# US taxes for dual citizens - consequences ?



## Nononymous

I'm a dual citizen due to birth; lived and worked in the US for a few years ending in 1995. 

Recently saw a couple of articles in the Globe & Mail about US citizens having to report foreign accounts, and of course file tax returns. I kind of went oops, oh yeah, forgot about that. As I understand it, I would not owe any money, as I don't make a huge income and have paid Canadian taxes. No complicated investments either. 

I'm basically too lazy to deal with the US taxes, but also rather wary of getting back on the IRS radar (in case I were to inherit money in the future - I believe that's likely not taxable but the resulting investment income might be if it was high enough). 

If I don't plan to ever live in the US or renew my US passport, it seems to me that there's almost zero chance of there being any consequences to not complying. I do a few short business trips to the US every year, on a Canadian passport, and have never had problems. 

I could renounce my citizenship, but again, it's a hassle, probably costs money, and definitely puts you on the IRS radar.

One alternative to simply ignoring the whole business is to file the simplified 1040EZ (saw that mentioned somewhere) with ballpark numbers for salary, and ignore the smaller but more complex things like rental and freelance income, and assume that's sufficient since it's all covered by the tax treaty and I'd owe nothing anyway. Or will they really want something exact?

Thoughts?


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## Bevdeforges

Officially, to make things right, they'd want you to file 3 or 4 years' back taxes, basically demonstrating that you owe nothing (or very little) to clear away the prior "omission" in filing. Then, you should continue to file going forward.

You can't really file a 1040EZ, because you need to file a form 2555 to "exclude" your foreign earned income from taxation. (Earned income is basically salary, or personal service income if you're self employed.) All other "unearned" income is only protected from double taxation through the foreign tax credit - so if the tax rate on your rents or investment income is less in Canada than in the US, you wind up paying the difference. (Obviously, this is a vast oversimplification - but you get the general idea.)

There are two dangers in simply not filing: The first is that, should you come to the IRS attention at some point (big inheritance, winning the lottery, etc.) and they come after you to assess back taxes, they can (and probably will) disallow your earned income exclusion for any years you haven't filed when calculating your back taxes for you.

The other big danger is that by not filing at all, you can't invoke the statute of limitations. Normally, if you file the IRS has 4 years (I think it is) to raise any objections to your return and the treatment of whatever income you have declared. After the 4 years have run, you're home free. For any income you didn't declare, however, the books theoretically never close and in the event of a lucky windfall or something, the IRS could go back and hit you for back taxes, interest and penalties. (Filing the past 3 - 4 years has the effect of closing out all prior years.)

The financial disclosure stuff is kind of a black hole at the moment. The FBAR disclosures (the Treasury form you file separately from your income taxes if you have at least $10,000 total in overseas accounts) used to be fairly innocuous, but in recent years are getting more and more detailed and more and more onerous. While it's clear they're looking for abuses of the system, there's some concern that the IRS is using the information submitted to set off on hunting expeditions in foreign banks and institutions.

There is an amnesty period for the financial disclosure stuff that I hear has just been extended (once again) to the end of August. It's your call if you have the sorts of financial resources that the IRS insists should be disclosed. Consider, though, that with all the cutbacks in the US budgets, how much are they likely to spend on sending their auditors abroad to track down minor offenders?
Cheers,
Bev


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## Pathologic1

*US taxman cometh*

Yes this is quite a mess the US has put all its expats in.

I have been in Canada working as a professional for over 25 years and have been paying my Canadian taxes since. I have no other worldly income or possessions. I knew I was supposed to be filing US income taxes but also knew that, especially with the foreign earned income deduction, I would owe no taxes, so filing seemed like a redundant, time consuming and costly waste. And everything has been fine this way. until now....

Now with the US FATCA coming in in 2013 which will require banks and brokers to report anyone born in or a citizen of the USA to the IRS I am worried. My savings and RRSPs are all in jepordy. And knowing that if they find you before you fess up to them they will be harsh I want to become up to date with the US IRS. But then I read about the FBAR amnesty program with its huge penalties of 5-50% of everything you have in any undisclosed accounts and now I'm not sure what to do. These amounts will destroy my retirement that I have worked so hard for. I am not a tax cheat so it's pretty irritating when uncle sam wants to treat you like one anyway.

From my reading (esp #17 in the IRS's Offshore Voluntary Disclosure Initiative Frequently Asked Questions and Answers [I'm not allowed to post the URL yet because I'm a newbie]) it seems that if you don't owe any US taxes, one could merely file all the delinquent FBARs and income taxes for the past 3-4 years and one should be fine. 

Any comments would be appreciated


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## Nononymous

I was concerned about the FBAR thing too. I called my bank and brokerage and asked straight up if they had any record of any citizenships. And in both cases I was told that they had me as a Canadian resident (through my social insurance number) but with no record of citizenship, Canadian, US or otherwise. So I really don't see how any of this will be reported come 2013, if there's no citizenship data. 

