GC Holder, Canadian Commuter, Question about Form 8938

[JohnSul]

I have been researching the new offshore reporting rules (specifically form 8938) and concluded that I am not required to file this form. Please let me know if my interpretations are wrong.

First, I am a Canadian citizen living in Ontario and commuting to Michigan each day. I hold a "commuter-status" green card with the U.S. I file 1040NR (MFS) each year because of closer ties to Canada under the tax treaty.

The rules for who must file 8938 say it is "specified individuals". You are a specified individual if any of the below are true:
• A U.S. citizen. (I am a Canadian citizen)
• A resident alien of the United States for any part of the tax year (but see Reporting Period, later). (See next section on special rules)
• A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return. (This is not me)
• A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. See Pub. 570, Tax Guide for Individuals With Income From U.S. Possessions, for a definition of bona fide resident. (This is not me)

Clearly I am not a “Specified Individualâ€￾ on 3 of 4 of the items. The only item that is questionable is the second bullet regard “resident alienâ€￾. But for this one, there is a special rule below.)

Special rules for resident aliens. You are a resident alien if you are treated as a resident alien for U.S. tax purposes under the green card test or the substantial presence test. For more information, see Pub. 519, U.S. Tax Guide for Aliens. If you qualify as a resident alien under either rule (which I do not), you are a specified individual even if you elect to be taxed as a resident of a foreign country under the provisions of a U.S. income tax treaty. If you have to file Form 8938, attach it to your Form 1040NR.

I clearly do not pass the substantial presence test because days that I commute do not count. Regarding the Green Card test, Publication 519 says the following:

Green Card Test
You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year 2011. (However, see Dual-Status Aliens , later.) This is known as the “green cardâ€￾ test. You are a lawful permanent resident of the United States at any time if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services (USCIS) (or its predecessor organization) has issued you an alien registration card, also known as a “green card.â€￾ You continue to have resident status under this test unless the status is taken away from you or is administratively or judicially determined to have been abandoned.

From this wording, on the surface it would appear that I would pass the Green Card test and would be considered a resident alien in the U.S. However, I believe this is negated later in Publication 519 where it says the following:
"The rules given here to determine if you are a U.S. resident do not override tax treaty definitions of residency."

Again, the tax treaty allows me to call myself a non resident alien in the U.S. (which allows me to file a 1040NR) due to closer ties to Canada. The tax treaty says I am a Canadian resident and Publication 519 clearly says that the rules listed in Pub 519 regarding residence do not override tax treaty definitions.

So the bottom line to me is that I am not a resident alien and therefore not a “specified individualâ€￾ and therefore do not need to file form 8938. Am I wrong?

By the way, I tried calling the IRS and form 8938 is "out-of-scope" and there is no one to speak with regarding these interpretations.

Thanks in advance.

[nelsona]

Your election to use the treaty to file 1040NR covers only the 1040NR and payment of income tax.

AS a GC holder, you need to meet all other requirements, like FBAR, 8891, 8938, etc.

Keep questions shorter please.

[nelsona]

As such you may just want to file a 1040 and get all the benefits of it rather than 1040NR, especially if married.

[JohnSul]

Sorry for the length, but I didn't want to miss anything. I am not familiar with FBAR and 8891. But for 8938, it references Pub 519 which states that these rules do not override treaty residency definition. Doesn't that mean in that in the U.S. I am a non-resident? Perhaps I just don't understand the treaty.
Thanks for the help,
John

[nelsona]

Without looking at the form. I'm quite sure the residency they are talking about is in determining what the threshold for reporting is, noit whether or not you should file.

I guess you need to get educated about FBAR and 8891, otherwise you are in for some hefty fines.