FBAR re: house sale

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robark
Posts: 2
Joined: Fri Jul 12, 2013 5:42 pm
Location: B.C.

FBAR re: house sale

Post by robark »

I was born in the US but have been a PR in Canada since I was 7 years old; have never lived or worked in the US since. I have a US passport. I have always paid Cdn taxes but never US taxes. I now want to become compliant with US filing obligations but am overwhelmed by the red tape. One question I have is about FBAR - my Canadian husband and I sold our house and purchased another 4 years ago, and for a day or two the proceeds of the sale were in our joint checking account before being applied to new purchase/mortgage, putting that account briefly over $10K. Does that have to be reported on the FBAR? Also my husband contributes to a spousal RRSP in my name (solely from his income) - do I have to apply for an exemption on that?
Taxpoor
Posts: 110
Joined: Thu Oct 11, 2012 9:14 am
Location: Canada

Post by Taxpoor »

FBAR reporting requires you to report the maximum value of that account in the calender year...it doesn't matter if it is only in the account for a couple of days or not, so the answer is yes.

I am curious when you state "putting that account briefly over $10K."

Do you realize that if the aggregate amounts of all your accounts, (including ANY account you have signature authority) exceeds 10k it has to be listed on FBAR?

In other words, if you have 4 accounts all with values under 10k, but together they add up to over 10k, than ALL accounts have to be listed.

With respect to you RRSP, yes, of course you have to report this to the IRS through form 8891 and either pay tax on this or request an exemption to defer, but this is not a simple process anymore. You will have to request a PLR (private letter ruling) in order to backfile any of these forms.


Since your post states that you "now want to become compliant" I am assuming you are starting this process from scratch (?)

I would suggest you take an afternoon and read thru this site and see what you have to do and where you have to start.

Although not a difficult process, it is to say the least it is a bit of a roller coaster ride.

Educate yourself the best you can on all aspects of this mission. This site is excellent to get you up to speed as many of the questions you need answers to have already been asked, use the search tool.

The complexity in your situation will arise from accounts such as TFSAs, or RESPs. Accounts that are considered 'trusts' by the IRS require complicated (IMO) paperwork such as form 3520.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

as taxpoor said, ALL your accounts, including investmenbts accounts are reportable thru FBAR every year, no need to quibble about the value, I'm sure you have accounts that totla more than $10K, and have so every day of every year for the past 20 years. So you need to do FBAR for the past 6 years including all your accounts.

And you need to back file 1040 and 8891, abd a few other forms.

search on FBAR, and 8891 and OVDI and streamline for compliance issues.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
AnnGlow
Posts: 2
Joined: Tue Jul 16, 2013 2:23 am
Location: 3445 S 116th St, Omaha, NE 68144

Post by AnnGlow »

Have you consulted any lawyer regarding this? I think he will be the best person to guide you about your problem.
Taxpoor
Posts: 110
Joined: Thu Oct 11, 2012 9:14 am
Location: Canada

Post by Taxpoor »

I disagree. A tax lawyer is not needed (IMO) in Robark's case. At the very least a suitable accountant.

There is now a procedure to become tax compliant, as indicated by the IRS...all one has to do is follow the procedure.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

taxpoor, the previous post was spam. Ignore annglow
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
robark
Posts: 2
Joined: Fri Jul 12, 2013 5:42 pm
Location: B.C.

Post by robark »

Thank you everyone. Our everyday chequing/savings account combined would never be over $10k other than when the house proceeds were there briefly, so I wasn't sure about that. Our RRSP's are definitely over $10K and I knew had to be reported, but I didn't know if it mattered that my Canadian husband was making the contribution from his income on the spousal one. I will indeed do more research - I will obtain my Social Security card when I visit the U.S. next month and proceed from there.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

One the TOTAL of your accounts goes over $10K, ALL must be reported. If one RRSP is over $10K, then clearly your total is over $10K, and ALL accounts must be reported, by both spouses.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
diaosi1
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Joined: Tue Jul 23, 2013 2:23 am

Post by diaosi1 »

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ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Post by ND »

Streamlined may work well for you - 3 yrs returns, 6 yrs FBAR. You can lose eligibility for that if IRS knocks on your door versus you volunteering. You say that you have a US passport. Beware that renewing such passport can trigger IRS calling upon you and then you'll be left without the option of S/L.

The US passport renewal form mandates that the applicant supply his Social Security Number (SSN) if he has one. This is authorized by Internal Revenue Code Section 6039E, enacted in 1986. The legislative history to that section makes clear that over 25 years ago Congress was aware that US persons residing overseas were not filing US tax returns even though required to do so. Congress intended to increase tax compliance of US citizens living outside the United States through its enactment of this tax provision.

The statutory provision is being enforced. A $500 penalty applies for failure of a passport applicant to provide the SSN, unless reasonable cause can be established. In addition, the State Department MUST turn over to the IRS information from the application – the statute mandates that it must provide your SSN and foreign residence information to the Department of Treasury. If you refuse to submit the SSN, the State Department MUST still provide your identifying information to the IRS indicating you have refused to give the information. So, whether you reveal your SSN on the passport form or refuse to do so, you can lose either way. The IRS will be made aware of you and can commence its investigation into your tax compliance history.
Taxpoor
Posts: 110
Joined: Thu Oct 11, 2012 9:14 am
Location: Canada

Post by Taxpoor »

Robark

The FBAR clearly states that you have to tabulate the maximum value of any account for that tax year if the aggregate amount of your accounts exceed 10k

Therefore the 'spike' above 10k due to the fact that the house proceeds were there 'briefly' ensures that you must now report all accounts to the Dept of the Treasury.

You might want to take a close look at for 8938 as well.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

taxpoor, robark already said they have RRSPs well over 10K. All accounts should have been reported every year, spike or no spike in one account.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
kwilliamson
Posts: 2
Joined: Mon Oct 23, 2017 1:31 pm

Post by kwilliamson »

Hello there,

If you are a US citizen, any income you earn anywhere in the world is taxable in the United States. By selling real estate it's not the incoming how much is the capital gains they earn.

So if you bought a property for 100 euros and sold it for a hundred and ten euros, your capital gain would be 10 euros. You need to pay a 15% tax on that provided it count as long-term capital gains.

If this actually did happen to you, hire an accountant to do your taxes this year. Don't take any chances.

Thanks

https://ozarkhomesforsales.com/
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