NRA spouse choosing to file US taxes reporting requirements

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Diskdoctor
Posts: 75
Joined: Wed Apr 21, 2010 9:46 am
Location: Winnipeg

NRA spouse choosing to file US taxes reporting requirements

Post by Diskdoctor »

This thread relates to the situation where one spouse is a US citizen, the other spouse is not, they are living outside the US, and the non-US spouse has made an election under 6013(g) or (h) to file US taxes as if they are resident. What are the reporting requirements for the NRA (non-resident alien) spouse? Here is the information I have gathered:

FBAR (TDF 90-22.1) - not required
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The instructions for the FBAR indicate that it is required for a US person, then goes on to explain that this is either a citizen or a resident. According to a final ruling from FinCEN:
"FinCEN wishes to clarify that the determination of whether an individual is a United States resident should be made without regard to elections under section 6013(g) or 6013(h) of the Internal Revenue Code."
http://www.gpo.gov/fdsys/pkg/FR-2011-02 ... 1-4048.pdf
So by my reading a NRA spouse is not required to file the FBAR


FATCA (8938) - required
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According to the instructions, a specified person includes "A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return." (of course you still have to meet the minimum foreign financial asset requirement before you have to file)


3520/3530A - ?
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The instructions for the 3520 use the term "US Person" (as does the FBAR) which it defines as US citizens and resident aliens but it then refers to Publication 519 for clarification on the determining resident alien status. P519 defines resident alien according to green card or substantial presence test BUT then alludes to making a choice to be treated as a resident alien. This leaves me unclear as to whether the 3520 needs to be filled out when the NRA spouse is the sole owner or beneficiary of a trust.


8891 - ?
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Instructions for the 8891 identify only a "US citizen or resident". Since this is filed in place of a 3520 presumably the same rules would apply. What they are is not clearly stated.
nelsona
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Post by nelsona »

8891 is required for an NRA spouse filing jointly, for tax deferral purposes.

Note that 8891 not only fullfills the 3520 requirements, but it is the only accepatable manner of making the election to defer taxation on internal earnings -- and was its original intent.

So while, 3520 may or may not be required for NRA filing jointly, not filing 8891 makes the spouse's internal RRSP earnings taxable on 1040.


8891 would also satisfy the 3520 requiremnts of 8938, so I see no reason why an NRA spouse filing jointly would not want to file 8891.

As for NRA 3520, this is the great open door that congress will want to go through, which will eventually make NRA spousal trusts subject to 3520 -- even when NOT electing to be treated as a resident.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Diskdoctor
Posts: 75
Joined: Wed Apr 21, 2010 9:46 am
Location: Winnipeg

Post by Diskdoctor »

nelsona,

You make a good point regarding the tax deferral implications of not filing the 8891. If one is willing to claim the RRSP income though, it's still not clear to me whether the 8891 is required.

Similarly for the 3520. Even if it's not required you still have to claim the income when filing jointly.
Diskdoctor
Posts: 75
Joined: Wed Apr 21, 2010 9:46 am
Location: Winnipeg

Post by Diskdoctor »

You raise the issue of potential filing requirements for NRA spouses who do not file jointly. I saw some discussion of this in another thread on RESPs:
http://forums.serbinski.com/viewtopic.p ... 3&start=30

Potential future requirements are good to be aware of but I am most concerned about what the law currently states. As far as I know, none of FBAR, 8938, 8891, or 3520 are currently a requirement for a NRA spouse who is not filing jointly.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

8891 replaces 3520, so must be filed.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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