I've been looking into informal in-trust accounts, explained briefly here at this government site: http://www.canlearn.ca/en/parent/save/f ... iita.shtml
This answers most of my questions, but I have a few lingering ones:
- For the IRS, is form 3520 required for these kinds of trust accounts?
- If funds are withdrawn, what proof does CRA require to show the funds were withdrawn for the beneficiary, and to what degree? For example, if I purchased, say, shingles for the house that my children live in, would that count? Or would that be "breach of trust"?
Thanks. [/list]
Informal In-Trust Accounts
Moderator: Mark T Serbinski CA CPA
IRS would not recognize any tax sheilding, although all of it would be in child's name. in Canada, since attribution rules still appl, you would be taxed. why have atrust to do this, with its complex US reporting.
The trustee would determine the breach (that is their job).
The trustee would determine the breach (that is their job).
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
3. A new paragraph 7 shall be added to Article XVIII (Pensions and Annuities) of the Convention
as follows:
“7. A natural person who is a citizen or resident of a Contracting State and a beneficiary of a trust,
company, organization or other arrangement that is a resident of the other Contracting State, generally
exempt from income taxation in that other State and operated exclusively to provide pension, retirement
or employee benefits may elect to defer taxation in the first-mentioned State, under rules established by
the competent authority of that State, with respect to any income accrued in the plan but not distributed
by the plan, until such time as and to the extent that a distribution is made from the plan or any plan
substituted therefor.â€
Current rules are no need for reporting, and full taxation at withdrawal, in both countries.
as follows:
“7. A natural person who is a citizen or resident of a Contracting State and a beneficiary of a trust,
company, organization or other arrangement that is a resident of the other Contracting State, generally
exempt from income taxation in that other State and operated exclusively to provide pension, retirement
or employee benefits may elect to defer taxation in the first-mentioned State, under rules established by
the competent authority of that State, with respect to any income accrued in the plan but not distributed
by the plan, until such time as and to the extent that a distribution is made from the plan or any plan
substituted therefor.â€
Current rules are no need for reporting, and full taxation at withdrawal, in both countries.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
.. and before you get the notion of saying "I'll includse income on my 1040 now (below standard deduction) to avoid taxation later" new section in Rule 72 ended that last year, and stacking provision would make even a little income completely taxable in US (since pension income is not exemptable).
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best