# filing 3520 d/t TFSA



## craziness

Hi there, hoping someone can offer a few tips. I have a Tax free savings account in Canada that holds about 5 stocks. I was born in and reside in Canada, but have dual citizenship. I called my bank to see if they have a EIN to submit on the form and they have no idea what this is and they don't fill out the 3520 A, so I will have to do that also. My question is would I be considered the US agent, trustee, US owner and Benificiary on the account as it is only in my name and I am the only one that stands to benefit from it. The form is a little complex for such a simplistic account. Any help would be appreciated.


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## Bevdeforges

Perhaps someone with more experience with this form will jump in here, but I wouldn't cop to being anything more than the US owner and beneficiary. I'm not entirely sure if a tax free savings account really qualifies as a "trust" at all, but it does seem that the IRS seems to think it does. 

Don't get caught up in the details of the form. If you don't know the answer (or even what they're asking about) it probably doesn't apply. Report the information you have and leave it at that. If the IRS has further questions, they'll be in touch - but you'll have the satisfaction of having disclosed as fully as possible. Chances are, unless the amounts involved are large, you'll hear nothing in response and that's a good thing.
Cheers,
Bev


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## graubart

The problem here, beyond the complexity, is trying to shoehorn the Canadian TFSA into the IRS categories. It doesn't quite fit. I submitted these forms for 2011 and am not at all sure they were completely correct, but I think I can answer your specific question. Other than that, I won't be able to help. I have closed my TFSA so I won't have to deal with these forms again.

You are the US Owner and, for these forms at least, the owner isn't a beneficiary. You are not a trustee either, that is the bank.

You may appoint yourself the US Agent if you like. This means the IRS will contact you if they need more information. I believe you are always entitled to represent yourself when dealing with the IRS.


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## maz57

Perhaps there are other facts of your personal situation that you haven't mentioned, but if you are a Canadian, resident in Canada, with a Canadian birthplace I don't understand why you would bother to give the time of day to the IRS, let alone fill out their ridiculous forms.

The TFSA is a tax advantaged gift from the Canadian government to the average taxpayer. It is intended to encourage saving and investing by Canadians in Canada. Why invite the US government to negate the benefits of that account by telling them all about it? What right does the US government have to help itself to the proceeds of Canadian investments in Canada by Canadians? By the IRS's own admission, the preparation time for a 3520 is more than 40 hours. Not surprising you are having trouble filling it out! If it makes you feel better, declare the capital gains if and when you sell one of the stocks for more than you paid. Otherwise, you may well wind up owing US tax on paper gains! That way you can never be accused of failure to disclose, only failure to understand inscrutable forms even trained accountants don't know how to fill out. Bev seems pretty knowledgeable and she appears to be mystified by the 3520.

The US government has known about the Canadian tax-advantaged registered accounts (RRSP, RESP, RDSP, RRIF, TFSA) since inception. To date they have only given relief to the RRSP, choosing to ignore the rest except to tax them and saddle them with onerous reporting requirements. Compare that to the CRA reporting requirements (hint: there is none). That is proof the IRS is interested only in taking your hard earned money. They most certainly don't give a damn about allowing you to save for your retirement years. I say keep it in Canada for the benefit of yourself and Canada. It's the Canadian government who will be providing your CPP and OAS, not the US government. 

Until such time as the US government gives up on this ugly citizenship-based taxation, it is up to Canadians to do as much as possible to prevent the wealth of Canada from being diverted into the black hole of deficit spending, banking fiascos and stock market scamming. There is only one reason the IRS wants the intimate details of our assets outside of US borders (so called foreign assets). They are paving the way for future increased taxation or outright confiscation. We should feel no obligation to assist them in this mission.

End of rant!


