In 2011 I inherited some money from my deceased mother. I knew the returns would be more difficult to do myself so I decided it would be wise to pay a professional.
I paid one of the two people in H&R Block, Montreal who does US returns. She was too busy to do my CDN return so she suggested I let the same guy I used the year before (H&R Block ), do my CDN return. My US return was filled on time and everything went smoothly. My Canadian return however, was another story.
After my CDN return was sent in, I happen to come across some info on the internet - similar to FABAR - requiring CDN residents to report bank accounts with Foreign Income above $100K. Because of my inheritance, my US bank account went just over $100K in 2011.
I notified my CDN tax preparer who was clueless even though he knew of my inheritance that year, I was a US citizen, and I had a US bank account with interest to report.
After I told him, he filled a T1135 in June on my behalf. Yesterday I received a "Notice of re-assessment - T1135 Foreign Verification Statement that says I owe $1,100.00 in penalties and $49.82 in interest.
I am feeling so defeated, I try my best every year to stay on top of all the crazy requirements for dual citizens and trying to protect what little nest egg I have. I don't make a lot and what little I have is going fast to inadequate tax "specialists".
Does anyone know if there is anything I can do next to avoid paying the penalty?
Canadian T1135 and US FABAR - Penalty
Moderator: Mark T Serbinski CA CPA
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CdnAmerican
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I did try to call the CRA but have little confidence in the person who I spoke with. She told me that my file seemed to be in order and no record on file of this Notice of reassessment that I received.
The person who did my taxes last year is also supposedly looking into the matter, but I have little confidence in them since they failed to inform me of the T1135 or even ask me the right questions that might have led to my needing to file the form.
There is a form T400A, Objection to the Chief of Appeals that I plan on sending but I will most likely first have to pay the penalty or be charged additional interest if I fail to pay within 20 days.
The person who did my taxes last year is also supposedly looking into the matter, but I have little confidence in them since they failed to inform me of the T1135 or even ask me the right questions that might have led to my needing to file the form.
There is a form T400A, Objection to the Chief of Appeals that I plan on sending but I will most likely first have to pay the penalty or be charged additional interest if I fail to pay within 20 days.
In the past until 2007 the CRA would allow under the taxpayer fairness Act a waiver of penalties and interest for not timely filing your T1135. Recently however they have taken the approach that they will not waive the penalty .
You can file a Notice of Objection as you say but this is only if teh CRA has erred in law, to my sight it seems the law has simply been applied too harshly. What you need to do is file teh Objection but also file a simple leter under the fairness provisions asking for the penalty to be waived since you used a so called expert H&R dummy to do teh t1 and was not informed of the filing requirement.
You say the bank account was just over 100K in 2011 remember we are talking CND dollars the average rate in 2011 was .989 so how about if you look at the actual date of the deposits if it was just around 100K USD it may be lowere in CND and by fluke you may be able to come in under 100K CND if its really close.
To hire a professional to fight the $ 1,100 penalty does not pay, just use a CA from now on pay a bit more but if your talking about CND and US tax don't EVER go see H&R Block heads they are clueless they get their training in a 3 month session and in Montreal no one does US tax at H&R that I know of or at least does it properly.
You can file a Notice of Objection as you say but this is only if teh CRA has erred in law, to my sight it seems the law has simply been applied too harshly. What you need to do is file teh Objection but also file a simple leter under the fairness provisions asking for the penalty to be waived since you used a so called expert H&R dummy to do teh t1 and was not informed of the filing requirement.
You say the bank account was just over 100K in 2011 remember we are talking CND dollars the average rate in 2011 was .989 so how about if you look at the actual date of the deposits if it was just around 100K USD it may be lowere in CND and by fluke you may be able to come in under 100K CND if its really close.
To hire a professional to fight the $ 1,100 penalty does not pay, just use a CA from now on pay a bit more but if your talking about CND and US tax don't EVER go see H&R Block heads they are clueless they get their training in a 3 month session and in Montreal no one does US tax at H&R that I know of or at least does it properly.
JG
JGCA I do plan to pay the fine before I'm charged additional interest and file the objection. You mentioned I should file a letter under the fairness provisions. Who would you suggest I send this letter to?
Now I have concerns about completing my 2012 T1135. I know I have to report that I have funds +$100,000 held outside of Canada but what about the sale of personal property? In 2012 I sold/transferred my (inherited) portion of my mom's home to my brother.
There was no gain or loss on the sale price from the value when I inherited the property, but does the sale of the property change anything as far as reporting requirements on the T1135?
Now I have concerns about completing my 2012 T1135. I know I have to report that I have funds +$100,000 held outside of Canada but what about the sale of personal property? In 2012 I sold/transferred my (inherited) portion of my mom's home to my brother.
There was no gain or loss on the sale price from the value when I inherited the property, but does the sale of the property change anything as far as reporting requirements on the T1135?