Form 8938 -- CSB issuer type? Life ins. reportable?

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Filo
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Form 8938 -- CSB issuer type? Life ins. reportable?

Post by Filo »

Form 8938 for US citizen residing in Canada:

(1) Canadian Savings Bond (Part II): Type of issuer is Government, but the available choices are Individual, Partnership, Corporation, Trust, Estate. Do I write in "Government"?

(2) Life insurance is not mentioned in the instructions. Reportable? If so, is current maximum value zero (as is the case with a pension plan before retirement)?
Filo
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Post by Filo »

OK, 27 views and no replies. I realize that's code for "You have just asked a dumb question." But there are one million U.S. persons living in Canada, and there must be a bunch of them that have to deal with these two issues. For the CSBs, an online search turned up nothing at all helpful. For the life insurance, the few opinions I found were contradictory.

Let me rephrase:

(1) CSBs -- can I really get into any trouble by just leaving the Type of Issuer choices all unchecked?

(2) Life insurance -- does it make any difference whether it's term or whole life (with cash value)?

Tell me "nobody knows" or flame me if you want, and I will not argue. But I would like to hear what someone thinks.
nelsona
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Post by nelsona »

...
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sarahp
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Post by sarahp »

[quote="Filo"]OK, 27 views and no replies. I realize that's code for "You have just asked a dumb question." [/quote]

And one more view... so I'll reply as well... I don't think it's a dumb question at all, but I don't know, either. I came across your post while trying to understand whether or not life insurance is reportable.
Filo
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Post by Filo »

@sarahp:

For the CSBs I'm going to handwrite in "Foreign government". I don't know whether that will get me in trouble. (I file on paper, by snail mail.)

Life insurance: the IRS issued a clarification for the 8938 indicating that only life insurance which has a cash surrender value is reportable (that's "permanent life insurance" or "whole life insurance").

Term life insurance is issued for a fixed term (usually 10, 20, 30, or 40 years) and does not have a cumulative cash surrender value, and it is not reportable.

"Reportable" means both on the 8938 and on the TD-F-90-22.1.

The "maximum value" for the year is defined to be the amount of the cash value for the tax year in question (not the face value of the policy).

Disclaimer: I am not a tax consultant (obviously).
sarahp
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Post by sarahp »

Thanks, Filo. That's very helpful. I'm relieved to know that term life insurance is not reportable - that's all we have.
tobeagoodman
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Re: Form 8938 -- CSB issuer type? Life ins. reportable?

Post by tobeagoodman »

[quote="Filo"]Form 8938 for US citizen residing in Canada:

(1) Canadian Savings Bond (Part II): Type of issuer is Government, but the available choices are Individual, Partnership, Corporation, Trust, Estate. Do I write in "Government"?

(2) Life insurance is not mentioned in the instructions. Reportable? If so, is current maximum value zero (as is the case with a pension plan before retirement)?[/quote]

Hi, Filo,

Sorry, I cannot answer your questions. But I have a question for you. You mentioned in (2) is current maximum value zero (as is the case with a pension plan before retirement).

My question is: where you find out that the maximum value of a pension plan is zero before retirment? As far as I know, the maximum value of INTEREST in a pension plan, i.e. RRSP, is zero before retirement, as explained in FBAR doc.

Thank you!
Filo
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Post by Filo »

@tobeagoodman --

It isn't "interest", it's "your interest in", meaning your financial interest in [the plan]: from Form 8938 instructions, "If you received no distributions during the tax year and do not know or have reason to know based on readily accessible information the fair market value of your interest, use a value of zero for the interest."

So if you have not retired, your interest in the retirement plan is zero. This is a fiat definition. It's not supposed to make any sense.

But after you have retired, the 8938 instructions say, "If you do not know or have reason to know based on readily accessible information the fair market value of your interest in a . . . foreign pension plan . . . during the tax year, the value to be included in determining the total value of your specified foreign financial assets during the tax year is the fair market value, determined as of the last day of the tax year, of the currency or other property distributed during the tax year to the specified person as a beneficiary of participant." Another fiat definition of the plan's maximum value to you.