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## craziness

maz57 said:


> Perhaps there are other facts of your personal situation that you haven't mentioned, but if you are a Canadian, resident in Canada, with a Canadian birthplace I don't understand why you would bother to give the time of day to the IRS, let alone fill out their ridiculous forms.
> 
> The TFSA is a tax advantaged gift from the Canadian government to the average taxpayer. It is intended to encourage saving and investing by Canadians in Canada. Why invite the US government to negate the benefits of that account by telling them all about it? What right does the US government have to help itself to the proceeds of Canadian investments in Canada by Canadians? By the IRS's own admission, the preparation time for a 3520 is more than 40 hours. Not surprising you are having trouble filling it out! If it makes you feel better, declare the capital gains if and when you sell one of the stocks for more than you paid. Otherwise, you may well wind up owing US tax on paper gains! That way you can never be accused of failure to disclose, only failure to understand inscrutable forms even trained accountants don't know how to fill out. Bev seems pretty knowledgeable and she appears to be mystified by the 3520.
> 
> The US government has known about the Canadian tax-advantaged registered accounts (RRSP, RESP, RDSP, RRIF, TFSA) since inception. To date they have only given relief to the RRSP, choosing to ignore the rest except to tax them and saddle them with onerous reporting requirements. Compare that to the CRA reporting requirements (hint: there is none). That is proof the IRS is interested only in taking your hard earned money. They most certainly don't give a damn about allowing you to save for your retirement years. I say keep it in Canada for the benefit of yourself and Canada. It's the Canadian government who will be providing your CPP and OAS, not the US government.
> 
> Until such time as the US government gives up on this ugly citizenship-based taxation, it is up to Canadians to do as much as possible to prevent the wealth of Canada from being diverted into the black hole of deficit spending, banking fiascos and stock market scamming. There is only one reason the IRS wants the intimate details of our assets outside of US borders (so called foreign assets). They are paving the way for future increased taxation or outright confiscation. We should feel no obligation to assist them in this mission.
> 
> End of rant!


Thanks for all the replies. I really appreciate it and this forum has helped so much in dealing with all these forms. I am almost ready to submit 5 yrs worth of returns. Merry Christmas to myself! What a relief. While I agree these forms are ridiculous, I do have a US SIN and passport and I think becoming compliant is the best thing vs worrying about it in the future. I live by the border and go to the states frequently and don't want any future challenges. I have my first renoucing apt sheduled for March and think that is the best way to get out of filling out these ridiculous forms.


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## maz57

After rereading this thread I realise I took advantage of your query to deliver a bit of a rant without really answering your question. My apologies for that. I gather that we are both embarked on a similar journey and feel the stress that US personhood can cause if one lives outside of the US.

With respect to the TFSA, what I've been doing is simply listing the account number and institution on both Schedule B and FBAR. The income on Schedule B then goes on the appropriate line on the 1040. I don't see that any good can come from trying to pound the square peg of the TFSA into the round hole of a 3520. The mere filing of a 3520 could quite possibly raise a red flag in the IRS computer system because "foreign trusts" have been a vehicle of choice for homeland US tax evaders. The chances of filling the form in correctly are about zero and that's worth another red flag. I've been abstaining from trading stocks while in this process because that would generate a gain or a loss which would require some other stupid form. Mercifully the only mutual funds I have are held in RRSP's so are covered by 8891s. So far I've had zero response from the IRS, which I understand is a good thing. 

Keeping it simple seems to be the way to go for our purposes. I just want to get those five years filed with no complications and then bye bye US citizenship. I go in a week from now for my Canadian citizenship ceremony so I guess that is my Christmas present! I too would just like to be able to occasionally visit relatives in the US without this millstone hung around my neck. 

I think we are doing the right thing by trying to fix this problem now once and for all. The days of ignoring it (or being blissfully unaware in my case) are soon to end. When this FATCA business finally develops into the full catastrophe it will inevitably be it's going to be far more difficult (perhaps impossible) to try to comply with two different tax systems. And the way things are going with Congress they will only increase the pressure on expats because we are convenient targets that don't "pay our fair share".


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## Bevdeforges

Each person has to decide for themselves whether to "suffer the slings and arrows" involved in keeping or renouncing their US citizenship. In many cases, it's easier to simply fly beneath the radar, but at a certain income level that becomes more of a problem.

One small tip if you do decide to renounce: make sure to carry a copy of your renunciation certificate with you when traveling to the US, particularly if you were born in the US. Because you're not supposed to enter the US on anything other than a US passport if you are a citizen, some immigration agents will question you on arrival if you present a Canadian or other passport stating your place of birth as the US. Having a copy of your certificate on you can avoid a lengthy discussion of the issue.

