I guess they can view the TFSA as "elaborate / complicated tax movement to avoid" and list me as "high risk", which can enable higher fines.
But, in any case TFSA is something they can throw penalties on. Especially I guess the Mutual Funds within.
MGeorge, is your accountant in Toronto area by any chance and how much do you think it would be to have an accountant like that file the years?
Just found out - am I bankrupt now?
Moderator: Mark T Serbinski CA CPA
see: http://www.irs.gov/Individuals/Internat ... -Interests
IRS can file a Federal Tax Lien against a Cdn resident of which CRA has no say because for taxpayers outside the USA, the lien is usually filed in Washington DC. The Lien attaches to the taxpayer’s real and personal property and if that property is sold while a lien is in effect, the IRS will obtain payment of the taxes due from the sales proceeds before the taxpayer is paid.
Once the IRS files a Tax Lien, it becomes a matter of public record. Credit reporting agencies regularly gather this type of information, and the Federal Tax Lien will then become part of the taxpayer’s credit history. A Federal Tax Lien can adversely impact your credit score and you may encounter difficulty in obtaining new credit or refinancing existing credit.
If you have an unpaid tax liability and the IRS has filed a Federal Tax Lien, the IRS may submit your identifying taxpayer information to the Treasury Enforcement Communications System (“TECSâ€). TECS allows the Department of Homeland Security to identify taxpayers with unpaid tax assessments who are traveling into the United States. It has been reported that such taxpayers are now more frequently being detained at the US entry border.
Where a tax treaty is in place between the US and the foreign jurisdiction where the taxpayer has assets, it may contain a collection assistance provision. The United States has 64 bilateral income tax treaties currently in force. Unlike most of the 64 income tax treaties the US has negotiated, the one it has with Canada has expanded collection provisions.
IRS can file a Federal Tax Lien against a Cdn resident of which CRA has no say because for taxpayers outside the USA, the lien is usually filed in Washington DC. The Lien attaches to the taxpayer’s real and personal property and if that property is sold while a lien is in effect, the IRS will obtain payment of the taxes due from the sales proceeds before the taxpayer is paid.
Once the IRS files a Tax Lien, it becomes a matter of public record. Credit reporting agencies regularly gather this type of information, and the Federal Tax Lien will then become part of the taxpayer’s credit history. A Federal Tax Lien can adversely impact your credit score and you may encounter difficulty in obtaining new credit or refinancing existing credit.
If you have an unpaid tax liability and the IRS has filed a Federal Tax Lien, the IRS may submit your identifying taxpayer information to the Treasury Enforcement Communications System (“TECSâ€). TECS allows the Department of Homeland Security to identify taxpayers with unpaid tax assessments who are traveling into the United States. It has been reported that such taxpayers are now more frequently being detained at the US entry border.
Where a tax treaty is in place between the US and the foreign jurisdiction where the taxpayer has assets, it may contain a collection assistance provision. The United States has 64 bilateral income tax treaties currently in force. Unlike most of the 64 income tax treaties the US has negotiated, the one it has with Canada has expanded collection provisions.
Hi mrbacon,
No, my accountant was in Ottawa at Collins Barrow. The prices are all over the place, it depends on the complexity of the returns. When I backfiled, I was told that it had to be 6 returns and 6 FBARs (now it's only 3 returns in most cases).
You know, a combination of the help available here, and simply ordering "TaxACT" software for the last 3 years could probably get the job done. If you're comfortable with tax software, this may be a good option. It's only like $13 for 1 tax year.
Cheers!
No, my accountant was in Ottawa at Collins Barrow. The prices are all over the place, it depends on the complexity of the returns. When I backfiled, I was told that it had to be 6 returns and 6 FBARs (now it's only 3 returns in most cases).
You know, a combination of the help available here, and simply ordering "TaxACT" software for the last 3 years could probably get the job done. If you're comfortable with tax software, this may be a good option. It's only like $13 for 1 tax year.
Cheers!
------------------------------
MGeorge is neither an accounting nor taxation professional.
MGeorge is neither an accounting nor taxation professional.
Getting compliant
You can get compliant using the Streamlined Program - it's the official way for non-resident non-filers to get compliant. There will almost certainly be no penalties (I've yet to hear of any), but there may be back taxes plus interest.
Ignore/Avoid/Run from OVDP (unless you are a genuine tax evader).
See: http://www.irs.gov/Individuals/Internat ... Procedures.