However, you mentioned "pension plan, i.e. RRSP": an RRSP is not a pension plan; and RRIF payouts get listed with pension payouts on form 1040, but an RRIF is not a "pension plan". The maximum value of your RRSP or RRIF is determinable from your RRSP/RRIF account statements, and that is the maximum value (for a given year), and it is "your interest in" the RRSP/RRIF.

You also mentioned "FBAR doc". This thread is about form 8938, not about the FBAR. And the FBAR instructions do not contain the word "RRSP" nor the word "pension" anywhere.
Taxpoor
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Post by Taxpoor »

Life insurance: the IRS issued a clarification for the 8938 indicating that only life insurance which has a cash surrender value is reportable (that's "permanent life insurance" or "whole life insurance").

Just need some clarification on where you (Filo) got the information from. Not doubting you are correct...just confirming that my filings were accurate.

I have term life insurance with the company i work for...no cash surrender value...and it terminates @ age 70. According to the above post it is not reportable on either 8938 or FBAR.

My concern is that on the IRS site it says that life insurance plans are reportable on both 8938/fbar if they 'have a cash value'.....so what does this mean? If I die, then there is obviously cash value to the beneficiary....right?.

Do you see what I mean? or am i misinterpreting this?

Anyone??
Mach7
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Post by Mach7 »

Taxpoor I think you are getting hung up on the definition. When reviewing the IRS information on which financial accounts go on Fbar and 8938, (there is a table) it states that insurance plans or annunities have to go on both if they have a 'cash value'.

To me this means a cash value to the individual in which he/she can borrow against, or get paid out when the policy is terminated. This would be the definition of a whole life insurance plan.

The only way to get paid out on your company term plan is for you to die...and then you don't see the money anyway...therefore no cash value to you. Besides these term policies usually stop at a predetermined time (age)...

I went through this very same discussion with numerous Accountants and they all advise that the term life insurance plan does not have any "cash" value, (or cash surrender value if you prefer that term), and therefore does not go on either 8938 or Fbar....if the IRS wanted these tabulated, they would have excluded the (cash value) clause on the fact sheet.
taxeve
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Post by taxeve »

[quote]PostPosted: Thu Apr 26, 2012 2:31 am Post subject: Form 8938 -- CSB issuer type? (Quote from 'Filo')


Form 8938 for US citizen residing in Canada:

(1) Canadian Savings Bond (Part II): Type of issuer is Government, but the available choices are Individual, Partnership, Corporation, Trust, Estate. Do I write in "Government"?

So, about the above quote from 'Filo': I am asking basically the same question about reporting Canada Savings Bonds held in RRSPs on form 8938. So,

- How are Canada Savings Bonds (CSBs) held in RRSPs reported on form 8938.
- Is it safe to write in 'Government of Canada' as the 'Issuer'?
- Is it safe to write in 'Government of Canada' as 'Type of Issuer'?





[/quote]
K104XYZ
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Post by K104XYZ »

taxeve, various websites indicate that Canada Savings Bonds are "issued by" the Bank of Canada, and that the Bank of Canada is a crown "corporation" owned by the Government of Canada.
taxeve
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Post by taxeve »

Hi K104XYZ. Thanks for your reply. I just called 'Canada Savings Bonds' 2 times earlier this morning. One agent told me that it was the Bank of Canada as Issuer and said it is a Corporation. Then, I called again just to verify. The second agent told me that it was not the Bank of Canada, but simply 'Canada Savings Bonds' as Issuer and it is also considered a Corporation. So I'm still not 100%
sure.
In case you need to speak to them for your own situation, CSB phone number is 1-800-575-5151 (options 1, 3, 1) .
I will also call IRS International Section, 1-267-941-1000 (4) (4).
I will post as I learn more.
Thanks again.
nelsona
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Post by nelsona »

Just put what you think is right. This is not a big deal.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

I certainly wouldn't waste any time calling IRS. They will be even less "accurate" as CSB.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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