My husband and I are Canadian citizens. We lived in the US for a couple of years and our kids were born there, and are therefore dual Canadian-US citizens.
We now live in Canada.
Here's the question: at what point do our kids have to start filing US tax returns?
At this stage they are very young (3 & 4), so obviously no income. However they each do have a (Canadian) bank account; and we will be setting up RESP accounts for each child later this year.
Thanks.
Filing of personal tax returns for KIDS?
Moderator: Mark T Serbinski CA CPA
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CdnAmerican
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Good question! My sense is that the kids don't have to file returns until they start to get income. However, if you are US citizens, there is some troublesome paperwork that comes in. My understanding is that forms 3520 and 3520A are required if you make an RESP for them. My feeling is that these RESPs, while resulting in painful paperwork, are nonetheless worthwhile given the govt grant that you get. (There is lots of detail around the RESP and these forms elsewhere on this forum.)
I have also done a 3520/3520A for my kids' savings accounts (I am a US citizen living in Canada, and have two small kids as well). I suspect that these accounts are very technically considered trusts by the IRS, but that may be an overly stringent impression of the rules. I wonder if others do this as well, or if I am being too compulsive on that account!
You have put forth a very good question, and I hope lots of people can contribute on this one. It makes sense to understand the tax implications before you create an account (many of us learned that the hard way). Good luck!
I have also done a 3520/3520A for my kids' savings accounts (I am a US citizen living in Canada, and have two small kids as well). I suspect that these accounts are very technically considered trusts by the IRS, but that may be an overly stringent impression of the rules. I wonder if others do this as well, or if I am being too compulsive on that account!
You have put forth a very good question, and I hope lots of people can contribute on this one. It makes sense to understand the tax implications before you create an account (many of us learned that the hard way). Good luck!
Not a professional opinion.
I have similar questions. The children are dual Canadian/US citizens and are beneficiaries of RESPs worth >$10,000 each. They were born in the US but live in Canada.
The contributors to (owners of?) the RESP are Canadian citizens. The children have not received any distributions from the RESP.
1. Do the children have to complete a 90-22.1 because they have a financial interest in an account worth >$10,000?
2. Do the children have to complete a 3520 or 3520a?
I don't think any of the 'applicable boxes' on the 3520 apply, and neither does the 3520a because the 'owner' is not a US person.
Most of the RESP questions on this forum refer to the parents/owners of the RESPs being US citizens, while in this case they aren't.
The contributors to (owners of?) the RESP are Canadian citizens. The children have not received any distributions from the RESP.
1. Do the children have to complete a 90-22.1 because they have a financial interest in an account worth >$10,000?
2. Do the children have to complete a 3520 or 3520a?
I don't think any of the 'applicable boxes' on the 3520 apply, and neither does the 3520a because the 'owner' is not a US person.
Most of the RESP questions on this forum refer to the parents/owners of the RESPs being US citizens, while in this case they aren't.
OK, I think I may have found the answer to my question 2 here:
http://forums.serbinski.com/viewtopic.p ... light=resp
The 3520 & 3520A aren't required.
http://forums.serbinski.com/viewtopic.p ... light=resp
The 3520 & 3520A aren't required.
Keep in mind for a different scenario where the parents are US citizens:
Under the “kiddie tax†rules, certain children are taxed at their parents' highest tax rate on the child's unearned income over $1,900 for 2012 and $2,000 for 2013, as calculated by RIA based on inflation-adjusted CPI amounts, if that tax is higher than what the child would otherwise pay on it. The parents can, if certain conditions are met, elect to include the child's gross income on their own return.
A child is subject to the kiddie tax if: (1) the child either (a) is under age 18 at the end of the tax year, or (b) is age 18, or 19-23 if a full-time student, at the end of the tax year and his earned income doesn't exceed one-half of his support; (2) either parent is alive at the end of the tax year; (3) the child doesn't file a joint return for the tax year; and (4) the child's unearned income is more than $1,900 for 2012 ($2,000 for 2013, as calculated by RIA based on inflation-adjusted CPI amounts).
Under the “kiddie tax†rules, certain children are taxed at their parents' highest tax rate on the child's unearned income over $1,900 for 2012 and $2,000 for 2013, as calculated by RIA based on inflation-adjusted CPI amounts, if that tax is higher than what the child would otherwise pay on it. The parents can, if certain conditions are met, elect to include the child's gross income on their own return.
A child is subject to the kiddie tax if: (1) the child either (a) is under age 18 at the end of the tax year, or (b) is age 18, or 19-23 if a full-time student, at the end of the tax year and his earned income doesn't exceed one-half of his support; (2) either parent is alive at the end of the tax year; (3) the child doesn't file a joint return for the tax year; and (4) the child's unearned income is more than $1,900 for 2012 ($2,000 for 2013, as calculated by RIA based on inflation-adjusted CPI amounts).