# US citizen in Canada: seemingly simple tax situation?



## jenha

Hi, everyone. I am a US citizen living in Canada, married to a Canadian, with small children. I feel like my tax situation w/r/t the US is seemingly simple right now but I would like to know if I'm overlooking anything. I've done a lot of reading so far on what my obligations are to the US and I'm reluctant to pay an accountant to check this all for me when I feel like my situation is currently quite basic, but I will if there's a big issue I need to address. I apologize for the length, I just want to make sure I've covered all the bases here.

*I've been living in Canada for the past 10 years and a permanent resident (by marriage) since 2006. I have maintained PR status and have not applied for Canadian citizenship.
*I have had no income at all since 2003 (from either US or Canadian sources) except for the Universal Child Care Benefit that Canada gives me, which amounts to (at most) $3600 a year for any given year, and it is the only thing I claim on my Canadian taxes since it's taxable. 
*I have filed Canadian taxes every year since I received a SIN.
*My husband has provided financially for me and the children the entire time. They are all his children.
*My children are obviously dual citizens by birth but only one was born in the US and has an SSN currently. None have US passports.
*My husband is solely a Canadian citizen and has never had a green card in the US.
*We never lived together in the US at any time before or after marriage and my husband has never made any income in the US. 
*My husband's income is below $90,000.
*We have never had more than $10,000 in our bank accounts combined at any time. Our two bank accounts are in both our names. They are checking accounts that do not earn interest.
*My husband has an RRSP, only in his name, with less than $10k in it. He had it before he married me. He does not have a TFSA, stocks, or any other financial instrument. 
*I do not have an RRSP, TFSA, or any other financial instrument in Canada or the US.
*My children do not have RESPs.
*We do not own a house, and never have.
*We do not own a business.
*We bought a car outright a couple years ago for less than $5000 that has both our names on the title.
*We travel to the US frequently for brief visits to visit my family - usually just for the day or overnight. We have never had a problem crossing the border.

When I moved to Canada I called the IRS and asked if I had to file taxes while living abroad. They told me not to bother filing since I had no income. I have not filed taxes in the US since 2002 as a result. It was my understanding when I started receiving the UCCB that it was not enough money to claim in the US - looking at IRS Publication 54 (2012) seems to bear this out: if I filed "married filing separately" (that is what I would file, correct?) I have to have at least $3800 in gross income to be required to file?

I only recently discovered the heightened requirements and, after some panic and frantic researching, realized my situation up to this point is seemingly of no consequence to the US and they will not penalize me for not filing taxes. My assets are minimal and I don't meet the FBAR filing requirement. Does this all seem correct?

Should I file now for this year and/or any past years, even though my situation has not changed and still is as laid out above?

Is my husband's income or RRSP considered my income in any way for US tax purposes (because we're married)?

I do have more questions about how we should proceed in hypothetical future situations (in buying a house or starting a business, etc.) so as not to cause US tax problems but I don't want to write a novel here - I just would like some confirmation from knowledgeable people that I'm all right as it stands at the moment.

Thanks so much for your time!


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## Bevdeforges

From everything you've said, you should be just fine doing as you are doing.

As long as your income in your name is below the filing threshold, there is no need for you to file. If you do not have signature authority over bank accounts totaling (all together) at least $10,000 then you do not need to file the FBAR.

You should NOT declare any part of your husband's income.

The one caveat I would give you is that you may want to look into getting your kids US SS numbers and passports if you are traveling back and forth to the US. There are some reports that the border folks are getting stricter about this - and the fact that you are traveling together as a family where Mom has a US passport means that somewhere along the line, some border guard may figure out that the kids are technically US citizens. (It may also depend on whether or not this latest move to revamp the immigration system in the US gets going. One demand from the Republicans appears to be "tighter border control" which would have implications for the Canadian border, as well as the Mexican border.)

The US SSN is primarily in case any of your children decide they want to live and work in the US later on in their lives. It can be a royal PITA to get your first social security card as an adult.

But tax wise, you seem to be just fine as is.
Cheers,
Bev


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## jenha

Thank you, Bevdeforges! I appreciate your reply.

Yes, we've thought about getting the kids set up with SSNs and US passports, we just haven't gotten around to it yet. Good to know it may become a problem at the border - what you say makes a lot of sense. They are definitely getting more thorough in checking our IDs and so forth over the past couple years when we cross.

Honestly, since recently finding out about how the US is becoming more stringent with their tax requirements of citizens living abroad, I have been worried about establishing the children's US citizenship more firmly in case it is a detriment to them down the line - they've never lived there. We're not about to stop visiting the US, but I have no plans to ever move back to the US. I guess I've left it up in the air because I'm afraid to make the wrong decision here and inadvertently penalize them somehow. 

If you all don't mind, I have a few more questions? Obviously we would consult a lawyer and accountant should we go through with any future plans, I just want a general sense of pitfalls/issues I might not know about, and when I research I turn up very little to go on.

I am worried about not having filed in the US now or in the past because in the future our situation is likely to change w/r/t me working, having more money in our bank accounts, setting up savings accounts, etc. and then I will have to file, having not filed in a decade. Wouldn't that send a red flag to the IRS, like, "where is this person coming from with claims who never filed before?" Is it better now to establish a record with them that shows I'm on the up-and-up even if I'm not required to file? Or will that just bring unnecessary scrutiny on us - as in "why is this person filing when she's not required to file?"