There were a few more articles in the media some weeks back, it's sounds like there will be intense lobbying on this because Canadian financial institutions cannot comply. And things like RRSPs and RESPs would likely be made exempt, or thresholds raised beyond $10,000.

I intend to ignore it, given the risk of having to pay even 5% penalty during this asinine amnesty.


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## Pathologic1

*FBAR Canada*

The reason the banks are complaining is that they will have to spend hundreds of millions to comply with the US requirements to identify where you were born, the nationality of your parents and whether you have a green card. This will replace the only information now required that is are you a Canadian resident. They aren't complaining because they are trying to protect you. Through FATCA if they do not comply with the US requirements all the money they get from the US will be reduced 30% so they will try very hard to comply. They wont risk their profits and try and help you hide.

The rumor spread in the media and elsewhere is that you need to participate in this "amnesty" program. That is really made for people that have lied and cheated and may face criminal charges. I am going to merely file my taxes for the past six years along with the FBAR forms and get caught up so its over and done with. This is also known as quiet disclosure and one expat accountant I talked to said he as done this with hundreds of clients and without problem.

As in Canada if you wait until they find you things don't usually go well. For instance: they can stop you from using the 90,000 per year foreign earned income deduction; tax you and penalize you for all the money your RRSP made and not allow you to file the form which will make the IRS treat the RRSP as Canada does; when you die your executor is required to report the estate to the USA (maybe the banks and brokers will have to report it too?)or be personally liable for unpaid taxes and penalties. This will also require them to back file and pay any penalties and taxes at that time

Below is a response from the US IRS to a query about this which confirms this approach

================================================

Hello Sir/Madam,

I am very confused about this FBAR requirement, which I just learned in a local newspaper.

I have been living and working in Canada for over 25 years and have reported all of my worldly income (all from Canada) and filed my taxes every year in Canada as required here. It was my understanding that Canada and the US had tax agreements and that, if anything, the taxes in Canada are higher than the US and thus I would have no taxes owing in the USA. Hence I have not filed in the US for many years but I plan on doing so from now on.

The question is, if I file my last 8 years of US income taxes and have nothing owing can I then file my FBARs back over the same time period without entering the amnesty program as suggested in the IRS's "2011 Offshore Voluntary Disclosure Initiative Frequently Asked Questions and Answers" section 17 ? 

Is this what I should do if I owe no taxes? 

I certainly didn't move to and work in Canada to avoid taxes. 

Thanks

=============================================
From: [email protected]
To:
Subject: RE: FBAR Canada
Date: Wed, 13 Jul 2011 


Dear Sir : 

Yes 

The Statue of Limitation is 6 years 

Filing a late or delinquent FBAR 

When filing delinquent FBARs, attach statement to each report explaining why your filings were not made timely. Keep copies of the FBARs and statement for your records. For prior calendar years, use the current version of the Form TD F 90-22.1, but you may rely on the instructions what were in effect during the reporting period of the delinquent FBAR in determining whether you are required to file the FBAR. Mail you delinquent FBAR and explanation to:

Department Treasury 
Post Office Box 32621
Detroit, Mi 48232-0621 

The maximum value of account is the largest amount (not the average amount) of currency and nonmonetary assets that appear on any quarterly or more frequent account statements issued for the applicable year. If periodic account statements are not issued, the maximum account value is the largest amount of currency or nonmonetary assets in the account at any time during the year. Convert foreign currency by using the official exchange rate at the end of the year. 
Though the FBAR instructions direct filers to use the official exchange rate, the Internal Revenue Service has no official exchange rate and generally accepts any posted exchange rate that is used consistently. For exchange rates, check the U.S. Treasury Web site or other commercial sites.


Ellen White 
Bank Secrecy Act (BSA) 
Tax Law Specialist 
Small Business /Self Employed 
BSA Compliance Department


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## Nononymous

Thanks, that's useful clarification. The news articles were very misleading. 

I cannot imagine banks retroactively collecting citizenship information, which would require voluntary disclosure from customers. It'll be interesting to see what happens. 

I suppose I might get organized enough to file these things later in the year, but as before, I really can't think of a situation (beyond moving to the US, which won't happen) in which the IRS would ever find me.


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## Pathologic1

Everyone's situation is different and it is very hard to tell with any certainty what to do.

I would be willing to bet that the US's requirement will force the banks and brokerages to do whatever the US requires in terms of place of birth etc. That's why they are complaining about how much it is going to cost them to get all this info from their customers. You could lie when you get the queries from the bank as you will by 2013 but then no doubt there will be penalties if that is discovered and the US will claim that this is as evidence of criminal behavior because you were trying to hide the income and then you are deep do do. 

