TD Canadian T-Bill and Form 8621

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nakubo.1974
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Joined: Sun Feb 16, 2014 1:01 am

TD Canadian T-Bill and Form 8621

Post by nakubo.1974 »

Thank you in advance for your assistance. I am a married Canadian citizen and my entire family immigrated to the US in 2013. For 2013, I am filing a dual-status MFS return because it is more advantageous than filing a full-year joint return (I derived this after crunching numbers based on wages/dividends earned and RRSP/401k contributed in the two countries).

In Canada, I still own the TD Canadian T-Bill Fund and am assuming that I need to fill out Form 8621. I plan to sell the holdings soon and move the money to the US so that I will only have to report this for 2014 and never again!

The mutual fund has a unit value of $10.00 and pays out monthly interest. The interest payments are re-invested in additional units at the same price of $10.00.

Please answer the following questions I have about the form.
Part II Elections:
1) Do I need to select an option in this part?
2) If yes, would you recommend QEF or Mark to Market or something else? This also impacts what I would fill out in line 5 of Part II. I suspect TD doesn't provide any documentation which would allow me to choose QEF.
3) Since I plan to sell in 2014, what option would I choose when I file the same form next year?

Part I of the form
Line 2 - Since the additional units are purchased on various dates, do I need to attach a statement or can I simply state "Various"?
Line 5 - I believe what I choose in Part II will drive the choice for this.

Top section of the form.
1) Shareholder tax year - Use calendar year or enter actual dates of residence starting in the middle of 2013?
2) Name of PFIC - Use "TD Canadian T-Bill Fund" or "TD Asset Management Inc."?
3) Address - That of the branch where I opened the account or the TD Asset Management Inc.'s main office?
4) Employer identification number - Leave this blank since I am an Individual?
5) Reference ID number - Do I create this myself as long as it is a unique alphanumeric value?
nelsona
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Post by nelsona »

Before you dismiss the full year 1040, did you use 2555 to exclude your Cdn wages?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nakubo.1974
Posts: 32
Joined: Sun Feb 16, 2014 1:01 am

Post by nakubo.1974 »

Yes nelsona, I did use the 2555 for my calculations. I received large dividends in Canada (almost equal to my wages there) and maxed out both RRSP and 401k in 2013. As a result, my foreign income tax credit was not that high. Even after including the 1099-T for my son, I ended up ahead filing dual-status MFS.
nakubo.1974
Posts: 32
Joined: Sun Feb 16, 2014 1:01 am

Post by nakubo.1974 »

Can someone please assist with my original post. I would like to get this out of the way ASAP since I don't like to file taxes at the last minute :)
MGeorge
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Location: Canada

Post by MGeorge »

Hi nakubo,

Regarding the 8621 filing - there are only likely 2/3 "elections" that you can make - I will assume the T-bill mutual fund won't give you a PFIC statement. The only Canadian mutual funds that I know of that provide PFIC statements are:
1. Dimensional Fund Adisors
2. Fidelity Investments
3. Mackenzie financial mutual funds.
4. And recently, some CIBC mutual funds.

-If you can get a PFIC statement, then you can make a "QEF" election.

The good news is that a T-bill fund likely will only ever produce interest income and very little capital appreciation. This means that if the net asset value is always $10 - like in the case of many money market funds, you can make a "mark-to-market" election and have very little "mark to market" gain. I will warn you though - even if each unit of your mutual fund is always $10 Canadian, you will get some artificial gains due to the US to CAD conversion.

There are only a few bizarre cases where you would be better off not making the "mark-to-market" election, so I'd say chose election C "mark-to-market".

You still need to report the interest income "distributions" on schedule B of your return.

I hope this is helpful.
MGeorge
Posts: 313
Joined: Fri Jun 22, 2012 9:23 am
Location: Canada

Post by MGeorge »

Hi nakubo,

Regarding your other questions:
Part II: elections - covered this - TD won't give you PFIC statements, so choose Mark to market.
Top of form: You don't need to get an EIN for TD Asset Management - just fill in the "reference ID" and use it consistently in 2013 and 2014.
The name of the PFIC is "TD Asset Management". The "class of shares" is the T-bill fund name.
I'm not sure was to put for the date shares were acquired. I'd write "various" or "biweekly" or give the first date of a share purchase and/or reinvested dividend.
As far as I know, the shareholder tax year will always be your tax year (2013)
nakubo.1974
Posts: 32
Joined: Sun Feb 16, 2014 1:01 am

Post by nakubo.1974 »

Hi MGeorge, thank you very much for your replies.

Due to the direction of the CAD/USD exchange rate since my move, I don't think I have to worry about capital gains!
nakubo.1974
Posts: 32
Joined: Sun Feb 16, 2014 1:01 am

Post by nakubo.1974 »

Sorry, I have a few more questions.

When I fill the form for 2013:
1) Part I line 5: Do I select checkbox "c" and enter 0 as the amount?
2) I assume that I should fill out lines 10 (FMV, Adjusted Basis, Difference), 11 ($0), 12 ($0) in Part IV.

When I fill the form for 2014 (I will sell these holdings soon):
1) Do I still make the same election ("C") in Part II?
2) I assume that I should fill out all lines in Part IV.
MGeorge
Posts: 313
Joined: Fri Jun 22, 2012 9:23 am
Location: Canada

Post by MGeorge »

Hi nakubo,

No problem - for your questions:
1. Part 1, line 5. correct. Chose C, enter $0. This is always true for the 1st year of a mark to market election. The amount here is the total gain - loss reported from previous years.
2. You're correct - since you haven't sold any shares in 2013.

In 2014 - you'll sell the shares:
1. Yes - you must make the same election. Once you make a mark-to-market election for a fund, you must keep making the election.
2. Correct, fill out all lines.

Cheers,
MGeorge.
mariareese
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Post by mariareese »

I think $10.00 is fair enough but the current rate is also good ..:)[list][/list]
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