If my husband's income increases to over $90,000 is it considered a shared income, thus requiring me to claim it to the IRS? Or does the IRS only care about what I actually earn, myself? I'm sorry if that seems really basic but I honestly have no idea how much his assets/income are considered *my* income/assets according to the IRS (because we're married) and maybe it's so basic a question I have been stumped finding a clear answer to it anywhere. 

I have felt bad that we didn't establish RESPs (education savings plans) for the kids, especially since the Canadian government gives you money to put in them when you open them. Now I feel like I've dodged a bullet because we'd have to pay taxes to the US on them. Should we not bother doing so - is it more trouble than it's worth?

Is there anything in particular I should know about buying a house in Canada with my husband - any special procedure or caveats since I'm a US citizen? It would be bought and financed with his income - would it be better that the title and mortgage were only in his name? Again, I'm sorry if that's super basic. 

If my husband starts his own business, he was thinking I would work for the business as well. Is that unwise? Should it be only in his name and I have no part of it? Would that be something I'd have to claim ownership in to the IRS even if it's only in his name, since we're married and it might be considered a joint asset of the marriage?

I have been thinking about establishing a small business myself (making crafts at home to sell) - it wouldn't earn very much, but definitely more than the $400 minimum where you have to claim self-employment to the IRS. Would this even be worth it if I'd have to pay taxes on being self-employed to both Canada and the US? 

I would so appreciate anyone with experience in these situations sharing what they know with me just so I can get an idea of what's feasible for us in the future... I feel like all our plans have been upended with this new discovery that my US citizenship could be a problematic factor (call me naive but I honestly never considered that it could be an issue before).

Again, thank you very much for your time. I feel reassured I have finally found people who I could ask these questions that have been worrying me. Both Canadians and Americans I have asked have given me some weird, horrified, but ultimately unhelpful reactions (because they can't answer my questions) when I've explained what I've found out about the IRS requirements, FBAR, etc. to them!


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## Bevdeforges

> I am worried about not having filed in the US now or in the past because in the future our situation is likely to change w/r/t me working, having more money in our bank accounts, setting up savings accounts, etc. and then I will have to file, having not filed in a decade. Wouldn't that send a red flag to the IRS, like, "where is this person coming from with claims who never filed before?" Is it better now to establish a record with them that shows I'm on the up-and-up even if I'm not required to file? Or will that just bring unnecessary scrutiny on us - as in "why is this person filing when she's not required to file?"


If you're not required to file, you're not required to file. Only exception would be if you decided you were going to move the whole family to the US for some reason, and then you would probably have to backfile for 3 or 4 years, if only to prove that you didn't have to file in the first place.



> If my husband's income increases to over $90,000 is it considered a shared income, thus requiring me to claim it to the IRS? Or does the IRS only care about what I actually earn, myself? I'm sorry if that seems really basic but I honestly have no idea how much his assets/income are considered *my* income/assets according to the IRS (because we're married) and maybe it's so basic a question I have been stumped finding a clear answer to it anywhere.


His income is his income, and I wouldn't worry about reporting it to the IRS. As far as assets that produce income, I wouldn't claim anything unless the account or asset title is in joint name.



> I have felt bad that we didn't establish RESPs (education savings plans) for the kids, especially since the Canadian government gives you money to put in them when you open them. Now I feel like I've dodged a bullet because we'd have to pay taxes to the US on them. Should we not bother doing so - is it more trouble than it's worth?


I don't know that much about Canadian plans, but as long as the income is below the thresholds for filing, I wouldn't worry about the educational plans. Particularly if you put them in your husband's name for the kids.



> Is there anything in particular I should know about buying a house in Canada with my husband - any special procedure or caveats since I'm a US citizen? It would be bought and financed with his income - would it be better that the title and mortgage were only in his name? Again, I'm sorry if that's super basic.


The threshold for having to file the various FATCA forms is something like $200,000 (more than if you were resident in the US), and most of the FATCA forms don't have to be filed if you are below the filing threshold for income anyhow. 



> If my husband starts his own business, he was thinking I would work for the business as well. Is that unwise? Should it be only in his name and I have no part of it? Would that be something I'd have to claim ownership in to the IRS even if it's only in his name, since we're married and it might be considered a joint asset of the marriage?


Report your employment income from the company as foreign earned income, listing the company as your employer. You would not have to report any ownership interest if it's only in his name.



> I have been thinking about establishing a small business myself (making crafts at home to sell) - it wouldn't earn very much, but definitely more than the $400 minimum where you have to claim self-employment to the IRS. Would this even be worth it if I'd have to pay taxes on being self-employed to both Canada and the US?


I don't know about the Canadian business registrations, but as long as you are paying the appropriate social insurances (i.e. "social security") to the Canadian government for your business, you should not have to pay US social security (aka "self-employment" tax).
Cheers,
Bev


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## BBCWatcher

Jenha, I'm a little confused. You mentioned that "they are all his children." Aside from the child born in the U.S., why would the other children "obviously" be U.S. citizens?