Don't forget the CRA will collect on behalf of the IRS using their massive powers and that Canada has an extradition agreement with the US. You cannot hide once the identify you. Too much risk for me. I'm coming clean. Plus when I die it could be a mess for the executor (who can be held personally liable) and a loss of much or all of the estate.

The experts I have spoken with say it is better to be safe as this could cost one a mint. If you win the lottery, get named in a known US citizen's will, or they find one of your accounts (ie the bank or brokerage reports you as required) it will be a big problem. As I said you could lose many of the ways that the US lets you earn foreign income without paying US taxes (like the 90,000 dollar foreign earned income deduction) and have an RRSP without a problem (you have to file a form which prevents them from taxing your RRSP earnings every year and treated as Canada allows). For me this would cost alot.

Filing can be done very easily. My Canadian accountant just uploads my tax info to my american accountant that deals only with expats who then files them all and the FBARs. Not much work for me. If you are married you can file jointly which saves accounting costs. It will cost me a total of about $1800 for the past 6 years. One could fill out the forms themselves, as I will in the future, but for this back filing I am going to use an expert that does this all the time and its easy. He seemed to think this should all be done by Aug 31st so I need to get him the material by Aug 15th. My Canadian accountant had this all done in a couple of hours.


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## Nononymous

Can you imagine the ****storm that will happen next year if Canadian banks are forced to collect this information on behalf of the US? It's one thing for people like myself who are aware of and have used their citizenship, even decades in the past, but what about all the "unwitting" dual citizens - by birth or parentage - who never took out passports or lived in the US? They will be completely outraged, and rightly so.

I will probably end up dealing with this one day, and if it doesn't at least partially go away (which I suspect) then I figure 2013 is going to be a good time to come clean because there will be several hundred thousand of us in the same boat. 

Wait and see, in other words. But I'm hardly an expert.


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## Pathologic1

Does the US care? 

I doubt it. Look, they broke the centuries old, famous secrecy of the Swiss banks and found a bunch of hidden US account holders. For instance the accounts at UBS included many Americans and there are people in jail now because of this and the money in them is now in the IRS's hands. 

The banks worldwide are complaining right now as is the government of Canada but so far the US just says do it. We don't care whatever you are complaining about. If you don't do it we WILL start taking 30% of everything you get from US like stock sales, dividends, interest etc. The brokerages and banks will not unilaterally ignore this. If you move your stuff to one of the brokerages that sounds like they will just stop dealing with the US you will not be able to invest in the worlds largest economy. And the IRS would see this as criminal because you are willfully trying to hide the funds from them. Bad idea unless you want to risk jail time. THe US doesnt fool around with tax cheats. Ask Conrad Black, Martha Stewart or a bunch of Mafia types. My advise is don't mess with the IRS. THey have a very long muscular arm.


Banks the world over are getting ready to comply with the US requirements and Canada is no different. The only hope for that is that the Canadian gov will convince the US that we should be treated differently as we are not a tax heaven but I will be very surprised if that happens. No doubt it will not change the USs legal requirements of filing etc.


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## Nononymous

I guess time will tell. Luckily I don't have enough money to make it worth the hassle.

I guess this strayed a bit from the original question - if you've had no connection to the US for 20 years and your bank doesn't have citizenship data, how would they ever find you?

I scanned various forums and found no reports of anyone having border issues due to tax.


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## Pathologic1

I think if you never have an account over 50,000 they won't find you. The banks and brokerages will only be required to report accounts that large. If larger, you will be reported to the IRS by 2013 and then the game will begin. 

If you are young I suggest starting now because over the years you may end up with an account that large (including RRSPs) even if it's just mortgage money passing transiently through your account. Or you get an inheritance that makes it swell briefly to this level. The US will then require the reporting by your bank.

But I understand your points and trying not to come to the IRS's attention is one approach. But just recognize it carries significant risks and should you run into money sometime you may very well come to their attention.


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## lucrob59

Pathologic1 said:


> Filing can be done very easily. My Canadian accountant just uploads my tax info to my american accountant that deals only with expats who then files them all and the FBARs. Not much work for me. If you are married you can file jointly which saves accounting costs. It will cost me a total of about $1800 for the past 6 years. One could fill out the forms themselves, as I will in the future, but for this back filing I am going to use an expert that does this all the time and its easy. He seemed to think this should all be done by Aug 31st so I need to get him the material by Aug 15th. My Canadian accountant had this all done in a couple of hours.


I too have resided in Canada for many years and have not filed a US tax return for sometime. So am I correct in understanding that if I file for the last 6 years that will satisfy the IRS? I don't expect to owe any taxes and would like to have this cleared up.


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## Nononymous

I've heard that 3-4 years might be sufficient. There's also the FBAR issue, not sure how many years they want that.

For me it's balancing the hassle and the am-I-opening-a-can-of-worms risk versus the incredibly low chance of being found by the IRS since I have no intention of going back to the US and have no assets there.

