Attribution Rules and US Citizen spouse
Moderator: Mark T Serbinski CA CPA
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Attribution Rules and US Citizen spouse
A US citizen is married to a Canadian...they live in Canada. USC files MFS so NRA spouse has no filing obligations to the US.
If they jointly own property or interest bearing accounts, what is the proper way to divide the income from it? Would it be split 50/50, or should they follow the Canadian attribution rules on the US return?
If they jointly own property or interest bearing accounts, what is the proper way to divide the income from it? Would it be split 50/50, or should they follow the Canadian attribution rules on the US return?
Re: Attribution Rules and US Citizen spouse
For interest bearing accounts, the rules are quite flexible. You do NOT have to follow the Cdn method (which is based on the portion contributed by each owner) The IRS doesn't really care who claims the interest, as long as someone does. If your name is on the 1099-INT, then to have someone else claim the interest, you issue a 1099-INT of your own, include a copy with your return, and then it d=becomes their resposibility, which, in your spouse's case, would mean not having to pay tax as a non-resident.
Of course, minimizing your US tax simply makes the CDn tax payable larger.
Of course, minimizing your US tax simply makes the CDn tax payable larger.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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Re: Attribution Rules and US Citizen spouse
Thank you. These are Canadian accounts, so no 1099 is given by the bank anyway.
What about a rental property located in Canada where both spouses are listed as the owner?
What about a rental property located in Canada where both spouses are listed as the owner?
Re: Attribution Rules and US Citizen spouse
It is based on the percent of ownership.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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Re: Attribution Rules and US Citizen spouse
Okay thank you. That is what I thought.
So you could end up reporting different amounts to Canada and the US.
So you could end up reporting different amounts to Canada and the US.
Re: Attribution Rules and US Citizen spouse
You mean differnt percentages? I don;t believe so. Ownership is ownership.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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Re: Attribution Rules and US Citizen spouse
Here's what I mean:
Say the Canadian spouse works and makes money. He invests that money into a property; he and his wife both register as joint owners.
The Canadian attribution rules would suggest that all of the income earned from this property belongs to the husband, but the IRS would see otherwise, no?
Say the Canadian spouse works and makes money. He invests that money into a property; he and his wife both register as joint owners.
The Canadian attribution rules would suggest that all of the income earned from this property belongs to the husband, but the IRS would see otherwise, no?
Re: Attribution Rules and US Citizen spouse
It is percent of ownership. You can determine that.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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Re: Attribution Rules and US Citizen spouse
Thanks for your replies Nelsona. Sorry for reviving this thread, but I have a related question here.
I've been helping a friend with their US filings. I thought it was going to be straightforward, but I just discovered they have a Mutual Fund RESP, as well as a TFSA.
The TFSA is owned individually by the US spouse; I assume 3520 and FBAR will be required.
For the RESP, both spouses are listed as owners, with a child as the beneficiary. All the funds in the account were contributed by the non-US spouse, though there is likely no way of proving this. I understand 3520 is no longer required, but that mutual funds are PFICs.
Based on what you said earlier, there is some flexibility in reporting income from joint accounts. Would it be acceptable to merely list the RESP as a joint account on the USC's FBAR and avoid reporting the income to the IRS? I want nothing to do with PFIC forms, and if they are required I will need to refer my friend onward to a real accountant.
I've been helping a friend with their US filings. I thought it was going to be straightforward, but I just discovered they have a Mutual Fund RESP, as well as a TFSA.
The TFSA is owned individually by the US spouse; I assume 3520 and FBAR will be required.
For the RESP, both spouses are listed as owners, with a child as the beneficiary. All the funds in the account were contributed by the non-US spouse, though there is likely no way of proving this. I understand 3520 is no longer required, but that mutual funds are PFICs.
Based on what you said earlier, there is some flexibility in reporting income from joint accounts. Would it be acceptable to merely list the RESP as a joint account on the USC's FBAR and avoid reporting the income to the IRS? I want nothing to do with PFIC forms, and if they are required I will need to refer my friend onward to a real accountant.
Re: Attribution Rules and US Citizen spouse
RWSP's have recently been granted relief from 3520 filings, so not a concern for that. TFSA's have not yet.
I have no opinion on the RESP, but I would suggest removing ownership for the USC as soon as possible.
I have no opinion on the RESP, but I would suggest removing ownership for the USC as soon as possible.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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Re: Attribution Rules and US Citizen spouse
My concern is that the RESP will appear on the FBAR and raise questions about the mutual funds in it.
It looks like I will need to refer this person onwards, as it is getting a bit too complicated for me.
It looks like I will need to refer this person onwards, as it is getting a bit too complicated for me.