With respect to the U.S. citizen(s), he/she has got no choice and is legally required to use a U.S. passport to enter the U.S. If he/she always visits the U.S. via land crossing (car, train, bus) then a U.S. passport card is fine and also less expensive.


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## Nononymous

Two quick points. 

For now, if you do set up RESPs, just do it in your husbands name. You can work out the mechanics of reporting requirements etc. at some future date, when the amounts exceed the threshold.

You can't renounce your children's US citizenship, that's something they'd have to do themselves at 18. But two of your kids won't have US birthplaces on their Canadian passports, so they may have less border trouble down the road if they chose to fly under the radar.

Otherwise it sounds like you are in the fortunate position of owing the US government absolutely no paperwork. So your conscience should be clear.


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## Nononymous

BBCWatcher said:


> Jenha, I'm a little confused. You mentioned that "they are all his children." Aside from the child born in the U.S., why would the other children "obviously" be U.S. citizens?
> 
> With respect to the U.S. citizen(s), he/she has got no choice and is legally required to use a U.S. passport to enter the U.S. If he/she always visits the U.S. via land crossing (car, train, bus) then a U.S. passport card is fine and also less expensive.


If I'm not mistaken, a child born outside the US to a US citizen parent is considered to be a US citizen if the US citizen parent has lived five or more years in the US. (In other words, one US citizen parent will grant you US citizenship as long as they have spent some time in the US - I assume to prevent the citizenship being passed on through the generations if nobody actually lives in the US.)


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## BBCWatcher

Sure, but "they are all his (the Canadian's) children" doesn't mean they are the children of a U.S. citizen.

I await the original poster's clarification.


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## Bevdeforges

It was kind of a long post, so you may have missed this statement:



> **My *children are obviously dual citizens by birth but only one was born in the US and has an SSN currently. None have US passports.


I think this means that all the children are the children of the OP and her husband. The comment about them being all his children was simply to clarify that there was no "prior marriage" in the situation.

At least that's how I read it. But perhaps the OP can clarify.
Cheers,
Bev


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## BBCWatcher

Usually people say something like "all the children are ours, with none from prior marriages." So I didn't want to miss anything that might be pertinent in the way the original poster described the situation.

Assuming clarification that all the children have a U.S. citizen-mother and otherwise qualified for U.S. citizenship at birth, yes, they're U.S. citizens. The only parental decision now available is whether they are documented or undocumented U.S. citizens. I almost always recommend that parents make sure their children are documented. It's just one of those basic parental responsibilities that's important for a variety of reasons. Yes, as pointed out, if any child wishes to renounce U.S. or Canadian citizenship independently and voluntarily as an adult that's possible, but for now it's not.


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## jenha

Yes, Bevdeforges is correct. I meant to clarify that all my children are my husband's children as well - that this is not a situation where I immigrated with a child from a previous marriage... sorry if that was unclear.

BBCWatcher, I am a US citizen and, as an adult living in the US, became engaged to a Canadian and moved to Canada to live with him - my children are definitely dual citizens by birth whether born here or there... only, so far as I know (with the new law passed by Harper's gov't) my child born in the US cannot pass his Canadian citizenship on to his children.

Thank you for answering my further questions, Bevdeforges. I admit your answers have put my mind at ease a great deal. 

Thanks, Nononymous! My concern with the RESPs is, if I am paying taxes on them to the IRS, doesn't that cut into their worth as tax-deferred savings for the kids? I worry they will cause more hassle than help, even with the "free money" from the Canadian gov't. But since I have no experience with the matter, I don't know for sure.

I have always intended to officially document their US citizenship, but having now read about the issues that can arise from maintaining US citizenship, I have been worried that it might be a real pain for them down the line. However, as you said, they can't renounce 'til they're adults, and I can't renounce it for them... nor am I sure I'd want to make that decision for on their behalf. I always thought having dual citizenship would be an asset for them, not a detriment, and am chagrined to find out that it may not be.


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## Nononymous

jenha said:


> Thanks, Nononymous! My concern with the RESPs is, if I am paying taxes on them to the IRS, doesn't that cut into their worth as tax-deferred savings for the kids? I worry they will cause more hassle than help, even with the "free money" from the Canadian gov't. But since I have no experience with the matter, I don't know for sure.
> 
> I have always intended to officially document their US citizenship, but having now read about the issues that can arise from maintaining US citizenship, I have been worried that it might be a real pain for them down the line. However, as you said, they can't renounce 'til they're adults, and I can't renounce it for them... nor am I sure I'd want to make that decision for on their behalf. I always thought having dual citizenship would be an asset for them, not a detriment, and am chagrined to find out that it may not be.


I honestly don't know much about the RESP situation, except that if you put them in your husband's name, they won't be your responsibility to report on an FBAR. It may be that down the road the principal and/or interest income is such that you'd need to file returns or FBARs for the kids themselves, but that has nothing to do with your taxes.

My daughter is a quasi-documented US citizen (birth registered in Germany, child passport never renewed when we moved back to Canada). Her RESP is in my parents' names (fair enough - they're paying for it) and we've done nothing to report it. But then again, I'm a bit of an outlier in that I'm a dual citizen who's making a conscious decision to stay off the books and under the radar (and yet still keeps spending time on this forum...) as I think it's the correct decision for me. 