Just asked a US citizen friend - been here about three years - what he does and it's pretty funny: writes his total income onto a 1040, signs it, staples a copy of his Canadian return to it, and mails it off. Takes five minutes, costs a stamp, and has worked thus far.


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## lucrob59

Well I have family there, travel back and forth a bit and will eventually have some inheritance coming from.

I would hate to show up at the border and find myself arrested and thrown in jail. IMHO a very real possibility. I still use my US passport.

I am willing to pay an expert to get this cleared up but going forward I will file the return myself (most likely in a manner not unlike your buddy! LOL)


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## Nononymous

You won't be able to renew your US passport without proving that you're up to date on your taxes. I think that rule came in a few years ago. And of course with an inheritance, you have no choice in the matter.

However, I suspect the chances of being stopped at the border and being asked about tax is very, very small, and presumably even the fine folks at US customs can't put you in jail for something like that. Rolling papers in your car or a mysterious piece of oregano on your shirt, okay, but not failure to file tax returns.


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## lucrob59

I renewed my US passport about 3 years ago through the US consulate in Toronto. They never asked about filing and I had no trouble renewing. Interesting...

As for the border you just never know when they will have the system in place to identify you and I would hate to find out the "hard" way.


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## Nononymous

You just snuck in on the passport, my last one ran out two years ago and when I checked about renewing with a mail-in form there was a tax question. Don't really need one anymore so no big deal.


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## Pathologic1

As you can see from the IRS's response the statue of limitations for filing Tax returns is 6 years. It is reduced to three years if a return has been filed but is still six years for the FBAR. (It's eight years if you need to use the "amnesty" program). So filing the last six years is what my expert suggests. One caveat is that if fraud is involved there is no statue of limitations ...

Basically my understanding is that you need to file the past six years if you haven't been filing and you want to be up to date with the IRS (so I'm submitting 2005 and on right now). Then send the FBARs to the treasury dept with an "explanation". As soon as these are submitted the 3 year statue of limitation clock starts ticking with the IRS submissions but still 6 for the FBARs

I'm not a lawyer or accountant but this is my understanding of the situation.


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## lucrob59

Oh I see. That is why the US accountant I just got off the phone with said I should expect to file 8 years back. 

Anyway my understanding of this "amnesty" until August 31st will not stop them from applying penalties. In fact you can expect the minimum penalty of 5% of your bank account holdings (some type of average annual figure). So if you have $50,000 in your savings and another $250,000 in your RRSP, then get ready to pay a penalty of $15,000 to them for not filing before. Of course the penalties are worse if you wait until later.

Is this your understanding?


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## lucrob59

Ok I am starting to get some clarity. I see you are not submitting under the OVDI, as that would automatically subject you to the minimum penalty.

Step one file back returns first, establishing no tax liability to the US. THEN file the back FBARs with an explanation to the IRS

Is that your plan?


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## Pathologic1

No that is not what I understand for most Americans in Canada. That is how some accountants and lawyers seem to think but that is because it is new to them. As you can see from the IRSs response to my very specific query citing their official FAQ, this "amnesty" program is not for most of us.

If you look at my previous post you will see that if you have just been working and living in Canada and paying your taxes in Canada, but not filing in the USA, you can just submit the past six years to IRS and FBARs to the Treasury Dept. 

You DO NOT Go into the amnesty program unless you have been involved in some shady business like having US accounts and pretending like you have no Canadian income, real hidden unreported off shore accounts, your living in the Caymans and paying no taxes anywhere etc. These are basically criminal or quasi criminal activities in the eyes of the IRS and the program is for these people. Entering it will likely save them from criminal prosecution. And they are serious about tax cheats in the US, just ask Martha Stewart or Conrad Black. 

The IRS warns those that have been involved in this shady type of activity that they shouldn't just file their income tax and FBARs, paying the taxes owed and hope to get by. They will hand these over to the criminal branch who will then act as they see fit. So if you are in this position I could see why maybe the amnesty program may be worthwhile. 

For the vast majority of Americans in Canada that simply live, invest, work and pay taxes like other Canadian's, the amnesty program is clearly NOT the way to go.


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## lucrob59

I sent you a PM. Thanks


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## Saskslam

Pathologic1 said:


> As you can see from the IRS's response the statue of limitations for filing Tax returns is 6 years. It is reduced to three years if a return has been filed but is still six years for the FBAR. (It's eight years if you need to use the "amnesty" program). So filing the last six years is what my expert suggests. One caveat is that if fraud is involved there is no statue of limitations ...
> 
> Basically my understanding is that you need to file the past six years if you haven't been filing and you want to be up to date with the IRS (so I'm submitting 2005 and on right now). Then send the FBARs to the treasury dept with an "explanation". As soon as these are submitted the 3 year statue of limitation clock starts ticking with the IRS submissions but still 6 for the FBARs
> 
> I'm not a lawyer or accountant but this is my understanding of the situation.


