Relief for RESP penalty

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Lili1234
Posts: 7
Joined: Tue Oct 01, 2019 10:52 pm

Relief for RESP penalty

Post by Lili1234 »

Good news for those who have or have had penalties with RESP

Rev. Proc. 2020-17: U.S. reporting relief concerning certain tax-favored foreign trusts


https://home.kpmg/us/en/home/insights/2 ... rusts.html
Ron.Henderson
Posts: 81
Joined: Sun Jan 06, 2019 2:24 pm

Re: Relief for RESP penalty

Post by Ron.Henderson »

Supposedly RESP accounts (and also RRSP, TFSA etc.) are not subject to FATCA reporting, so a US person who for whatever reason needs to file US taxes can always consider not declaring those accounts, thus avoiding risk of penalty.
rafa02
Posts: 95
Joined: Sat May 26, 2012 3:18 pm

Re: Relief for RESP penalty

Post by rafa02 »

This is a very interesting and welcome development...for RESP's, unfortunately it does not appear to apply to TFSA's, although a TFSA may not be reportable anyway, but it would be good if the IRS would clarify their position on TFSA's.
adeboloj
Posts: 73
Joined: Fri Mar 24, 2017 10:50 am

Re: Relief for RESP penalty

Post by adeboloj »

That's a relief! One doesnt need to report RESP or RRSP account.
Lili1234
Posts: 7
Joined: Tue Oct 01, 2019 10:52 pm

Re: Relief for RESP penalty

Post by Lili1234 »

nakubo.1974
Posts: 32
Joined: Sun Feb 16, 2014 1:01 am

Re: Relief for RESP penalty

Post by nakubo.1974 »

Married filing jointly and tax resident of the US (filed departing tax return in Canada when we moved to the US many years ago on a greencard). We still have an RESP with TD Canada Trust with some balance that earns interest each year. We have diligently filed 3520/substitute 3520-a for many years now and also included the interest income in our 1040. Ironically, the remaining amount in the RESP is from CESG grants and will need to be sent back to the Govt of Canada since the beneficiary (our child) is a Canadian non-resident. I need to call TD and find out if they can send that money back ASAP and close the RESP account so that we never have to worry about it ever again!

Can someone please clarify the following:
1) Do the new rules apply for tax year 2020 onwards or also for tax year 2019?
2) Assuming it also applies to 2019: If I have already sent forms 3520/3520-a, do I need to exclude the income on my 2019 tax return or include it?
cqhg
Posts: 16
Joined: Fri Dec 14, 2018 11:18 pm

Re: Relief for RESP penalty

Post by cqhg »

https://ustaxiq.com/claim-your-taxes-ir ... e-2020-17/

Claim your penalties back this tax season! TFSA and RESP accounts may no longer require Form 3520/3520-A reporting …
March 3, 2020ustaxiq-adminArticles, Featured

Yesterday, March 2, the IRS has provided a long-awaited relief from reporting on Form 3520-A and 3520 and associated penalties to dual U.S./Canadian citizens and Green card holders with certain “tax-favored foreign” arrangements, likely including TFSA and RESP accounts. Rev. Proc. 2020-17 discusses eligible U.S. citizens and residents, eligible “tax-favored foreign retirement and nonretirement” arrangements (referred to in the revenue procedure as “trusts”), provides a procedure for claiming a refund of assessed penalties, and requests further comments from the tax community. The IRS guidance can be found here: https://www.irs.gov/pub/irs-drop/rp-20-17.pdf
Lili1234
Posts: 7
Joined: Tue Oct 01, 2019 10:52 pm

Re: Relief for RESP penalty

Post by Lili1234 »

Does anyone understand how to fill out form 843 for a RESP. As usual the IRS guidelines are complicated. Thank
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