Removing USCitizen name from Cdn trust account to avoid 3520

CdnAmerican · Post by **CdnAmerican** » Wed Oct 17, 2012 10:23 pm

Hi - I'm a US Citizen living in Canada. I am considering closing a couple of accounts that require a 3520 - child's savings account and/or RESP. More to the point, I plan to pull my name off the account and put it in the name of a non-US citizen relative (grandparent).

My story is detailed elsewhere, but basically at this point I am up to date on all my 3520/3520A forms from past years. This was a very unpleasant but eventually worthwhile process.

These may be really simple questions. If so, simple answers are fine. I just have not seen direct responses to these in other threads.

1) I assume that I calculate income for my 1040 from those accounts up until the day that my name/signing authority is removed from the account. Is that true?
2) My presumption is that I simply will check the "final return" box and indicate that the part of the account controlled by me at the end of 2012 is $0. As such, there would be no need to file the 3520/3520-A after this tax year (even though my child is a USC). Is that true?
3) Are there any issues on the Canadian tax side with tranferring ownership of a savings account/RESP to another person? Again, I presume not, but that's what this forum is for ..

Thanks for any advice. This might be really short and simple.

nelsona · Post by **nelsona** » Thu Oct 18, 2012 1:17 pm

Transferring the account to a garnparent as always been the advice give here, so go for it.

Yes you are on the hook for the income up til the transfer. Also, the transfer is a gift, so you may have gift tax to pay in US.

CdnAmerican · Post by **CdnAmerican** » Thu Oct 18, 2012 5:59 pm

Thanks nelsona! What is the cutoff for gift tax when the USC is making a gift to a non-USC? I had thought that gift tax only applied if you were receiving, not giving, money.

JGCA · Post by **JGCA** » Thu Oct 18, 2012 7:36 pm

No gift tax applies in the US when you give. There is the annual exclusion amount of $13,000 or up to $ 134,000 ( for a non resident spouse) or you could use up your lifetime estate and gift tax exclusion of $ 1,000,000 in 2011, Also an non resident at time of death can use up their $60,000 exemption.

nelsona · Post by **nelsona** » Thu Oct 18, 2012 11:16 pm

Gift tax is for the oine GIVING, just like estate tax.

JGCA · Post by **JGCA** » Fri Oct 19, 2012 8:33 am

yes its only for the one GIVING over the limits I described if under its exempt but you need to file the return.

CdnAmerican · Post by **CdnAmerican** » Fri Oct 19, 2012 8:59 am

Good stuff. Thanks to both of you - I can't believe I missed that basic piece. That will help with the planning!

ND · Post by ND » Fri Feb 22, 2013 3:11 pm

Where a NRA spouse is the only RESP party listed as the â€œsubscriberâ€ and/or as any other title anywhere & that NRA spouse has made an election to be treated as a US resident (such as under Code Sec. 6013), shouldn't that NRA spouse and the US spouse be exempt from 3520 reporting on 3520? For example, regarding FBAR, for the Treasury Department's Financial Crimes Enforcement Network (FinCEN) policy in determining whether an individual is a U.S. resident for FBAR purposes, the election under which a nonresident alien married to a U.S. citizen can be treated as a resident for tax purposes, is disregarded.
The 6013 elections appear to apply only for the purposes of chapters 1 and 24 of the Code; if that is correct, then information reporting under other chapters would not apply to someone who has made a 6013 (g) or (h) election.

Diskdoctor · Post by **Diskdoctor** » Tue Mar 05, 2013 3:57 pm

ND,

That's a very interesting point. I need to investigate this further. I am a NRA and my wife is a dual citizen. I have been filing all the tax documents including FBAR and 3520s for the past number of years as if I am a U.S. citizen thinking that's what I needed to do to be compliant.

I found one reference here which seems to corroborate your theory as far as the FBAR goes:
"Generally, US citizens and US residents must file an FBAR under certain circumstances, but the determination of whether an individual is a US â€œresidentâ€ is to be made without regard to having made the Section 6013(g) election." (http://blogs.angloinfo.com/us-tax/2012/ ... 8-part-ii/)

Anybody out there have more information on this, particularly as it relates to the 3520?

livcyxingfoe · Post by **livcyxingfoe** » Tue Mar 12, 2013 4:19 am

That's a very interesting point. I need to investigate this further. I am a NRA and my wife is a dual citizen. I have been filing all the tax documents including FBAR and 3520s for the past number of years as if I am a U.S. citizen thinking that's what I needed to do to be compliant.

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