DIY is fine, but be aware that it can be non-trivial.
E.g., TFSAs, RESPs, RDSPs are considered "foreign trusts" and require special reporting (forms 3520 and 3520A). Gains are all taxable. Grants in RESPs, RDSPs are taxable.
Canadian mutual funds outside of RRSPs are considered PFICs and have their own forms plus ugly tax considerations.
Ways that an USC in Canada can be taxed:
- Gains above $250K USD on the sale of your principal residence are taxed.
- Gains in the sale of (shares in) a qualified small business are fully taxed ($800K CAD exclusion is not recognized)
- Gains in a Canadian mutual fund held outside of a RRSP are hideously taxed because they are considered PFICs (Passive Foreign Investment Company). Possible double taxation?
- Gains from the exercise and sale of employee stock options can result in US tax owed.
- Gains in a RESP are taxed.
- Gains in a TFSA are taxed.
- Gains in a RDSP are taxed.
- Lottery winnings are taxed.
- The NIIT (Net Investment Income Tax) can result in true double taxation.
- Phantom gains caused by exchange rate fluctuations are taxed. E.g., buy shares in a stock when CAD is weak, sell it for the same price in a different year when CAD is strong.
Because the above are all considered passive income, the $97,600 FEIE (Foreign Earned Income Exclusion) does not apply to them.
Ignore/Avoid/Run from OVDP (unless you are a genuine tax evader).
See: http://www.irs.gov/Individuals/Internat ... Procedures.
DIY is fine, but be aware that it can be non-trivial.
E.g., TFSAs, RESPs, RDSPs are considered "foreign trusts" and require special reporting (forms 3520 and 3520A). Gains are all taxable. Grants in RESPs, RDSPs are taxable.
Canadian mutual funds outside of RRSPs are considered PFICs and have their own forms plus ugly tax considerations.
Ways that an USC in Canada can be taxed:
- Gains above $250K USD on the sale of your principal residence are taxed.
- Gains in the sale of (shares in) a qualified small business are fully taxed ($800K CAD exclusion is not recognized)
- Gains in a Canadian mutual fund held outside of a RRSP are hideously taxed because they are considered PFICs (Passive Foreign Investment Company). Possible double taxation?
- Gains from the exercise and sale of employee stock options can result in US tax owed.
- Gains in a RESP are taxed.
- Gains in a TFSA are taxed.
- Gains in a RDSP are taxed.
- Lottery winnings are taxed.
- The NIIT (Net Investment Income Tax) can result in true double taxation.
- Phantom gains caused by exchange rate fluctuations are taxed. E.g., buy shares in a stock when CAD is weak, sell it for the same price in a different year when CAD is strong.
Because the above are all considered passive income, the $97,600 FEIE (Foreign Earned Income Exclusion) does not apply to them.
Re: Getting compliant
Link above is borked because the period was incorrectly incorporated into it.
Streamlined Program:
http://www.irs.gov/Individuals/Internat ... Procedures
Streamlined Program:
http://www.irs.gov/Individuals/Internat ... Procedures
tdott,
Is there any UPSIDE to being a USC in Canada? It seems everything you posted makes it a really terrible deal financially. Like a burden I will bear that others don't.
I made really poor gains since the crash back in 2008. We're talking $10,000 or less total in gains across all accounts.
That's more than some of my friends, but much less than the $200k in gains I know some people had on a minimal budget.
I only really fear the penalties.
Is there any UPSIDE to being a USC in Canada? It seems everything you posted makes it a really terrible deal financially. Like a burden I will bear that others don't.
I made really poor gains since the crash back in 2008. We're talking $10,000 or less total in gains across all accounts.
That's more than some of my friends, but much less than the $200k in gains I know some people had on a minimal budget.
I only really fear the penalties.
mmmm bacon...
The only benefit to being a USC in Canada is;
1. When you get a dividend from a US stock in your TFSA, you will likely pay less than 15% tax on it. When a non USC gets the same dividend in a TFSA, there is 15% tax taken automatically. But, the USC is getting all income taxed in the TFSA so,
No, there is no financial benefit to being a USC in Canada.
1. When you get a dividend from a US stock in your TFSA, you will likely pay less than 15% tax on it. When a non USC gets the same dividend in a TFSA, there is 15% tax taken automatically. But, the USC is getting all income taxed in the TFSA so,
No, there is no financial benefit to being a USC in Canada.
------------------------------
MGeorge is neither an accounting nor taxation professional.
