Reporting Threshold 3520

rockbottom · Post by **rockbottom** » Tue Mar 26, 2013 8:01 pm

Hi. I am wondering if a 3520 is required for someone who is below the filing threshold for income. For instance, a non-working USC spouse who has her name on a shared RESP with an NRA husband. Total earnings within the trust are less than $250 s year, so it seems pointless to file if she has no other income.

On a related note... if a dependent USC child receives a distribution, does she have to report income if the total earnings are less than $900? Or does the child get taxed on the total amount--i.e. parent's contributions plus internal earnings?

Unfortunately, if I interpret 26 USC Â§ 6012 correctly, ownership in a trust triggers a filing requirement where there would not normally be one. I'm hoping someone can correct me on this.

Assuming they both have to file, what line of 1040 is used to report RESP income?

nelsona · Post by **nelsona** » Wed Mar 27, 2013 7:57 am

Since 3520 is not linked to 1040, the 1040 filing requirement is not the standard.

rockbottom · Post by **rockbottom** » Wed Mar 27, 2013 11:32 am

Thanks, you've answered one of my questions. Now the other. What line of 1040 is used to report income from an RESP? Is schedule E necessary?

nelsona · Post by **nelsona** » Wed Mar 27, 2013 12:34 pm

RESP's are accounts, not businesses. You report them as interest, cap gains, or dividends, depending.

And you might want to look at the TFSA and RESP threads here, as there are PFIC issues you need to look at.

You should be dumping the RESP, or transfering it to a non-US person (like a granny)

rockbottom · Post by **rockbottom** » Wed Mar 27, 2013 4:15 pm

There's no mutual funds within it. That means no PFIC issues, correct?

The only gains are Interest, CESG, and capital contributions. Capital contributions made by the account holder would not go on 1040, right?

The RESP is closed, but trying to address the past.

nelsona · Post by **nelsona** » Wed Mar 27, 2013 7:06 pm

correct

rockbottom · Post by **rockbottom** » Thu Mar 28, 2013 11:32 am

Okay, so I just read something at http://www.gerberco.com/taxfilings_foreigntrusts.html.

It lists the following as requirements for a foreign trust:

Form 56
Form 709
Form 1041

Please tell me these are unnecessary for a simple RESP.

nelsona · Post by **nelsona** » Thu Mar 28, 2013 12:15 pm

Not needed.

rockbottom · Post by **rockbottom** » Thu Mar 28, 2013 1:16 pm

Whew! Thanks

rockbottom · Post by **rockbottom** » Wed Apr 17, 2013 9:11 pm

Okay, so in one year all the earnings were distributed, but by some fluke the RESP sat empty for a year with no income, no internal earnings, and no contributions. Does anything need to be filed?

nelsona · Post by **nelsona** » Thu Apr 18, 2013 2:03 am

3520 is still needed