As regards your kids having their citizenship documented, you may at some point be asked at the border to get them US passports if you are all together, but I'm sure it'll be a polite warning first. As you said, your Canadian-born children are US citizens, there's nothing you can do about that, but whether you want to actually inform the US of their existence is a decision you'll need to make. Staying off the grid is certainly an option for them. 

I too have changed my feelings about dual citizenship. It was moderately useful to me when I went to grad school in the US twenty years ago (saved me some paperwork) but now it's nothing but an albatross.


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## BBCWatcher

jenha said:


> ...so far as I know (with the new law passed by Harper's gov't) my child born in the US cannot pass his Canadian citizenship on to his children.


That would seem to be correct. Typically governments that wish to enforce a generational limitation adopt residency tests for such parents, but Canada's new law is more severe.



> I always thought having dual citizenship would be an asset for them, not a detriment, and am chagrined to find out that it may not be.


Every citizenship comes with rights, responsibilities, and privileges in unique mixtures. How someone assesses those attributes is highly situational and also can vary over time. Moreover, at least some would argue there's inherent value in dual or multiple citizenships.

I'm going to respectfully disagree with the "off the radar" idea at least in this case. Operating from the principle that a child is in the best position to decide his/her citizenship(s) once an adult, documenting his/her citizenships makes that decision easier to pursue either way. A "limbo" status makes it harder for the child (once an adult) to operate as the citizen he/she is if he/she chooses, yet the government in question can still enforce all the responsibilities associated with citizenship any time it wishes.


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## BBCWatcher

I should also point out that it's not actually a legal choice for a U.S. citizen to enter the U.S. with anything other than a U.S. passport, with very few exceptions (e.g. military movements). And I'm not in favor of violating any country's laws absent a damn good reason.


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## Nononymous

BBCWatcher said:


> I should also point out that it's not actually a legal choice for a U.S. citizen to enter the U.S. with anything other than a U.S. passport, with very few exceptions (e.g. military movements). And I'm not in favor of violating any country's laws absent a damn good reason.


I take a somewhat looser view. If a law is generally not being enforced (as has been the case with passports) and it's in your interest not to comply, then have at 'er. It's not a moral question, it's a pragmatic calculation of risk and benefit.

I think for myself and a lot of other Canadians who find themselves saddled with a largely "accidental" US citizenship (some only learning of it as adults) that has the potential to become a huge headache, there's an extremely visceral reaction against any form of compliance.


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## Nononymous

BBCWatcher said:


> I'm going to respectfully disagree with the "off the radar" idea at least in this case. Operating from the principle that a child is in the best position to decide his/her citizenship(s) once an adult, documenting his/her citizenships makes that decision easier to pursue either way. A "limbo" status makes it harder for the child (once an adult) to operate as the citizen he/she is if he/she chooses, yet the government in question can still enforce all the responsibilities associated with citizenship any time it wishes.


Again, I think that cuts both ways. If doing things by the book means that my child, upon reaching 18, faces both a lifetime's intrusive reporting requirements, and potentially having income from her RESP taxed by the US (because they don't recognize it as a tax-deferred savings vehicle) then I've put her in a terrible position. In her shoes, I'd be right pissed off.

One could argue that she'd be much better off staying anonymous - no filing obligations, no tax on her education funds. She can pretend she's only Canadian, which thanks to a non-US birthplace on her passport, she should be able to do. It was her bad luck that she inherited a second, unwanted citizenship.

If she decides she wants the citizenship, she can apply for a passport and deal with any tax issues then - potentially long after the education funds have been spent entirely on education.


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## Nononymous

jenha said:


> My concern with the RESPs is, if I am paying taxes on them to the IRS, doesn't that cut into their worth as tax-deferred savings for the kids? I worry they will cause more hassle than help, even with the "free money" from the Canadian gov't. But since I have no experience with the matter, I don't know for sure.


The short answer, after having had a quick look, is that your name should be nowhere near any RESPs - do it exclusively through your husband. Then there are no reporting requirements, or potential for US tax to be paid due to your citizenship.

It appears that your kids might face an additional US tax burden upon withdrawal of the funds, were they to be voluntarily tax-compliant.


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## BBCWatcher

Be careful to project adult issues onto children. They're not applicable. Absent a Justin Bieber-like situation -- and probably not even then -- children don't have U.S. tax concerns. In fact, they make great tax deductions, and the Additional Child Tax Credit may be available. In other words, the U.S. government may be prepared to pay cash simply because you have U.S. citizen children if the parent's tax situation is just right.

At age 18 or later the newly minted adult can take all factors into consideration and decide whether to renounce either country's citizenship or not. And that will depend on factors that are simply unknowable at this point in time. Even the tax considerations are unknowable -- tax laws in both countries can change.


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## maz57

Interesting point BBC.

"Even the tax considerations are unknowable -- tax laws in both countries can change."

