Hi I'm looking to see if anyone has thoughts. I am a student in the US and at some point switched from nonresident to resident for tax purposes (still am resident of Canada). And well, basically I had no idea what I was doing last year and did it wrong (I used HR block online) for my TFSA accounts from before when I was a nonresident.
Two questions:
1. I filed FBAR for my TFSA accounts and bank accounts. I also had one account with zero balance all year that I didn't report but I read somewhere that I should have reported it, despite being 0 all year. Is an amended FBAR okay/no penalties? I did file it, but neglected to declare the zero account.
2. My TFSA last year was not filed with Forms 3520/3520A or 8621. I only declared it on the FBAR and paid capital gains taxes on the TFSA distributions. Apparently that is completely wrong. This year I hired a tax preparer to include those forms and called it a QEF before selling it all. So what would you recommend I do about the prior year's taxes? Do I go back and amend it/refile 3520/A, 8621 under streamlined reporting? And if so do I still pay the 5% penalty - I already reported it on the FBAR so maybe not?
TFSA issues
Moderator: Mark T Serbinski CA CPA
Hi There,
Here are my two cents:
1. I can't guarantee there would be no penalties, but there really shouldn't be. Just amend your FBAR and if asked, just tell the truth that you didn't know that you had to report zero balance accounts. It's your decision, an accountant told me that he as seen more than 100 people become compliant out, and not knowing one had to file is generally accepted.
2. In my experience, 90% of accountants in Canada say that a TFSA is a foreign grantor trust requiring forms 3520. The best analysis I have seen the legal classification of the TFSA comes from a lawyer who co-wrote a book called "A tax guide for American Citizens in Canada".
http://www.skltax.com/wp-content/upload ... SA-CCH.pdf
You could take the position that a TFSA likely isn't a trust for US tax purposes, and simply attach a note to your US tax return asking for clarification. As for form 8621, you could correct past year's returns. There is no penalty for failing to file form 8621, but your past year's returns could be considered incomplete which lengthens the limitations on auditing.
Here are my two cents:
1. I can't guarantee there would be no penalties, but there really shouldn't be. Just amend your FBAR and if asked, just tell the truth that you didn't know that you had to report zero balance accounts. It's your decision, an accountant told me that he as seen more than 100 people become compliant out, and not knowing one had to file is generally accepted.
2. In my experience, 90% of accountants in Canada say that a TFSA is a foreign grantor trust requiring forms 3520. The best analysis I have seen the legal classification of the TFSA comes from a lawyer who co-wrote a book called "A tax guide for American Citizens in Canada".
http://www.skltax.com/wp-content/upload ... SA-CCH.pdf
You could take the position that a TFSA likely isn't a trust for US tax purposes, and simply attach a note to your US tax return asking for clarification. As for form 8621, you could correct past year's returns. There is no penalty for failing to file form 8621, but your past year's returns could be considered incomplete which lengthens the limitations on auditing.
------------------------------
MGeorge is neither an accounting nor taxation professional.
MGeorge is neither an accounting nor taxation professional.