3520/8621 issues

bmann · Post by **bmann** » Mon Jan 30, 2012 1:42 pm

I'm Canadian, my wife is American/Canadian dual. Our son is American as well. She opened an RESP in her name for our son. My wife's income is below the level needed to file. Her only income is investment income from mutual funds.

Our Canadian accountant said that since her income was so low, we didn't have to worry about the new form 8938. He said that form only needs to be filed if she would have an obligation to file a tax return. We never mentioned to him anything about the RESP and he never said anything about the mutual funds.

I'm wondering now does my wife need to file an American tax return for this year. Her low income would lead me to say no, but since her name is on the RESP, I'm wondering if we need to file a return, to file form 3520. From what I've seen on this website, I might also need to file form 8621 for my wife. With her income being below filing level, will she need to file form 8621 for the mutual funds.

The overall questions are:

Does she need to file a US income tax return for the year. If yes, since income is so low, could she file forms 3520 & 8621 without filing a 1040.

Does our son need to file anything for the RESP.

I don't want to file a joint return as I own my own business and don't want to deal with the headaches involved in that.

This is a great site, I'm promoting it to everyone I know.

nelsona · Post by **nelsona** » Mon Jan 30, 2012 1:47 pm

3520 would need to be filed regardless of income level.

1040 income level would be determined by all the income she might have (RESP, mutaul fund unrealized gains, RRSP, etc) that IRS views as income.

nelsona · Post by **nelsona** » Mon Jan 30, 2012 1:48 pm

she may need to file 1040 simply because of Sch B part III.

I'm not a big fan of Cdns not filing 1040 based on low income. Too much goes unreported.

bmann · Post by **bmann** » Mon Jan 30, 2012 2:23 pm

Thanks for the answer.

Do we need to file anything for our son who is the eventual beneficiary of the RESP. He's only 2 years old.

nelsona · Post by **nelsona** » Mon Jan 30, 2012 2:52 pm

He does not have any income, since the RESP is not his at this point. 3520 covers the RESP.