I would argue, however, that tax considerations fall into the category of "knowable unknowns". In Canada personal income tax rates have trended lower with more reliance on consumption taxes (GST) to offset the resulting loss of revenue. Additionally, tax-sheltered savings schemes (all of which are ignored by the US except for the RRSP) are periodically introduced. As you well know, consumption taxes are not deductible on a US tax return while Canadian tax-sheltered savings are fully taxable. If this trend continues, the time will come when there are not enough Canadian tax credits to offset US taxes. 

Meanwhile, on the US side, the trend is to punish US citizens who live abroad with ever more bizarre and complex reporting rules, to totally ignore the perfectly legal tax sheltered government plans in their country of residence, and to increasingly assume that any "foreign" account is highly suspicious and must be dealt with severely. Proposals to eliminate the FEIE are introduced in Congress on a regular basis and it's only a matter of time before one of these measures succeeds. Meanwhile FATCA is going to make life miserable for millions of US "persons" worldwide when it is finally implemented.

I see no reason that either of these two trends will be reversed anytime soon.


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## Nononymous

maz57 said:


> I see no reason that either of these two trends will be reversed anytime soon.


Ergo, in my case I think I'm doing my daughter a service by NOT making her existence known to the US. At 18 she can opt to become tax-compliant, continue under the radar, or renounce. By keeping her off the books I'm giving her more options.


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## BBCWatcher

Nononymous said:


> By keeping her off the books I'm giving her more options.


Let's assume that she doesn't travel to the U.S. which would be illegal with anything other than a U.S. passport. That is, let's assume keeping a U.S. citizen child undocumented is legal because there is no U.S. travel involved.

I don't see it the way you do. She's got zero tax issues (unless there's something very strange going on), but her parent might be losing a tax benefit, a tax benefit which could be lavished on her. She would have a hassle applying for a Social Security number if she wants one, as Bev points out, causing all kinds of problems such as difficulty applying for U.S. student aid. U.S. Social Security typically provides documented U.S. citizen children with survivor benefits should something bad happen to the U.S. parent. Renunciation should she choose it would be straightforward and inexpensive (no exit tax basis, again unless something very strange is going on). And the underlying fact of citizenship is the same, and the U.S. ability to exert sovereignty any time it wishes. It's solely a question of documentation which then provides the option of clean and clear renunciation.

I think this is projection, honestly. Children don't have adult responsibilities, so the cost-benefit analysis is very different for them. And if they're destined to be Broadway stars, Silicon Valley moguls, or whatever, documented U.S. citizenship is at the very least helpful.

I'm trying to see the benefits of "flying under the radar" for the child, but I just don't see it for the child absent something very unusual. I can definitely see circumstances when adults might do that, but the "cloak and dagger" stuff projected onto children is a bridge too far for me.


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## maz57

Bottom line...other than the guaranteed right to return, there is NO advantage to US citizenship if you don't live in the US. If one doesn't intend to return, it's best to shed US citizenship ASAP. It can only get worse. I don't understand why the US government is doing this but everyone affected has to respond in a manner appropriate to their individual circumstances. 

It's ironic, but I believe that for occasional visits I am safer traveling on my Canadian passport now that I have lost my US citizenship. At least now I get a little respect when I roll up to US customs. Worst case scenario; I am refused entry. I can live with that.


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## Vangrrl

Hi! My situation is somewhat similar to yours. I am American by birth and dual citizen of Canada and the US. I'm married to a Canadian. We have two children, one who was born in the US and one who is not.

My son (who is 7) and I travel to the US on US passports. I don't feel we have a choice in the matter - we have been warned on the few occasions that we have traveled on Canadian passports. My Canadian-born daughter (who is 5) travels on her Canadian passport. We have been asked about her citizenship/passport at the border only once - the implication was that she should be a US citizen since I am. I told the agent truthfully that I don't believe that I lived in the US long enough to pass along citizenship to her and left it at that. I have no intention of applying for US citizenship on her behalf. 

My kids have RESPs. They were opened in my name (before I found out that I needed to file US taxes). We have since transferred them to my husband's name.

I do not have a TFSA. I don't believe it would be advantageous. I do have RRSPs, and there is a form that you file along with your taxes to defer tax on them. 

I am employed by my husband's corporation. I declare my earned income from his company. But I don't declare his income, or his corporation earnings.


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## Nononymous

With travel, I'm basically "feh" towards the legality or illegality. They've not enforced this for years. If they begin to enforce it, which seems to be the case, then I use a US passport and she's Canadian because I didn't live long enough in the US, or so I pretend.

The only "normal" (i.e. non-millionaire) issue with US citizen kids and taxes I can think of is that if they are the beneficiaries of an RESP, they may be obliged to file something as minors, and once they start going to school, withdrawals from that RESP seem to be considered taxable income by the US. (I did some digging, it's hard to find a straight answer, but this seems to be the Google consensus.) So it's possible they could owe US taxes on Canadian education savings. (Furthermore, I don't know if it's changed, but 20 years ago tuition was a tax deduction for Canadians, but not for Americans). In which case, staying undocumented is probably the most cost-effective way of telling the US to eff-off, which it fully deserves. 

The part that killed me was reading that the 20 percent co-payment from the Canadian government is considered taxable income if the RESP contributor is a US citizen. That's brilliant. The Canadian government sets aside tax dollars to support education, and the IRS wants a cut. That's really going to encourage compliance...


