Hi,
I am a Canadian citizen that worked 5 years in the US as a TN visa worker. I recently resumed my residency in Canada and learned that I should have filed FBAR`s for the last 5 years . My CPA never told me that for the years he prepared my taxes. Also, form 8939 should have been filed since 2011 as I met the threshold for that form. My Canadian-source interests and dividends were reported as ``other income``. Now I realise that I am non-compliant with the IRS, and I don`t know where to start. Any advice? According to the Canadian government , CRA will not collect taxes and penalties coming from either 1040 or FBAR`s as long as the person was a Canadian citizen when the tax liability arose. I was a Canadian citizen, but deemed non-resident of Canada. Would that provision apply in that case? Where should I start ? Could I face all those harsh penalties if the IRS does not accept my explanations ?
Former tn visa worker
Moderator: Mark T Serbinski CA CPA
You should file FBAR's for those years for which you were a taxable US resident. Non-willful failure to file does not generate a penalty if you properly paid taxes on any income from those foriegn accounts. You must include an explanation of why your failure to file is non-willful; you will explain that you have just discovered the need to do so, and that your CPA had failed to draw it to your attention.
Note that the FBAR forms do not go to the IRS, but to the Treasury Dept.
For the missing 8939 forms, I think you can just file amended tax returns for those years and include the forms.
If you file late FBARs because you did not know of the need, but carefully declared all the income from the foreign accounts, I think you be all right. Even if a penalty is assessed for failure to file, you might refuse to pay it and Canada will not collect it on the US behalf, as you mention. However, this might restrict your future adventures in the US.
Note that each year for which you filed a signed US tax return, you must have filled out Part III of Schedule B (Interest and Dividends) in which you are required to say whether you had foreign accounts and if so, whether you needed to file the FBAR form (TD F 90-22.1). Did you fill out this section improperly?
Note that the FBAR forms do not go to the IRS, but to the Treasury Dept.
For the missing 8939 forms, I think you can just file amended tax returns for those years and include the forms.
If you file late FBARs because you did not know of the need, but carefully declared all the income from the foreign accounts, I think you be all right. Even if a penalty is assessed for failure to file, you might refuse to pay it and Canada will not collect it on the US behalf, as you mention. However, this might restrict your future adventures in the US.
Note that each year for which you filed a signed US tax return, you must have filled out Part III of Schedule B (Interest and Dividends) in which you are required to say whether you had foreign accounts and if so, whether you needed to file the FBAR form (TD F 90-22.1). Did you fill out this section improperly?