I am learning the hard way that nothing is easy when it comes to investing without the help of qualified individuals who can offer proper guidance to a middle class USC living in Canada just trying to save for a rainy day.
Can you tell me if opening a Diversified investment account through the Bank national as a means of saving will mean having to file the 3250/3250A?
USC living in Canada - Investment options
Moderator: Mark T Serbinski CA CPA
Investemnt aaccoiunts are not trusts, nor are the individual investements, so no trust reorting is required. RESPs and TFSAs are trusts.
The problem now is the PFIC and foreign asset reporting for each investment.
The problem now is the PFIC and foreign asset reporting for each investment.
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
I am familiar with the FABAR reporting, but not PFIC. I just looked up PFIC
"Unless the U.S. shareholder makes a QEF or "mark-to-market" election to be taxed on a current basis on the income of the PFIC whether or not distributed, an actual distribution from the PFIC or sale of the PFIC shares generally results in income tax at the highest applicable tax rate with an additional interest charge imposed on the tax due.
My original inquiry was made because my 21 year old son (student) just opened this "Diversified" type of account to save a little money for the first time in his life. I told him he will most likely have to file a US tax return next year because his earned income might be enough to require him to file.
It was hard enough trying to convince him, having never lived or worked in the US, that he is American and has to file US tax returns but this type of info (PFIC) is only going to make things more complicated.
He may just find it easier to denounce his U.S. citizenship. I know you don't like to encourage that option but this all seems a bit overwhelming for the average working class Joe who's just trying to save a little without having to pay out more money than one has saved to hire someone for the sake of proper tax reporting.
"Unless the U.S. shareholder makes a QEF or "mark-to-market" election to be taxed on a current basis on the income of the PFIC whether or not distributed, an actual distribution from the PFIC or sale of the PFIC shares generally results in income tax at the highest applicable tax rate with an additional interest charge imposed on the tax due.
My original inquiry was made because my 21 year old son (student) just opened this "Diversified" type of account to save a little money for the first time in his life. I told him he will most likely have to file a US tax return next year because his earned income might be enough to require him to file.
It was hard enough trying to convince him, having never lived or worked in the US, that he is American and has to file US tax returns but this type of info (PFIC) is only going to make things more complicated.
He may just find it easier to denounce his U.S. citizenship. I know you don't like to encourage that option but this all seems a bit overwhelming for the average working class Joe who's just trying to save a little without having to pay out more money than one has saved to hire someone for the sake of proper tax reporting.
I was hoping that filing my sons 1st US tax return would be easy. I anticipate his earnings to be around 10K and I thought a 1040 with Schedule B, and 2555 would be enough and that I could do it myself. Now because he has opened this type of Mutual Fund savings account for which he probably has a total of $60.00 dollars saved, I have to pay an expert lots of money to figure this one out. It's just not fair!
Just a comment ... it isn't fair. Nothing fair about it. Actually if this is your sons first investment at least he can do mark to market and avoid the more punitive taxation albeit still being taxed on unrealized gains (pay as you go) and no capital gains treatment.
A bigger problem is for those of us who've owned their funds for a while. I finally sent my tax return in in late Sept after first hearing about PFICs and beginning research into the consequences in March. Luckily? before I filed the markets dropped and the CDN dollar dropped so I was able in 2011 to sell many of them at a loss and not report them till 2011. If a gain I would have been taxed at 35% even though in a much lower tax bracket plus would have been hit with interest since gains are spread over the life of the investment.
Buying individual stocks or investing in US ETFS is often just not a prudent alternative for small investors.
EVeryone affected should write to politicians on both side of the border.
A bigger problem is for those of us who've owned their funds for a while. I finally sent my tax return in in late Sept after first hearing about PFICs and beginning research into the consequences in March. Luckily? before I filed the markets dropped and the CDN dollar dropped so I was able in 2011 to sell many of them at a loss and not report them till 2011. If a gain I would have been taxed at 35% even though in a much lower tax bracket plus would have been hit with interest since gains are spread over the life of the investment.
Buying individual stocks or investing in US ETFS is often just not a prudent alternative for small investors.
EVeryone affected should write to politicians on both side of the border.
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lanman2000
- Posts: 143
- Joined: Wed Jul 29, 2009 8:30 am
I'm in the same boat here. Trying to save money up for my kids' education and trying to save money over and above RRSP and it just seems there is really no good option.
RESP - crazy reporting requirements. Cost of paying someone to help me file is WAY more than the benefits of the RESP
TFSA - see RESP above
Investment account in canada - PFIC reporting
Seriously... is there nowhere I can invest but the stupid bank giving me like 1% interest??? It just seems absolutely ridiculous. I must be (hope I am) missing something. Please help someone...
RESP - crazy reporting requirements. Cost of paying someone to help me file is WAY more than the benefits of the RESP
TFSA - see RESP above
Investment account in canada - PFIC reporting
Seriously... is there nowhere I can invest but the stupid bank giving me like 1% interest??? It just seems absolutely ridiculous. I must be (hope I am) missing something. Please help someone...