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## BBCWatcher

Sorry for a bit of thread "hijacking" here -- we're off in a different direction from the original poster's questions, I think.

I think there are some concepts that are getting muddled together that shouldn't be. Citizenship status is a legal question. Whether that citizenship is _documented_ or not is a very separate issue. An undocumented citizen is still a citizen and can still be treated like any other citizen by the government in question.

The U.S. does not allow children to renounce U.S. citizenship legally possessed whether documented or undocumented. They have to do that on their own, as adults, voluntarily and independently. Parents are powerless to affect their children's U.S. legal status as citizens. Once they're born, if there's "damage" done it's already done, and it endures at least until age 18.

I think we all ought to be able to agree that, in all except rare cases, children don't confront the negative aspects of U.S. citizenship that some adults do. The education example cited seems highly contrived to me: children don't typically have a lot of income, and a little bit of income going to fund education isn't likely at all to even trigger a U.S. tax filing requirement. (U.S. citizens don't have to file tax returns until they reach an earnings threshold.) It certainly wouldn't be a situation that the original poster is likely to experience with her children, given the other information she's mentioned.

Look, I realize this forum is called "Expatforum.com" and there are more than a few participants who aren't thrilled with particular citizenships, such as U.S. citizenship. But I also think we have to avoid projecting adult problems onto children that rarely experience them. And there's nothing a parent can do anyway to affect the legal status of a U.S. citizen child -- what's done is done.

The much more probable situation is that that child (and future adult) simply wants to travel to the U.S., even for transit, and without any "cloak and dagger" concerns (parental hangups?). The answer to the question, "Hey Mom, can I fly to New York on Tuesday to audition for that Broadway show?" should be "Heck yes, here's your Social Security number and passport, and break a leg!" Children are different: they're almost always income and wealth poor but opportunity rich. Maximizing the latter means they've got more options for increasing the former, and (again, in general) making it difficult/inconvenient to seize opportunities in the world's largest economy is not (generally) a good idea _for children_, especially when there's rarely a "damn good reason" to even try to do that. Said another way, 2 passports are better than 1, and 3 are better than 2, basically.

Adults? Different situation. As people grow older they tend to have more income and wealth (hopefully), and then things like tax considerations tend to become more important. Maybe they hang out at Expatforum.com.  Their future time horizon is shorter (unfortunately), so with fewer years ahead to consider the future is more knowable. Things like a strong, affordable medical system become more important with age. This is all very different stuff -- not 100% universal, but very typical and very typically different.

Finally, I should point out that I had a grandparent who didn't document the legal fact of his child's (my parent's) citizenship. While it wasn't intentional and no "blame" should be assigned, it made things more difficult than they should have been. There may be exceptions, but as a general principle I think it's fair to say the child doesn't appreciate the "favor." Being undocumented is not generally fun -- it's having the legal status without the proof, which is not a good combination _in general_. So I'm writing about this issue from a bit of personal perspective, hence I'm dwelling on it a bit. I hope that perspective is helpful.


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## Bevdeforges

We've gone around on the topic of US citizenship with all its benefits and pitfalls before. Admittedly, the US is a bit unique in how they define a "citizen" particularly one born abroad and the whole thing about tax obligations for US citizens living abroad (whether born there or not) is and has long been a bone of contention.

US expats fought long and hard for the ability to be able to pass their citizenship on to their foreign-born offspring, only achieving this in the mid-1970's and, for better or for worse, it has now turned into one of those "be careful what you wish for" issues. The taxation aspect, while originally mostly an annoyance is becoming a complication with the FATCA legislation, but until we see to what extent that will be "enforced" outside the US, it's very difficult to tell how much of a complication. And the fact remains that, whether or not you register your children with the consulate, the US considers them US citizens from birth if they meet the criteria. 
Cheers,
Bev


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## maz57

I, too, apologize for the thread hijack. It's just that it's painful to me to hear yet another story of a person living a perfectly innocent life who suddenly discovers the horrendous complications attached to US citizenship if living abroad. Being retired I have the time to follow a few of these forums and can't resist tossing in my $.02 once in a while. Perhaps a wider discussion of some of the issues winds up being helpful to the original poster...I don't know. 

And yes, the fact of US citizenship for a minor child cannot be changed until the age of 18. However, I think for kids not born in the US and not living in the US it's best to take no action. Upon becoming an adult, that person can go ahead and claim their US citizenship if they so desire, or they can choose to continue to ignore it and no one will be the wiser. It's certainly no more difficult than going through the renunciation process if their parents registered them with the US government and they then decide they don't want to be an American, don't want to live in the US, and don't want to file US tax returns. 

For wealthy people living abroad they probably already have their lawyers and accountants and the extra expense of annual reporting is probably not significant in the overall scheme of things.. For those of more modest means that expense can be a much higher percentage and it winds up being a colossal waste; a lot of scant resources spent to prove they owe nothing to the IRS. And really, in a moral sense, what right does the US government have to any of this information for non-residents?

