# First Time Filer, FBAR, FinCEN, Delinquent?



## mwebster (Jun 12, 2016)

Hello,

I am in the confusing process of filing Canadian taxes for the first time (late) and found out about FATCA online. It is overwhelming because I don't exactly know how it will impact me but I do know it will impact me, please help...

_About Me_
I am a citizen of Canada & the USA -- I moved to Canada in 2008/have not been a resident of the US since 2008 -- I have been a student for the last 8 years in Canada, living off of part time income, student loans, and a USD structured settlement I exchanged to CAD funds.

In 2009 I opened a checking account and TFSA in Canada (I don't recall but I think that the bank knows I am a US citizen). My TFSA has never had more than a couple hundred in it at a time...

Below, I have converted all my CAD funds (including wires from my US account to my Canadian account and back--) into USD using end of calendar year exchange rates.

_My Canadian bank account max values per year..._

2009 - unsure, getting statements Monday from bank, but I don't believe exceeded $10,000.

2010 - exceeded $10,000
(wired from my US bank account to my Canadian Account from a US nontaxable structured settlement.)
(I also gained a small amount in the exchange <$1,000. No other gains to report.)

2011 - exceeded $10,000 
(funds remaining from my USA nontaxable structured settlement + funds from my Canadian student loan + $5,000 income)

2012 - exceeded $10,000 
(Canadian student loan funds)

2013 - exceeded $10,000 
(Canadian student loan funds)

2014 - under $10,000
($5,000 income)

2015 - exceeded $10,000
($9,000 income + >$10,000 wired from my US bank account to my Canadian Account from a US nontaxable structured settlement.)
(I also gained a large amount in the exchange >$10,000.)

I have so many questions, not sure where to begin, here is a start, please feel free to advise in any way....or ask questions..any info is appreciated.

1 . Is a Canadian student loan (CAD to be paid back) considered income to be reported in a US tax return?
2 . In Canada - are funds exchanged from my USD structured settlement into my Canadian checking account -- not including exchange gains -- taxable income in Canada?
3 . In Canada - would any exchange gains from this transaction be considered taxable income?
4 . In USA - would the exchange gains on my 2015 transaction of exchanging >$10,000 USD from a structured settlement into CAD funds be considered taxable income?
5 . Can I be taxed both in the USA and Canada on exchange gains made from the structured settlement payments?

6 . In USA - If my student loan and structured settlement exchanges (not gains) are considered income to be reported, do I have to file a tax return for all years except 2014?
8 . Will I need to file a Form 8938?
9 . Do I need to file a FinCEN Form 114 for all years except 2014?
10 . If I do, what is the first year I will need to file a FinCEN Form 114?
11 . In USA - Am I correct to exchange CAD funds that were originally USD funds back into USD when filing a return, FBAR or other forms.
12. If I have to file FBARs, am I delinquent?
13. Can I manage to file what I need to before the June 30 deadline?
14. Is my case extremely complicated? Is there a possibility I can file on my own?
15. If not, am I allowed to ask -- does anyone know of a place that specializes in dual citizenship taxation in the Vancouver area?

THANK YOU SO MUCH for taking the time to read this!


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## Bevdeforges (Nov 16, 2007)

mwebster said:


> 1 . Is a Canadian student loan (CAD to be paid back) considered income to be reported in a US tax return?
> 2 . In Canada - are funds exchanged from my USD structured settlement into my Canadian checking account -- not including exchange gains -- taxable income in Canada?
> 3 . In Canada - would any exchange gains from this transaction be considered taxable income?
> 4 . In USA - would the exchange gains on my 2015 transaction of exchanging >$10,000 USD from a structured settlement into CAD funds be considered taxable income?
> ...


You're really overthinking this. First of all, student loans are just that - loans. That is not income and so is not reportable. Now, I'm not entirely sure what you mean by a structured settlement - but an insurance-type settlement generally isn't considered income. Any bank interest you earned on the amount received IS reportable income, but at the point that you exchange the funds to another currency, no. A transfer of funds from one bank account to another is a transfer of capital, not a taxable event.

You should file a FinCEN for any year where the total of your non-US accounts exceeds $10,000. But there is little or no indication that they're poised to pounce on folks who simply start filing correctly and going forward rather than doing the full 6 years back. The FinCENs are easy enough to do online (in fact must be done online) however and really should only take you a few minutes each. If you don't have the precise figures to work with, you can always file with a good faith estimate for the back years.

As far as back income tax filings, do take a look at the filing thresholds. Given that your student loans and your settlement aren't considered income, you may not have to file at all if your gross income is less than the published threshold for your filing status (probably single?).
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Bevdeforges said:


> But there is little or no indication that they're poised to pounce on folks who simply start filing correctly and going forward rather than doing the full 6 years back.


True, but it's still prudent to file the back years as well -- as you suggest, Bev.


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## Booth44 (Apr 23, 2016)

mwebster said:


> 2 . In Canada - are funds exchanged from my USD structured settlement into my Canadian checking account -- not including exchange gains -- taxable income in Canada?
> 3 . In Canada - would any exchange gains from this transaction be considered taxable income?


The answer to both these is "no".

If you haven't filed Canadian tax returns for whatever reason be sure to do so as you should get a small windfall in personal GST credits if nothing else. (Also make sure all your T2202A Tuition amounts are filed each year you were in school so you are building up those tax credits for carryforward).

I'd go back and file all 6 years worth of FBARs. It's probably not worth paying the fees to the bank for those old 2009 statements. There's no harm in overestimating what your account balance would have been. Err on the high side just in case. Make sure you fill out FINCEN 114 selecting "other" as the reason for late filing and then type "Streamlined Filing Compliance Procedures for Overseas Taxpayers" as explanation in the box provided. You should be able to knock out the FBARs in about 30 minutes start to finish. Start with the furthest year back and work your way forward using the previous year's file as a template. The chances of you getting a late filing penalty for what you've described is pretty much nil.

I think Bev gave you the perfect answer re: US 1040s.

This is a situation where I'd recommend someone at least take a stab at a do-it-yourself solution rather than paying big bucks to an accountant, especially with all the free info and software available online.

For sure do the FBARs/FINCEN 114s and get yourself onside.


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## iota2014 (Jul 30, 2015)

Booth44 said:


> Make sure you fill out FINCEN 114 selecting "other" as the reason for late filing and then type "Streamlined Filing Compliance Procedures for Overseas Taxpayers" as explanation in the box provided.


There's no need for the OP to enter the Streamlined Procedures if there's no tax due. The Delinquent FBAR Submission Procedures (https://www.irs.gov/individuals/international-taxpayers/delinquent-fbar-submission-procedures) should be used for back-filing FBARs when no tax is owed.



> Taxpayers who do not need to use either the OVDP or the Streamlined Filing Compliance Procedures to file delinquent or amended tax returns to report and pay additional tax, but who:
> 
> - have not filed a required Report of Foreign Bank and Financial Accounts (FBAR) (FinCEN Form 114, previously Form TD F 90-22.1),
> 
> ...


In the dropdown list of reasons for late filing, just choose "Did not know I had to file."

Simple and easy. It's not often you can say that about IRS procedures, so it's worth taking the offer.


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## mwebster (Jun 12, 2016)

Thanks everybody for your responses! Will do a.s.a.p.


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