Newbie questions (do i *have* to file?)

didnotknow · Post by **didnotknow** » Sun Nov 18, 2012 11:09 pm

Background: Dual US/CAN citizen born in Canada and never lived one day in the US (mother is US citizen)

-Never knew until last week that i am supposed to be paying taxes to the US?!

Questions:
1) I have no social security card, no US passport, and have never lived in the US - does this in any way exempt me from having to file?

2) What happens if i don't file?

3) Should i be speaking with an immigration lawyer, or just deal directly with an experienced accountant? If so, do i deal with a Canadian one or American one?

THANKS!!!!!!!

Mach7 · Post by **Mach7** » Mon Nov 19, 2012 6:40 am

The fact that you have identified yourself as a US/Canadian Citizen answers your question.

Yes you hae to file, but an immigration lawyer is not needed. Get a good accountant, do your research (This site is excellent along with the issac Brock Society), and begin the process.

Mach7 · Post by **Mach7** » Mon Nov 19, 2012 6:44 am

Further to your questions;

If you don't have a SSN number, then as a US citizen you will have to get one before you file. (Someone like Nelsona can better clarify if you only need an ITIN #...but if I recall a bonified Citizen requires an SSN).

What happens if you don't file?...don't even begin thinking that way...just file and become compliant.

didnotknow · Post by **didnotknow** » Mon Nov 19, 2012 10:06 am

Thanks for your replies. The reason that i was thinking of speaking to a lawyer is because i also want to renounce my citizenship. I never plan on living in the US, therefore keeping the dual citizenship seems ridiculous (i pay taxes every year but never get a single benefit?).
Or am i misunderstanding? Is there *any* benefit to keeping the citizenship if i am 100% certain that i will never live there? I can't think of any...

Also, I am worried that because i make a fairly good income (over 100K) that i will have a lot to pay. I honestly, had NO idea that i was ever supposed to pay, and the thought of having to pay something on my RRSPs, income, and property sales (all happened in Canada, i've NEVER had any dealings with anything in the US) really upsets me.

Thoughts? Not trying to "get away" with anything, just feeling stuck.

Mach7 · Post by **Mach7** » Mon Nov 19, 2012 1:30 pm

You cannot renounce your citizenship until you are tax compliant...(well...you CAN..but then you are considered a 'covered expat' and will/may fall into paying the exit tax).

Benefits in keeping US citizenship is something you have to consider for yourself.

If you pay tax in Canada, there is no reason you will have to pay tax in the US...we have a tax treaty with our friends south of the border to eliminate double taxation. Your costs will be incurred hiring an Accountant to tabulate your returns, FBARs etc. to show the IRS that you owe nothing.

It may seem overwhelming right now, but it is not as bad as it seems.

Just get compliant then decide what to do with your citizenship.

maz57 · Post by **maz57** » Mon Nov 19, 2012 2:20 pm

Before taking any action you should consider your options very carefully. It sounds as if you have never had any interaction with the US government. If so, they have no knowledge you even exist. The only information they will have about you is the information you tell them. The only reason you would open this can of worms is if you want to work or move to the US.

Even if you travel to the US it will be on a Canadian passport showing a Canadian birthplace. There is absolutely no rush to "get compliant". Even though your mother is a US citizen it's not absolutely certain that you are. The rules are very complicated.

Even with the upcoming FATCA rules, your bank will have no "indicia" of US personhood. Be very cautious before you step into the abyss. Once you are in the US system there is no going back. Your life will become very much more complicated--make sure there is some clear benefit to you. The US and Canadian tax systems interact in ways that severely restrict your financial options as a Canadian citizen/resident. The only interest the US has in you is your money.

I know that's it real shock to discover yourself in this dilemma, but you must take the time to carefully consider all the angles. Whatever action you take will affect you for the rest of your financial life. I personally know many in your situation who have decided that the best thing is to do nothing.

nelsona · Post by **nelsona** » Mon Nov 19, 2012 4:34 pm

However, "interaction" would include renouncing. In order to renounce, you must be compliant.

So it may indeed be better to just ignore the fact that you are USC, until and unless you want to move to US.

MGeorge · Post by **MGeorge** » Mon Nov 19, 2012 5:50 pm

Hi didnotknow,

Is your father a US citizen? I'm not sure about how the rules may have changed over the years - but my understanding is that US citizen is only automatically conferred at birth if:
1. You were born in the US - which you weren't
2. BOTH parents are US citizens when you were born outside of the US - and both parents are married to each other.

Based on the information you've provided, it seems that you may be entitled to US citizenship, but you aren't automatically.

If this is the case, you can choose to continue not being a US citizen.

Regards,

nelsona · Post by **nelsona** » Tue Nov 20, 2012 12:26 am

Usually one US citizen parent is enough, as long as they lived in US the requisite time.

MGeorge · Post by **MGeorge** » Tue Nov 20, 2012 9:15 am

That's correct - one US citizen parent is enough to grant eligibility for US citizenship provided the residency requirements are met. But this does mean that US citizenship is automatic. Mr. didnotknow would have to have applied for US citizenship and prove that his 1 USC parent meets the 5 year residency requirements. A USC grandparent can meet this requirement as well.

My point is that Mr. didnotknow may not have received US citizenship automatically, and therefore he has a choice. I'm interested in whether his father was a US citizen - if not, then he can continue not being a US citizen.

let us know, didnotknow!

didnotknow · Post by **didnotknow** » Tue Nov 20, 2012 1:51 pm

Thanks everyone. I do indeed have dual citizenship (wasn't sure, but verified with my mom, who applied on our behalf when we were teenagers). My father is not american. I'm thinking that i need to speak with a lawyer to sort everything out.

nelsona · Post by **nelsona** » Tue Nov 20, 2012 2:44 pm

An accountant familar with these cross-border issues is what you need, not a lawyer.

MGeorge · Post by **MGeorge** » Tue Nov 20, 2012 2:47 pm

I don't think you need a lawyer. I was in a similar situation except both of my parents were USCs when I was born, and I did have a social security number. I just filed 6 years of back taxes and FBAR forms with a letter stating that I didn't know I had to file. I didn't owe any taxes because of foreign tax credits and exclusions. Now I'm all set. I don't plan to renounce as I'd like to be able to move there someday.

Cheers,
MGeorge.

didnotknow · Post by **didnotknow** » Tue Nov 20, 2012 2:50 pm

Thanks. I guess my reason for renouncing would be because i don't ever intend on moving there / working there, therefore why pay an accountant to file taxes every year for the rest of my life to send to a country that i don't intend on living in? Not sure how easy it is to renounce, that's why i was thinking about speaking to a lawyer.
Also, i heard that i might have to file for a certain number of years even AFTER i renounce. Seems strange, not sure if it's true...

nelsona · Post by **nelsona** » Tue Nov 20, 2012 4:02 pm

Ine used to have to file after renunciation, however that is now changed. What must be done is have IRS sign-off on past returns as being compliant.

As to 'cost'. since no taxes are involved, once a acct would do one year, the following years would be boiler-plate.

Serbinski Accounting Firms

Newbie questions (do i have to file?)

Newbie questions (do i have to file?)