Thanks to all for this discussion. I was somewhat freaked out earlier today when I came across the article on the "amnesty" program. This is actually for my wife as she was born in the US to a Canadian mother - moved to Canada when she was one. We had no clue that she was supposed to have submitted US tax forms for the past 25 odd years till a friend mentioned it and I started surfing.

Then to discover the possibiltiy of huge penalties with the Amnesty program - really had us going. So from what I understand from this discussion we need to first:

1) Submit tax forms to IRS for the last 6 years (2005 on)
2) Submit the FBARs as well for the last 6 years to treasury dept. - with explanation.

And this is not related to the August 31 st deadline correct?
For the FBARs - do I just list all my wifes RRSP accounts that have more that $10000?

This all started as we just figured out that she should have Canadian citizenship as her mother was Canadian - she's always just had the US passport and the PR card in Canada


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## Pathologic1

Aint nothin' simple if the taxman is involved.

The rule is that if the aggregate value of your non US accounts is greater than 10,000 US $ then you need to report all of your accounts, even the ones of <10,000. The year end balance for investment accounts and the highest during the year for cash or cash equivalent accounts. 

As far as the order of submission there is really no reason to file the taxes before the FBARs unless you are afraid you will owe a bunch of taxes and will want to just forget about complying but you would know that before you actually filed the returns.


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## lucrob59

Pathologic1 said:


> As far as the order of submission there is really no reason to file the taxes before the FBARs unless you are afraid you will owe a bunch of taxes and will want to just forget about complying but you would know that before you actually filed the returns.


I agree with this. Assuming you will owe no tax, I dont see why you would not file all the forms together for each year back to 2005. Do not forget that cover letter explaining why you are now filing.

Then keep your fingers crossed...


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## Saskslam

lucrob59 said:


> I agree with this. Assuming you will owe no tax, I dont see why you would not file all the forms together for each year back to 2005. Do not forget that cover letter explaining why you are now filing.
> 
> Then keep your fingers crossed...


Thanks to you both - and just to clarify - this has really nothing to do with the August 31st Offshore Voluntary Disclosure deadline?

Also - I sent an email to a Tax lawyer here in Ottawa - he said he is dealing with a similar case and has offered to discuss over the phone. I'll advise if I hear anything substantial.
My biggest concern is probably my wife's RRSPs and how those are treated under US tax law.


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## Pathologic1

As far as I am aware the Aug 31 date only applies to the amnesty program but the sooner its all done the better I suppose.

As far as RRSPs go there is a form (IRS 8891 I think) which needs to be filled out. It is an application to have the IRS treat the RRSP as CRA does, that is untaxed until withdrawn. This is actually another reason to become up to date with the IRS. They have been known to not allow this favorable tax treatment if you wait until they find you, in which case you will end up paying back taxes, interest and penalties. 

But it's not all doom and gloom. If you come forth you can file form W9 with any investment companies you may have and this will decrease or stop the US from withholding taxes on thing like dividends and interest coming from the USA. Furthermore, according to my expat US accountant some people even end up getting refunds in spite of the fact they have not paid any US taxes at all.

I think this whole thing is way more frightening to honest taxpayers that have been reporting all of their income and paying their Canadian taxes all along. The IRS is really after those Americans that live in in low or no tax jurisdictions like the Caymans and pay little or no taxes and those that have accounts in multiple countries (including the US) but fail to report the income made in other jurisdictions on their taxes. I really do not think honest Canadian taxpayers have much to be afraid of, unless they wait until the IRS might find them. The worst thing one could do is arrange things so that it looks like you are trying to hide money from the IRS. They would interpret this as criminal tax evasion and they do not go easy on this (ie prison and huge fines). So in my view it would be better to do nothing than to do this.


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## Pathologic1

One more thing. I have discussed this with a US tax lawyer in Spokane Washington and he agrees with this tact. This is often referred to as quiet disclosure but again should only be used by those living in non tax haven countries like Canada that have honestly reported their world income. Otherwise you should perhaps consider the amnesty program to avoid criminal prosecution by the IRS.

I actually have 5 page memo with supporting material from this lawyer to an accountant verifying this and going over all of the options but I am hesitant to share it as someone has paid alot of money to have him do this and I would need to get permission to share it with others as it is not in the public domain.


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## lucrob59

My understanding of this OVDI is the same as Pathologic. It is an opportunity for tax cheats to come clean with potentially lower fines. Just by filing under the OVDI subjects you to minimum 5% penalty on basically all your savings, RRSP's included. 

IMO I would rather file quietly and wait to hear from them, then to "voluntarily" subject myself to penalties under the OVDI. Especially since I am no tax cheat and should owe no taxes in the US in the first place.

