Here's a link to some information about the 2010 HIRE act:
http://gswlaw.com/irsblog/2010/08/31/fo ... -hire-act/
Reading it carefully, it seems the child receipient of the eventual RESP funds ( or, for that matter, of any gift of more than $10,000 / annually from a foreigner, which would include a non-US parent, presumably ) must report it to IRS.
But tuition and medical expenses are excluded, so spouse could pay university tuititon with RESP proceeds without tax consequences for child, and could transfer up to $9999/year without incurring any tax obligation for the child. In any cass the child would be responsible for any tax liability on the "gift".
Only growth and grant contributions are taxable in Canada, and those in the hands of the child. Presumably any US tax in the hands of a US citizen child would be offset by the Canadian taxes payable.
The contributions could be returned to the Canadian parent, who may choose to "gift" them to the child, which would incurr tax liability over $1000/year.
I would think in practice this isn't much of a downside for the case of Canadian parent and US citizen child. I am more concerned that any "gift" from Canadian parent to US child is reportable in the hands of the child.
This makes the origin of the funds ( RESP or parent private savings ) moot.
For that matter, if a Canadian spouse 'gifted' his/her US husband or wife more than $10,000, it would be taxable in the hands of the US receipent.
I hope I have misunderstood this.
RESPs and US taxes
Moderator: Mark T Serbinski CA CPA
[quote="nelsona"]RESPs are not recognized by IRS as a tax shelter. So, you need to report any internally generated income on them yearly to IRS. Hopefully you have enough other Cdn income (and thus tax) to offset any US tax).
ADDITIONALLY< the owner of the RESP (the parent or grandparent) needs to file a 3520 if they are a US 1040-filer. This has reecently expanded to the spouse of a 1040_filer even.
The solution id for the Cdn grandparents of the child to hold the RESP.[/quote]
My child's RESP is held by her non US mother. I am not a signatory or have any authority over the account. How does this affect filing with IRS?
ADDITIONALLY< the owner of the RESP (the parent or grandparent) needs to file a 3520 if they are a US 1040-filer. This has reecently expanded to the spouse of a 1040_filer even.
The solution id for the Cdn grandparents of the child to hold the RESP.[/quote]
My child's RESP is held by her non US mother. I am not a signatory or have any authority over the account. How does this affect filing with IRS?
To be clear:
Wife is not a US Citizen.
I am dual citizen.
I file US takes MFS.
I have no connection to the RESP.
Seriously, the IRS expects a 3520 from my wife for the RESP?
What are they going to do to her if she declines to file?
Child is a potential US citizen - it is not automatic as he was born in Canada, he would need to apply and potentially use his US grandfather.
If he does become a citizen I guess HE might have some IRS issues at some point, but otherwise, I can't see how the IRS can be involved in this.
Wife is not a US Citizen.
I am dual citizen.
I file US takes MFS.
I have no connection to the RESP.
Seriously, the IRS expects a 3520 from my wife for the RESP?
What are they going to do to her if she declines to file?
Child is a potential US citizen - it is not automatic as he was born in Canada, he would need to apply and potentially use his US grandfather.
If he does become a citizen I guess HE might have some IRS issues at some point, but otherwise, I can't see how the IRS can be involved in this.
"the IRS expects a 3520 from my wife for the RESP?"
No -- according to the direction things are going (iguess you didn't read the link) -- the IRS now expects a 3520 from YOU, as the spouse of a foreign trust holder.
I can see their point, since you could be hiding the income in spouse's name to avoid US taxation.
It has nothing to do with the citizenship of your spouse or your child, It's YOUR citizenship that brings this requirement upon YOU.
No -- according to the direction things are going (iguess you didn't read the link) -- the IRS now expects a 3520 from YOU, as the spouse of a foreign trust holder.
I can see their point, since you could be hiding the income in spouse's name to avoid US taxation.
It has nothing to do with the citizenship of your spouse or your child, It's YOUR citizenship that brings this requirement upon YOU.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
by "link" I don't mean the one you posted, I'm referring toa more recent one which seemed to conclude that USC's were on the hook for reporting Non-USC spouse involvement in trusts.
I'd have to search for it.
I'd have to search for it.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
This is getting ridiculous - I have no connection whatsoever to the RESP.
I don't fund it and I am not a beneficiary.
Any non-taxed growth will be CCRA taxed in my wife's hands if our son does not use it.
I can only imagine how much fun it would be to try and fill out a 3520 for an RESP I'm not part of.
My wife has a personal RRSP, is that a foreign trust for 3520 purposes?
Her personal bank accounts? FBAR required?
Maybe I'll just divorce her.
I don't fund it and I am not a beneficiary.
Any non-taxed growth will be CCRA taxed in my wife's hands if our son does not use it.
I can only imagine how much fun it would be to try and fill out a 3520 for an RESP I'm not part of.
My wife has a personal RRSP, is that a foreign trust for 3520 purposes?
Her personal bank accounts? FBAR required?
Maybe I'll just divorce her.
"My wife has a personal RRSP, is that a foreign trust for 3520 purposes?
Her personal bank accounts? FBAR required?"
I try to read as many new posts as possible in order to keep up with developments, changes, news, etc. and came across this comment even though I don't use RESP's, and perhaps this information is specific to RESP's or "Married, Filing Jointly."
I nearly collasped when I read this, since nelsona's following post seems to confirm that this is true (many are giving up citizenship because of it). I immediately went to the information on the IRS website, but couldn't find anything to confirm that we are required to report trust accounts that our NRA-nothing-to-do-with-US spouses hold. I am hopeful that I have missed a key piece of information in this post thread, such as the poster is filing "Married, Filing Jointly."