On the TFSA, I concur with maz57's approach. We have tax free savings accounts here in France (though they work differently and are subject to different restrictions). I just report mine as a regular savings account. The amounts of interest involved are not enough to generate taxes for me (obviously, your mileage may vary), so I go for full disclosure without getting too involved in the complicated forms.
Cheers,
Bev


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## maz57

Absolutely right Bev as far as retaining US citizenship or not. Everyone's circumstances will differ, as will their patience in dealing with the endless paperwork, intimidation, and risk of identity theft that comes with being a US person living abroad. In my case I've lived in Canada for over forty years, all my assets are in Canada, I have no US source income, my spouse is Canadian, my friends are Canadian; in short I feel more Canadian than American at this point. 

When I do visit the US, it kind of seems like a foreign country to me. No doubt I will eventually die and be buried in Canada, so it seems pretty natural to just put an official stamp on what has been a matter of fact for a very long time. I certainly entertain no notions of ever living in the US again. 

I first found about this US tax thing mid 2011 and it's been a long tough slog helped in no small measure by your common sense real world experience. Several of my friends who found themselves in the same pickle panicked and spent large sums with cross-border accountants which they could ill afford and now regret. The IRS is a shocking contrast to the basically user friendly attitude of the Canada Revenue Agency. The IRS's tactics of threats and intimidation were a major factor in my final decision to relinquish US citizenship. So they are reaping what they have sown. (FATCA=Forcing Americans to Throw Citizenship Away....lol)

It will be interesting crossing the border for the first time with a shiny new Canadian passport (It will have a US birthplace, of course. The application for a Canadian passport includes an option to delete the birthplace but I believe showing up with such a document would cause more problems than it solves.) When I am sworn in as a new Canadian next week, it will be with the intent to relinquish my US citizenship. (Bonus: a relinquishment saves the $450.00 US fee.) The US consulate nearest to where I live has a reputation for being obstructionist; I'm not sure if this is intentional or simply bureaucratic incompetence. (Maybe they are processing more loss of nationality cases than they are admitting to?) Apparently the soonest available appointment is not until June 2013, so getting that Certificate of Loss of Nationality will probably take the better part of a year. Meanwhile I'll have to travel without a CLN. Of course, I can't use my US passport because that would contradict my intent to lose US citizenship. I'm thinking of going before a notary and making a sworn statement of the facts which I will carry with me and hold in reserve in case they get belligerent.

As far as the "flying beneath the radar" option is concerned, I believe the chance of success for that strategy will slowly go away, particularly if that person has substantial assets. So now is the time to exit the US system with minimal hassle; things can only get worse for expats. Even though the vast majority of expats are ordinary law abiding folks who don't cheat on their taxes, the assumption of the US government is they have foreign accounts, therefore they must be up to some illegal activity. With the trend of ever more comprehensive data gathering and sharing sooner or later everyone will be noticed by some computer somewhere.

P.S. I'm not an accountant or a lawyer. Just a retired guy who would like to live in peace without looking over my shoulder to see if big brother is on my case. I just want the nightmare to be over. I'd like to resume a normal financial life without having to always consult the US tax code before making the most mundane of investment decisions.


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## Bevdeforges

In any event, I wish you luck with the path you've chosen. Just one caveat: there was a Supreme Court ruling back in 1990 or thereabouts that basically stated that the ONLY way one can give up their US citizenship is by formally renouncing in front of a consulate official. This, despite the fact that the law still states that voluntarily taking a second nationality (among several other "expatriating" acts) "may" be grounds for having your citizenship revoked.