We can all hope that the day comes when the US gets itself on the same page as the rest of the world. It seems simple enough to me; you pay your taxes where you live and receive services. You don't pay taxes to some foreign government where you don't live and don't receive services. Canada I think has got it right. When you leave you file an exit return and have no further obligation until such time as you return and log back into the Canadian system. It's got nothing to do with citizenship. You don't see droves of Canadians renouncing their citizenship over taxes and filing obligations. 

As for having access to the world's largest economy, my response is this; if America continues to insist on this insanity it won't be the largest for much longer.


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## Nononymous

Indeed, also guilty of thread hijacking. In shutting-up I would say that if you have a US citizen child with a non-US birthplace, there are some very strong arguments against having that citizenship documented. Each situation is of course different.


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## Nononymous

Getting off topic, I know...

For what it's worth, I made another quick trip down to the US this past weekend. I used my Canadian passport with US birthplace - no questions, no reaction at all from the Federales.

Another trip next week, we'll see how that goes.


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## Nononymous

And again, another trip to the US on a Canadian passport. They really don't take this US-citizens-must-use-US-passport thing very seriously...


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## Bevdeforges

Nononymous said:


> And again, another trip to the US on a Canadian passport. They really don't take this US-citizens-must-use-US-passport thing very seriously...


That's good to know - though are you using the same port of entry each time, or does this vary?

Obviously, enforcement of these things varies according to the political climate. The laws are still on the books, and like they say, "your mileage may vary."
Cheers,
Bev


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## Nononymous

Bevdeforges said:


> That's good to know - though are you using the same port of entry each time, or does this vary?
> 
> Obviously, enforcement of these things varies according to the political climate. The laws are still on the books, and like they say, "your mileage may vary."
> Cheers,
> Bev


Mostly Calgary, but also Montreal with a connecting flight. I think that's been three or four trips now since the time I was asked about it (which only came about because I had that fun "meetings are working and you need a visa" conversation). 

That being said, I'm not enjoying the uncertainty, particularly for business trips. Intention is to renew the US passport later this year when I'm not a Canadian resident.


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## maz57

@ Nononymous. My experience is similar to yours. I've crossed probably a half dozen times on my Canadian passport since last December when I relinquished. (All by car) I know by the questions asked that they notice my US birthplace but it has been no issue whatsoever. Previously at the same Port of Entry I crossed for years on a US passport. I do not yet have a CLN. I don't wish to travel to the US with a US passport because it could jeopardise my relinquishment claim. 

I've done a bit of a Google search but I've been unable to find the actual statute which states US citizens must enter on a US passport. Anybody know? Is it a myth? There is certainly nothing in my US passport or the pamphlets that came with it. I'd be interested to see the actual chapter and verse. One would think it would be front and centre in the passport itself if were truly an enforcible law.


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## Nononymous

maz57 said:


> I've done a bit of a Google search but I've been unable to find the actual statute which states US citizens must enter on a US passport. Anybody know? Is it a myth? There is certainly nothing in my US passport or the pamphlets that came with it. I'd be interested to see the actual chapter and verse. One would think it would be front and centre in the passport itself if were truly an enforcible law.


I can't remember where - some State Dept site probably - but I have definitely seen it. It is the law, and was stated to me verbally, once.


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## BBCWatcher

The legal citation is 8 U.S.C. § 1185 paragraph (b). Here's the text of that paragraph:

(b) Citizens
Except as otherwise provided by the President and subject to such limitations and exceptions as the President may authorize and prescribe, it shall be unlawful for any citizen of the United States to depart from or enter, or attempt to depart from or enter, the United States unless he bears a valid United States passport.

This law has been in force since at least 1952, although it wasn't until 1994 that the words "United States" were added after the word "valid." (That was probably the original legislative intent, but there were a series of U.S. Supreme Court cases after 1952 bearing on dual citizenship.) In 1978 the law was amended so that the President doesn't have to declare a national emergency to make exceptions.

The criminal penalties appear to be described in 18 U.S.C. §§ 1541 to 1546, particularly 1541 to 1544. The maximum penalty is 10 years in prison, although years can be added if there are other offenses (particularly drug trafficking and facilitating international terrorism). The statute of limitations for these passport-related offenses is 10 years.

It's not entirely clear (to me, anyway) what part(s) of §§ 1541 to 1544 apply to a U.S. citizen attempting to use a foreign passport to enter the United States, but I wouldn't want to test the possible ambiguity on the penalty side. I suspect the U.S. Justice Department would not have a problem prosecuting a violation of 8 U.S.C. § 1185 if they were sufficiently motivated. And 8 U.S.C. § 1185 is as clear as a law gets.


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## Nononymous

Indeed. Enforcement, however, does not appear to be a priority.

I'd be curious as to how that works with customs pre-clearance in Canadian airports, as you're not really on US soil. I supposed they push a little button under the desk, you disappear through a hole in the floor, and the next thing you know you're on a Gulfstream heading for Gitmo with a bag tied over your head.


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## BBCWatcher

Nononymous said:


> I'd be curious as to how that works with customs pre-clearance in Canadian airports, as you're not really on US soil.


Consider U.S. embassies. Are they "U.S. soil"? Legally, yes.