I file "Married, Filing Single". The only acct. that has any association with my NRA, Canadian citizen-only, never-anything-to-do-with-US spouse is a joint chequing acct. we share. This is the only account for which I report interest (about $2 annually) and file FBAR that has anything to do with him. I have no access, no authority, no power-of-attorney (will always be vulnerable - thanks to Uncle Sam), no information regarding my spouse's personal accounts.
My question is: Are we required to spy on our spouses for the IRS to discover information about things we have nothing to do with or access to? While I certainly could see the U.S. requiring this soon, I haven't found any information to support this so far.
Please tell me I am misunderstanding and that the case in this post is "Married, Filing Jointly" and that RESP's are treated differently because of they are held in a 'U.S. persons" names.
There are several of us "damn yanks" here on pins and needles, thinking that we had cleared up our messes, feeling like we're back in the frying pan. Thank you for clarifying.
Her personal bank accounts? FBAR required?"
I try to read as many new posts as possible in order to keep up with developments, changes, news, etc. and came across this comment even though I don't use RESP's, and perhaps this information is specific to RESP's or "Married, Filing Jointly."
I nearly collasped when I read this, since nelsona's following post seems to confirm that this is true (many are giving up citizenship because of it). I immediately went to the information on the IRS website, but couldn't find anything to confirm that we are required to report trust accounts that our NRA-nothing-to-do-with-US spouses hold. I am hopeful that I have missed a key piece of information in this post thread, such as the poster is filing "Married, Filing Jointly."
I file "Married, Filing Single". The only acct. that has any association with my NRA, Canadian citizen-only, never-anything-to-do-with-US spouse is a joint chequing acct. we share. This is the only account for which I report interest (about $2 annually) and file FBAR that has anything to do with him. I have no access, no authority, no power-of-attorney (will always be vulnerable - thanks to Uncle Sam), no information regarding my spouse's personal accounts.
My question is: Are we required to spy on our spouses for the IRS to discover information about things we have nothing to do with or access to? While I certainly could see the U.S. requiring this soon, I haven't found any information to support this so far.
Please tell me I am misunderstanding and that the case in this post is "Married, Filing Jointly" and that RESP's are treated differently because of they are held in a 'U.S. persons" names.
There are several of us "damn yanks" here on pins and needles, thinking that we had cleared up our messes, feeling like we're back in the frying pan. Thank you for clarifying.
The spousal association to trust is coming down the pike, just not here yet. Simply be prepared. You're not going to find direct info on any IRS site on this.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Quote from "nelsona": The spousal association to trust is coming down the pike, just not here yet. Simply be prepared. You're not going to find direct info on any IRS site on this."
Thank you for responding. So, yes, we will need to become U.S./IRS spies? Not to make light of this development, because there are serious implications here, but where will it stop? Who is next? Will we be required to report on our neighbours, the guy who cuts our hair, our chidren's teachers? I just sent this to my spouse, who immediately called our MP.
Seriously, how will we be expected to retrieve such information? Our partners and spouses are private individuals, citizens of (supposedly) sovereign nations who have no obligations to the U.S. I guess this is what FATCA will be expanded to include: now the Canadian government and Canadian financial institutions will be required to report the financial information of EVERY person who lives in Canada, much as every nation in the world will need to do.
Should we be prepared to pay penalties for not reporting this information previously, since it will most likely be retroactive? When can we expect to see this enacted?
Thank you for responding. So, yes, we will need to become U.S./IRS spies? Not to make light of this development, because there are serious implications here, but where will it stop? Who is next? Will we be required to report on our neighbours, the guy who cuts our hair, our chidren's teachers? I just sent this to my spouse, who immediately called our MP.
Seriously, how will we be expected to retrieve such information? Our partners and spouses are private individuals, citizens of (supposedly) sovereign nations who have no obligations to the U.S. I guess this is what FATCA will be expanded to include: now the Canadian government and Canadian financial institutions will be required to report the financial information of EVERY person who lives in Canada, much as every nation in the world will need to do.
Should we be prepared to pay penalties for not reporting this information previously, since it will most likely be retroactive? When can we expect to see this enacted?
nelsona: "Shrug. Your spouse has a legitimate gripe. You,. however, can always renounce your citizensip."
Yes, citizens of the non-US world can gripe, but to no avail. And, yes, to shedding the burden. In the end, it is my fault for making assumptions about things, and it has always been my choice to live as a Canadian, so you are right about relinquishing. Perhaps one day soon, most will do so, and we'll see an end to the need for cross-border accounting....wink, wink, nod, nod....
Thank you, nelsona. Certainly you have helped many of us who had didn't have the means to find help elsewhere!
Yes, citizens of the non-US world can gripe, but to no avail. And, yes, to shedding the burden. In the end, it is my fault for making assumptions about things, and it has always been my choice to live as a Canadian, so you are right about relinquishing. Perhaps one day soon, most will do so, and we'll see an end to the need for cross-border accounting....wink, wink, nod, nod....
Thank you, nelsona. Certainly you have helped many of us who had didn't have the means to find help elsewhere!
"we'll see an end to the need for cross-border accounting....wink, wink, nod, nod.... "
You'll note in my signature that taht would not matter to me
Besides, people still migrate, there are still far more Cdns going to US than vice versa.
You'll note in my signature that taht would not matter to me
Besides, people still migrate, there are still far more Cdns going to US than vice versa.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best