the account. And not that Part I does not have the Type of Issuer or Entity to worry about.
There is one exception to that, but from what I see it does not affect you: if you have an NON-RRSP account that happens to hold a mutual fund, then apparently that mutual fund is a PFIC and has to be reported on an 8621. As I said, from what you have said, it doesn't look like this affects you. As regards the 8621, the "information" available online is wildly contradictory, so avoid TFSAs and mutual funds like the plague.
I will be offline for awhile, until much later tonight.