The U.S. has negotiated certain legal prerogatives reserved exclusively for the U.S. at those extraterritorial CBP checkpoints in Canada and elsewhere. I wouldn't want to test those limits either. But even if there are applicable limits you haven't thought of the obvious solution: U.S. CBP in Canada lets you pass (with a smile), you board your flight to the U.S., and some friendly police officers are waiting for you at the other end. Simple.


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## maz57

BBC, thanks for that bit of research. 8 USC & 1185 (b) is pretty unequivocal. Curiously, paragraph (c) was deleted a while back. (c) proscribed the penalties for violating (b). So now, although a USC entering (or leaving) without a valid US passport is in violation of (b), there is no proscribed penalty! 

The sections 1541 to 1544 seem to refer to fraudulent use of a passport (using other than your real name, false information in the application, forgeries, or using someone else's passport.) Doing any of those things is a very bad idea no matter which country's passport you are using. But I don't think any of those sections would apply in the case of someone presenting a valid Canadian passport. 

The US barely tolerates dual citizenship. They don't like it and recommend against it. US Department of State pretty much ignores a dual citizen's other nationality whenever it can, most certainly within the borders of the US. 

But here's the weird part: If you go to the CBP website and look up the needed documents for a US citizen entering or leaving, they list six options. US passport, US passport card, enhanced drivers licenses, Trusted Traveler Cards (NEXUS, FAST, SENTRI), military id cards, or Merchant Mariner cards. Only the first two of those options are a US passport. Go figure.

As usual, the rules are inconsistent; that's probably why the application of them is inconsistent. In my particular case travelling on my Canadian passport is totally consistent with my assertion that I am no longer a US citizen. In fact, one could argue that attempting to travel on my US passport would be fraudulent even though it is still in my possession. I tried to send it to the US Consulate by registered mail but was told not too; it would only be sent back. Why does this stuff have to be so complicated?


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## Nononymous

For what it's worth, when I was told I must use a US passport, back in December, the officer referred to the Western Hemisphere Travel Initiative as the reason for this requirement (the "everybody needs a passport to fly into the US" rule) rather than the older law about US citizens must use a US passport.


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## BBCWatcher

The officer was correct. The law says it must be a U.S. passport unless the President has exceptions. The President does have exceptions, and the applicable exceptions for Canada-U.S. travel are described in the WHTI.

As I linked above, the U.S. Department of Justice is evidently of the view that the criminal penalties for passport offenses apply to 1185. That's all that really matters in terms of potential extreme inconvenience at least.

While a CBP warning isn't required, my assumption would be that if anyone is prosecuted it would be those who have been warned, and it might also occur during heightened sensitivity (such as an unrelated manhunt) or with some other incident (some other argument with CBP, for example). But that's just a guess. I'm not inclined to test these hypotheses.


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## maz57

I should clarify that the document requirements seem to be somewhat different depending on the mode of travel. For air travellers, there seem to be fewer exceptions. I have also heard (but have no personal experience) that in some cases the airlines themselves impose more stringent rules; i.e. no passport, no boarding. Perhaps they are fearful of being accused of being lax in their security.

I believe that some of the exceptions (EDL, NEXUS) may require proof of citizenship during the application process and therefore the passport requirement is deemed to have been effectively satisfied. So now the waters are totally muddied with different interpretations depending on mode of travel, which agency is doing the checking, and which guy you happen to be inspected by. And I'm not sure I'd like to be pulled over on a routine traffic stop on either side of the border and have to explain why I've got two passports in my possession!

Personally, I'm going to travel on my Canadian passport until such time I'm forced under protest to use a US passport. Eventually I'll have that CLN and can then tell them to "stick it".


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## graubart

I have lived in Canada for 43 years, traveling to the US twice a year normally. I never even had a passport until 2010. Prior to the Western Hemisphere Travel Initiative all that was required, even for air travel, was a US birth certificate, photo ID and proof of Canadian residency.

Since 2007 a passport has been required for air travel.

I would be comfortable traveling by land on an enhanced drivers license, for example, and expect the very worst that could happen is that I would be denied entry.


WHTI | Western Hemisphere Travel Initiative | USA

WHTI | Western Hemisphere Travel Initiative | USA


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## Bevdeforges

maz57 said:


> And I'm not sure I'd like to be pulled over on a routine traffic stop on either side of the border and have to explain why I've got two passports in my possession!


I have dual nationality and I always travel (to the US at least) with both passports. It's no biggie. I use the US passport to enter the US (including showing the airline people on check-in) and on departure (again, just at the check-in desk), but the French passport for everything else (especially coming back home to France - lines are always much shorter and quicker moving!). 
Cheers,
Bev


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## graubart

Bev,

When did the website start sticking ads in the very text of our posts.

I don't think that's right.


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## maz57

@ Bev. The border folks are familiar with passports and would understand why a person might have more than one. A Washington State Trooper or RCMP wouldn't be familiar and might well view double passports as highly suspicious. (Which passport is the fake one?) 

This would be more likely to happen in WA where they now apparently have started random checks looking at the status of individuals. (The so-called "constitution-free zones".) I was stopped in a temporary border control check back in '07 or '08 down in CA. Only had a US passport at the time. Things have gotten worse since.


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