There is a lot of confusion over this initiative. Pathological has spoken with advisors who have said if you are not a cheat then file quietly and get up to date. I spoke with an accountant in the US that told me I should file under the OVDI and was going to be subject to probably 5% penalty. So basically the advice is all over the place.


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## Saskslam

lucrob59 said:


> My understanding of this OVDI is the same as Pathologic. It is an opportunity for tax cheats to come clean with potentially lower fines. Just by filing under the OVDI subjects you to minimum 5% penalty on basically all your savings, RRSP's included.
> 
> IMO I would rather file quietly and wait to hear from them, then to "voluntarily" subject myself to penalties under the OVDI. Especially since I am no tax cheat and should owe no taxes in the US in the first place.
> 
> There is a lot of confusion over this initiative. Pathological has spoken with advisors who have said if you are not a cheat then file quietly and get up to date. I spoke with an accountant in the US that told me I should file under the OVDI and was going to be subject to probably 5% penalty. So basically the advice is all over the place.


So I spoke with a tax lawyer here in Ottawa. He confirmed (naturally) that my wife needs to file (he said 7 years) back tax forms with the IRS. He would meet with us and retain his US accountant. All of this for about $2500 (his fees) plus up to $1000 for each year for the accountant to process. So I'm sure with taxes and everything I'd be looking at $10,000 to bring my wife's file up to date.

He said he had taken at least 50 of these types of calls in Ottawa since he wrote an article on the subject this past March. The biggest thing that has changed obviously - is that in his opinion the Canadian Banks will have to divulge US citizen account holders in Canada. At which point if the IRS comes looking for you the penalties could be substantial. In addition to the economic situation in the US which will have them tracking down every last cent.

I guess for me the question is - can I handle filing the 1040s and schedules myself - and the FBARs? (I do our Canadian taxes - and our tax situation is relatively straight forward)


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## lucrob59

Saskslam said:


> So I spoke with a tax lawyer here in Ottawa. He confirmed (naturally) that my wife needs to file (he said 7 years) back tax forms with the IRS. He would meet with us and retain his US accountant. All of this for about $2500 (his fees) plus up to $1000 for each year for the accountant to process. So I'm sure with taxes and everything I'd be looking at $10,000 to bring my wife's file up to date.
> 
> He said he had taken at least 50 of these types of calls in Ottawa since he wrote an article on the subject this past March. The biggest thing that has changed obviously - is that in his opinion the Canadian Banks will have to divulge US citizen account holders in Canada. At which point if the IRS comes looking for you the penalties could be substantial. In addition to the economic situation in the US which will have them tracking down every last cent.
> 
> I guess for me the question is - can I handle filing the 1040s and schedules myself - and the FBARs? (I do our Canadian taxes - and our tax situation is relatively straight forward)


Wow. Just WOW.

That guy is a thief. You don't need him. You can find someone legitimate in the states doing this kind of work for about $300 per tax year.

My intention is to file back to 2005 which is six years. Going forward I will probably file myself.

If you have copies of your old Canadian tax forms, then all you should need is a scanner to get started with a US accountant. 

Pathologic may have someone to recommend to you.


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## Pathologic1

It all depends how complicated your tax situation is. If you are simply an employee without any complicated features I'm sure it would be as easy as your Canadian taxes.

However I think you are paying too much. There are many accountants in the US that do expat taxes and they charge more like 250-350 per year. You don't need a lawyer or anything fancy. So it should be more like 2000 to get the last 6 years filed.


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## Bevdeforges

The standard for years for Americans who didn't realize they were supposed to be filing was current year plus 3 years back - for a total potentially of 4 years. I would contact the IRS office at your local US Consulate before engaging any tax accountant or lawyer. They should be able to clarify the back filing requirement for you. (And actually, the IRS agents at the consulates are generally reasonably helpful when answering questions like this.)
Cheers,
Bev


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## Pathologic1

Not sure about a "standard". 

Legally, statue of limitations for these in the US is 6 years. If there is fraud there is no limit.

If you have filed your taxes the statue of limitations is then only three years which is where the three year number comes from. The FBAR statute and unfiled years remains at six years

So if you have not filed and there is no fraud you are formally, legally responsible for the past six years. After you file the three year clock starts ticking. (The FBAR is still 6)

However some people simply start filing only the present year. The only thing is that they can then start auditing the previous unreported years and the taxman is never kind when he comes after you, instead of you reporting to him. Same with the three year idea they can audit the three years you haven't reported. The six years therefore seems to be the safest way to go.


----------



## elyk

I have to admit, I'm still slack-jawed about this situation.

I too recently read a couple Globe and Mail articles on this topic and now find myself trying to figure out exactly what to do.

The different opinions on this thread indicate that there is definitely confusion on the path to follow.