I think those of you in Canada are probably subject to the closest scrutiny and the full blast of the IRS scare tactics, but it still seems to be primarily the well-to-do individuals who run any significant risk in this area. 
Cheers,
Bev


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## craziness

Well said Maz 57. This has obviously being quite a long and frustrating process for you. I have just become aware of becoming tax compliant since Aug 2012. I used to be proud to be a dual citizen and now it just makes me mad as it is a constant reminder of having to deal with this complicated and stressful process. I have gone through the range of emotions and now I am just focused on getting renounced and moving forward. Thankfully my children will not be US citizens as I have not lived there previously. I have my renoucing apt in March(they won't let you renounce at the first apt) and they will tell me when I can have my second apt to actually renouce and of course part with my $450. I hope to get the second apt in 2012 to end the pain of filing, but expect I will still have to file 2013. I have a friend who has just had his 2nd apt and they told him he should receive his CLN certificate in 8 months. Re the 3520 thanks for your suggestions, I am mixed as to what is best to do. I spoke to a very nice lady at the IRS yesterday who was much to my surprise very helpful(most are rude and unhelpful) She used to work on the 3520's and she suggested putting down as US agent, trustee and owner. She said as long as it seems to make sense you won't have any problems.(Bev's general approach) She also said that the States only considers it a foreign income trust because Canada does. She suggested I call my bank and ask them if they consider it a trust account, and if so fill out the 3520 and if they don't then don't fill it out. I did this and of course TD Waterhouse had no idea what any of this meant and just said it is a TFSA. So in actuality perhaps it is easier not to even bother with it...I'll stew on it for a bit......Anyways thanks again for everyones help.


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## maz57

Just a note to report that I'm now a Canadian citizen and can at least take comfort in the fact that the Canadian government may provide some measure of protection from this IRS onslaught. 

When I contacted the nearest US consulate telling them of my "expatriating acts" and requesting an appointment to hand in my passport and do the paperwork for a CLN, they responded that they were unable to give me any time frame because they were overwhelmed with requests for renunciation appointments. Various people have reported elsewhere that the soonest one might get an appointment is June of 2013! 

It looks as if the ordeal is going to drag on for a while yet. The good news is that the 2012 1040 will be my last US tax return. I confess to periodic moments of self doubt thinking I was overreacting to all of this IRS/FATCA business, but I see now that many other folks have come to the same conclusion that I have.


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## Vangrrl

maz57 said:


> With respect to the TFSA, what I've been doing is simply listing the account number and institution on both Schedule B and FBAR. The income on Schedule B then goes on the appropriate line on the 1040. I don't see that any good can come from trying to pound the square peg of the TFSA into the round hole of a 3520. The mere filing of a 3520 could quite possibly raise a red flag in the IRS computer system because "foreign trusts" have been a vehicle of choice for homeland US tax evaders. The chances of filling the form in correctly are about zero and that's worth another red flag. I've been abstaining from trading stocks while in this process because that would generate a gain or a loss which would require some other stupid form. Mercifully the only mutual funds I have are held in RRSP's so are covered by 8891s. So far I've had zero response from the IRS, which I understand is a good thing.


My approach is the same although I don't have TFSAs, but RESPs. I just listed them on Schedule B and FBAR. I'm not going to get bogged down in the details of trying to interpret how my Canadian accounts fit into the IRS definitions of trusts and what not and I'm certainly not going to pay for "expert" advice when my experience thus far is that the experts don't seem to know any more than the lay person with regards to the topic of cross-border taxation.

I filed 5 years of tax returns and FBARs all at once in Aug 2011 and then filed last year's return on time. I did hear back from the IRS in Feb 2012. In the letter I was told not to use the old version of the FBAR form (which I had done for the 2006 return because there had been an older form back then) and so I resubmitted 2006 information on a new version form. That's it. Never heard from them again. 

Good luck with whatever you decide to do!


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## compostelle

*TFSA Trust and closure*

Does anyone know if I have to fill out a seperate form to tell the IRS that I closed the TFSA. I too had a TFSA for three years, and was told by a employee of BMO that my TFSA was not a trust. Just because the US considers them trusts, doesn't mean they are. There are some accountants out there that did insist last year that all TFSA's were trusts, but I have read now on line that many are changing their interpretation and admitting that if the canadian bank says it is not a trust, then it isn't. 
I did decide to close the TFSA and return the money to my non-american spouse. I will include the interest earned on the TFSA on the Schedule B of the 1040. All interest I have is under the 1,500 dollar mark, but since I have RRSP's I have been told to file a 8891 also. (and FBARS , which I filed last year)
But I will post in another thread my RRSP questions!
P.


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