Requirement to File FBAR when filing MFJ ...

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Mswalleye2
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Requirement to File FBAR when filing MFJ ...

Post by Mswalleye2 » Thu Dec 13, 2018 4:56 pm

My US citizen husband living in Canada will be filing MFJ this year for the first time ... in order to reduced gains on a house sale. If I make the choice to be "treated as a US resident for the tax year" .... I take it I will now have to disclose my personal accounts as the aggregate of joint and personal are in excess of $10000. According to who needs to file an FBAR it says "US persons are required" and they define a US person as a "US resident" so .... since I am choosing to be "treated as a US resident for the tax year" can someone confirm that ... that means I do need to file an FBAR? That is how I read it but I thought I had asked this question years ago somewhere and at that time I understood that I did not have to file but ... I can't find the location where I asked that question.???

thanks for your time

nelsona
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Re: Requirement to File FBAR when filing MFJ ...

Post by nelsona » Thu Dec 13, 2018 6:19 pm

When a non-resident spouse files jointly, this does NOT make them subject to FBAR. Of course he would already be reporting any joint accounts he has with you.

However, it does make them subject to FATCA (Form 8938), PFIC and trust reporting that may not have otherwise occurred if the spouse did not join on the return. That comes up with RESPs, investments, TFSAs, etc that you may have.

To be clear, the only way you would benefit from filing jointly because of home sale is because it gained over $500K US. If it was less than that, his exemption on his half covers the gain. The gain on your half is tax-free if you don't join him on the return.

Am I missing some circumstance that is not obvious in your situation?
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Mswalleye2
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Joined: Fri Oct 12, 2018 2:37 pm

Re: Requirement to File FBAR when filing MFJ ...

Post by Mswalleye2 » Fri Dec 14, 2018 12:47 am

Okay, so I am interpreting the wording wrong? I just remembered ... it had something to do with the fact that 1040 requirements are not connected to the FBAR requirements ... I am trying to link the wording between two seperate departments ... or something to that effect?

The house has not been resided in fulltime last 5 years so there is no exemption, it wasn't a rental ... just calling it sale of vacation home I guess ..

I have tried to simplify my accounts in preparation of the house sale and MFJ. I was just going to claim the interest on my TFSA as the money is just sitting there in a GIC right now, I don't have mutual funds/bonds/stocks of any kind now, but .. my RRSP is in an account ACR? invested by the pension company (HOOPP or Omers) can't recall which one (so that is in funds). Would I be safe to claim the interest on the RRSP for the 2018 year on the 1040 .. since I do not want to file jointly in future years? I don't need to file Form 8938 so could I just calculate all of my interest and tack it on to the 1040?

thanks for your help

nelsona
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Re: Requirement to File FBAR when filing MFJ ...

Post by nelsona » Fri Dec 14, 2018 8:18 am

Well, you have the answer on FBAR: no requirement regardless of how you file. And the others are dependant on how you file.

The rule for exemption is you have lived in it 3 years, not 5.


Your RRSPs are exempt from reporting in all cases, its the TFSA and RESPs and outside investments that go towards PFIC, FATCA and trust reporting, I won' t go through those rules here. Are you sure you don't need 8938, now that you are jointly filing? Its threshold based. You have to report the TFSA income regardless.
Nelsona Non grata. Non pro. Search previous posts.

nelsona
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Re: Requirement to File FBAR when filing MFJ ...

Post by nelsona » Fri Dec 14, 2018 8:20 am

clarified: living in it 3 years in the past 5.
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Mswalleye2
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Re: Requirement to File FBAR when filing MFJ ...

Post by Mswalleye2 » Fri Dec 14, 2018 2:23 pm

I thought it was 2 years within the last 5 years ...therefore mentioned vacant for last 5 years. Unless it has changed... thanks again.

Mswalleye2
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Re: Requirement to File FBAR when filing MFJ ...

Post by Mswalleye2 » Fri Dec 14, 2018 3:05 pm

Form 8938 .. no .. if we combine what we have in USA and Canada yes, but what is in Canada .. no .. based on $600,000 at some point in year or $400,000 year end. I am assuming the home is not included in this value?

RRSP ... I won't include interest on it for 2018 ..? If I am then basically deferring the undistributed income ... when I choose to not file in the USA after 2018 ... wouldn't I technically owe them tax on that interest I accrued in 2018 -- since I will not be filing in the USA when they are distributed?

nelsona
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Re: Requirement to File FBAR when filing MFJ ...

Post by nelsona » Fri Dec 14, 2018 3:47 pm

Yes, my mistake, it is 2 of 5 years. That came from the rule that you have 3 years to sell your former home after you move from it.
When you said "has not been resided in fulltime last 5 years" I took that to mean it had been lived in part-time, which you might be able to pencil-whip into 2 years of residence. Sorry for the confusion.

So, I guess there is Cdn cap gains to pay on that as well. Look how much those will be (don't forget deemed acquisition if it is a US property, and you held when you moved to Canada) before deciding if it is worth saving some US cap gains tax, as it may just mean more Cdn tax. You may just be better off filing MFS. Just letting you know your options. You can work that out.

For RRSP, you would NOT have to report any income when you withdraw RRSP if you are not filing jointly in US for the year of withdrawal.

For 8938, no you do not include Cdn real estate value, unless you hold the home is some corporation, which doesn't sound like it is the case.
Nelsona Non grata. Non pro. Search previous posts.

Mswalleye2
Posts: 14
Joined: Fri Oct 12, 2018 2:37 pm

Re: Requirement to File FBAR when filing MFJ ...

Post by Mswalleye2 » Sat Jan 12, 2019 1:57 am

When you mention deemed acquisition .. do you mean disposition? The fair market value of the USA home when husband moved to Canada?

We recently had a realtor do an appraisel to get an approximate value for 2005 (year of move). I was hoping this value plus a copy of the value we were paying taxes on(tax stub) would satisfy the cost base on the Canadian side? What do you think? On the US side we have a $100,000 gain at least so MFJ may be best. On the Canadian side, the house sold $25000 US more than the appraised value for 2005 ... but with the work done on it over the last 4 years finishing it ... we will have a capital loss on the Canadian side because we spent $50000 US finishing it off. Homes were selling for quite a bit in 2005 in that area ....

The house was personal use, never a rental. What would be the best way to report this? report the capital loss? .. this wouldn't be so bad if I am understanding it right. I was seeing something about selling a secondary residence but I just skimmed over it.

How would the USA capital gains tax paid be beneficial to us in Canada ... if we indeed have a capital loss in Canada?

I wont ask any more questions as I think I am deviating from the original posted question .. thanks a lot though

nelsona
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Re: Requirement to File FBAR when filing MFJ ...

Post by nelsona » Sat Jan 12, 2019 11:37 am

When arriving in Canada it is called deemed acquisition. you are deemed to have sold and reacquired the investment.


As to "benefit", it won't be. That's what often happens in the cross-border world.
Nelsona Non grata. Non pro. Search previous posts.

Mswalleye2
Posts: 14
Joined: Fri Oct 12, 2018 2:37 pm

Re: Requirement to File FBAR when filing MFJ ...

Post by Mswalleye2 » Sun Jan 13, 2019 12:29 am

tks for your time

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