Myself, I've lived in Canada for 60 years, born to Canadian parents in the Canadian military who happen to be in the US for a few years when I was born. I only remained in the US for 10 months before returning to Canada and have been here as a Canadian citizen paying all my taxes ever since.

I find it unbelievable that I am suppose to fill out US tax returns. And how would I know if I had never read those articles? Ignorance of the law and all that I suppose, bit am I to know the laws of other countries too?

I did see in my research that the deadline for FATCA had changed from Jan 2013 to Jan 2014. (Can't post url, but Google search of the sentence below will reveal it). 

_Under the original guidelines for FATCA, the withholding provisions would have kicked in Jan. 1, 2013. With Thursday’s announcement, the U.S. authorities would begin withholding on Jan. 1, 2014.
_
I understand that the Canadian banks (and financial institutes of the world) are quite upset by this, and that it may well be bad for the US. I read an interesting Forbes article on this. Google -(_Why Obama’s FATCA Law Is A Threat To Business Growth_)

Anyway, since I've always done my own taxes, I am trying to figure out who to speak to to get a better grasp of this situation. I look in the Yellow Pages and I admit to not even knowing the difference between Tax Consultants, Tax Accountants, Tax Lawyers, etc, etc. Who would be best to contact, and I suppose you would have to find whether they had an understanding of this specific issue?


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## Pathologic1

Do not fret. The reason that there are many different opinions is because this is new and the "amnesty" program has caused much confusion. If you want to ask a professional I would strongly suggest an accountant or firm in the US that has dealt with expats for a long time. There are alot of misinformed people out there on both sides of the border.

I have said it before but the bottom line is that if you have honestly been paying your Canadian taxes based on world wide income you really have nothing to fear. Just back file your tax forms and FBARs for the past six years and you are home free. Do not wait until they find you. That is when things can go very bad.

I have obtained this information through US tax lawyers, accountants and the IRS itself. If you need advice in terms of the US accounting firm I am using I would be happy to provide it to you if you PM me. ( I am hesitant to put it here as it could be seen as advertising. I am in no way associated with the firm other than being one of their clients)


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## elyk

Thanks Pathologic1,

I would send a PM if I knew how, but I suspect I can't as I only have a couple posts under my belt.

Preferably, I would like to use an accountant in my home city that understood the issues. It may be an exercise in some cold calling to pull that off. If I'm unsuccessful, I may be attempting a PM to you when I'm allowed.

In the yellow pages I see there are CA, CPA, CMA designations for accountants and also firms that are listed under either accountant-public, accountant-chartered, accountant-management, accountant-certified general, accountant-certified management, etc. 

Seriously, is some retired shmuk like me suppose to understand this?


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## Bevdeforges

Well, you definitely DON'T need a "management" accountant. And as an individual, you most likely don't need a CPA or even a CA unless you have serious business interests.

Frankly, if you've lived and worked for 60 years in Canada and haven't popped onto the US radar screen yet, I'd leave it alone. You're not at all the profile they're likely to hassle and despite loads of threats I've heard and seen from all directions, they don't check your IRS record even when you're entering the US on a US passport. (At one time - possibly now changed - there were federal laws in the US that forbade government agencies exchanging personal information like this.)

If you really want to square yourself with the US government, you could look around for an "enrolled agent" - which is a tax professional who is enrolled with the IRS and is able to represent clients over tax issues. They are normally considerably less expensive than a CPA or other accountant for tax matters and specialized in federal taxes. 

You can find out more about enrolled agents through their professional association (which also has a locator): NAEA : What is an Enrolled Agent?
Cheers,
Bev


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## Pathologic1

I'm not convinced that the 60 years off the radar screen should be relied upon for safety. I wish I was convinced of this so I could just ignore it. I have been in Canada for 25 years and not really worried about the issue until FATCA. 

When FATCA comes into effect in Jan 2014 banks and investment companies will be required to identify clients born in the USA that have accounts of over $50,000 US (incl RRSPs) and report them to the IRS. When you left the USA will be irrelevant. 

There is a temptation to give a fake birthplace to your bank (if you can) or keep the accounts less than 50,000 to remain below the IRS's radar. The problem with this tact is that it if you are caught it shows purposeful tax evasion which can mean jail time.

Other reasons that I have decided to come up to date with the IRS are that if they find me they can deny the annual 90,000 foreign earned income deduction, tax all the earnings of my RRSP and cause problem with my estate and its executor who can be personally liable. And subject to penalties and interest. Then there's the apparent larger problem of those unfiled FBAR forms with their ridiculously large penalties. These risks just seem to great to me.

The US wants money. They are going to require banks worldwide to comply with FATCA. They broke the centuries old Swiss bank secrecy last year sending many expats to prison. They had the giant Swiss bank UBS pay them $800,000,000 to avoid criminal prosecution. I can't see the US not following through with implementing the FATCA worldwide. Because of the huge costs to the banks to identify us and report us they have successfully lobbied the finance minister is asking for a Canadian exemption but I really can't see that happening. And they no doubt will find some people cheating.