MGeorge is neither an accounting nor taxation professional.
[quote="mrbacon"]tdott,
Is there any UPSIDE to being a USC in Canada? It seems everything you posted makes it a really terrible deal financially. Like a burden I will bear that others don't.
I made really poor gains since the crash back in 2008. We're talking $10,000 or less total in gains across all accounts.
That's more than some of my friends, but much less than the $200k in gains I know some people had on a minimal budget.
I only really fear the penalties.[/quote]
IMO, unless you may want to move (back) to the US, there is no upside. Well, one other case is if you may need to visit occasionally and for some reason you wouldn't be allowed to as a non-USC (e.g. criminal record).
Lots of people have decided it's not worth the hassle and have renounced.
As for penalties, I'm not sure what you mean. Get compliant via Streamlined and you're *very* unlikely to get hit with penalties.
Is there any UPSIDE to being a USC in Canada? It seems everything you posted makes it a really terrible deal financially. Like a burden I will bear that others don't.
I made really poor gains since the crash back in 2008. We're talking $10,000 or less total in gains across all accounts.
That's more than some of my friends, but much less than the $200k in gains I know some people had on a minimal budget.
I only really fear the penalties.[/quote]
IMO, unless you may want to move (back) to the US, there is no upside. Well, one other case is if you may need to visit occasionally and for some reason you wouldn't be allowed to as a non-USC (e.g. criminal record).
Lots of people have decided it's not worth the hassle and have renounced.
As for penalties, I'm not sure what you mean. Get compliant via Streamlined and you're *very* unlikely to get hit with penalties.
relinquish?
@mrbacon
You said you "looked up renouncing citizenship and it looks absolutely brutal, way more expensive than complying".
Again, I'm not sure what you mean. There's a $2350 fee to renounce, but that's the "only" additional cost.
Note that it sounds like you *might* (emphasis "might") be able to claim a previous relinquishment. If so, this would save you the renunciation fee and, depending on when, might save you even having to have to become compliant.
If you have not done so yet, I suggest explaining your situation at: http://isaacbrocksociety.ca/renunciation/
Lots of knowledgeable and sympathetic people there.
You said you "looked up renouncing citizenship and it looks absolutely brutal, way more expensive than complying".
Again, I'm not sure what you mean. There's a $2350 fee to renounce, but that's the "only" additional cost.
Note that it sounds like you *might* (emphasis "might") be able to claim a previous relinquishment. If so, this would save you the renunciation fee and, depending on when, might save you even having to have to become compliant.
If you have not done so yet, I suggest explaining your situation at: http://isaacbrocksociety.ca/renunciation/
Lots of knowledgeable and sympathetic people there.
tdott's post is similar to my first post:
that you may have relinquished your USC in 2000 by becoming a Canadian.
see http://isaacbrocksociety.ca/how-to-renouncerelinquish/
you can confirm that you intended to relinquish your USC when you became a Canadian by going to a US consulate. you would get a CLN (certificate of loss of nationality).
I believe that if you want to be a USC that you still are. You should be able to confirm being a USC by obtaining a US passport. This is why I suggested that you may wish to speak with a US immigration lawyer to better understand your status, and the consequences of these apparent choices.
that you may have relinquished your USC in 2000 by becoming a Canadian.
see http://isaacbrocksociety.ca/how-to-renouncerelinquish/
you can confirm that you intended to relinquish your USC when you became a Canadian by going to a US consulate. you would get a CLN (certificate of loss of nationality).
I believe that if you want to be a USC that you still are. You should be able to confirm being a USC by obtaining a US passport. This is why I suggested that you may wish to speak with a US immigration lawyer to better understand your status, and the consequences of these apparent choices.
no-pro
-
CdnAmerican
- Posts: 245
- Joined: Tue Aug 30, 2011 12:15 am
Just a small dissenting comment about financial benefits to being a USC in Canada. There are some tax credits (Child Tax Credit, Adoption Tax Credit) that you can claim and get a refund for even if your payable taxes are $0. I also remember an Obama program from ?2009? which gave a similar credit; I think it's goal was to stimulate the economy after the stock market crash. Anyway, these typically do not offset the headache, but they are some small benefits.
And, of course, the ability to live/work in the USA at some point down the road is a benefit that's hard to quantify (valued at somewhere between zero and lots).
And, of course, the ability to live/work in the USA at some point down the road is a benefit that's hard to quantify (valued at somewhere between zero and lots).
Not a professional opinion.