The FATCA is the cause of the recent upswing in concern and reporting. If it weren't for that I would agree that you shouldn't worry. I am not comfortable with being reported to the IRS. I think, just as in Canada, you are much better off going to the taxman rather than having them come to you.


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## psnstls35

Pathologic1 said:


> When FATCA comes into effect in Jan 2014 banks and investment companies will be required to identify clients born in the USA that have accounts of over $50,000 US (incl RRSPs) and report them to the IRS. When you left the USA will be irrelevant.


AFAIK Financial Institutions will start reporting US accounts to the IRS beginning of 2013. The recently announced delay is about the tax withholding which will take place in 2014. And don't rely too much on the $50,000 exemption : many FI said they would not use it as it would raise too many legal issues => they will report _all_ US accounts, even the small ones. 



Pathologic1 said:


> ...with the IRS are that if they find me they can deny the annual 90,000 foreign earned income deduction...


They might deny it anyway. 
Senator Bill Tierney is proposing to remove it. I can't post the link because I don't have enough posts. google "bill tierney foreign earned income exclusion" if you want to know more about it...



Pathologic1 said:


> They broke the centuries old Swiss bank secrecy last year sending many expats to prison.


The folks who went to jail following the UBS case were not US expats. Most of them (not to say all of them) were wealthy US citizens living in the US who hid big money at UBS.

But I agree, FATCA is going to change the game and flying under the radar is going to be much more difficult.


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## Saskslam

As I continue to try and figure out a path forward (my wife was born in US and moved to Canada at age 1 and has lived here ever since) - I have heard back from another accountant. (Which I found by searching "US tax specialist in Ottawa") They are confirming what some of you knowledgeable people have previously unearthed. 

The person has a CA, CPA designation. Their recommendation:

1) File the last 6 years of US tax returns as a "silent" disclosure. (Not part of the voluntary disclosure program).

2) File the FBARs for the same period as a "silent " disclosure as well - these need to be done after the filing of tax returns.

They would prepare 6 years worth of returns and FBARs for between $2000-$2500.

I've always done our Canadian taxes - I'm wondering if I get them to do a couple of the US returns and the FBARs - and then I just apply the same standard to the rest?


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## Pathologic1

That sounds very similar to what my US accountant ( a CPA) says and is doing except I am having him do the whole 6 years for me. I think the plan you outline is totally logical. 

If you ever find out what kind of "explanation" for the late file FBARs your accountant thinks is acceptable I would be interested.

Thanks alot for the update Saskslam


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## elyk

Sasklam said:


> (Which I found by searching "US tax specialist in Ottawa") They are confirming what some of you knowledgeable people have previously unearthed.


Any way you could be more specific? I don't see a lot to choose from when I google. Having trouble finding someone who is an expert in Ottawa.


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## Bevdeforges

psnstls35 said:


> They might deny it anyway.
> Senator Bill Tierney is proposing to remove it. I can't post the link because I don't have enough posts. google "bill tierney foreign earned income exclusion" if you want to know more about it...


Every few years someone in Congress mounts a campaign to do away with section 911 of the IRS code (which is the overseas earned income exclusion). So far the expat lobby has come out swinging and the measure has been dropped. Obviously, you can't always count on that, but one big argument against repeal of section 911 is that it would put American employees of "international agencies" at a HUGE disadvantage, as most countries do not tax the salaries of those working for UN and similar agencies.

If they do repeal 911, expect a rash of US citizens renouncing their citizenship at the local consulates.
Cheers,
Bev


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## Saskslam

elyk said:


> Any way you could be more specific? I don't see a lot to choose from when I google. Having trouble finding someone who is an expert in Ottawa.


I don't want to put their names here - that seems to be a rule. But if you google "US tax specialist Ottawa" there are three firms for example - at the bottom of the first page.


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## Nafnaf

I guess I am in the same situation: born in the US and moved to Canada at the age of 11 in 1976. 
I have read with great interest everybody's input. Now I am desperately looking for an experienced accountant or firm to do the taxes and FBAR. I don't seem to find anyone on the web based in Montreal where I live. Would it be better finding someone based in the US or elsewhere in Canada? I would really appreciate some references and not just picking off the web.

Thanks


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## krevette

Pathologic1 said:


> That sounds very similar to what my US accountant ( a CPA) says and is doing except I am having him do the whole 6 years for me. I think the plan you outline is totally logical.
> 
> If you ever find out what kind of "explanation" for the late file FBARs your accountant thinks is acceptable I would be interested.
> 
> Thanks alot for the update Saskslam


Hi there,

I would also be interested in finding out what is an appropriate explanation for late file of FBARs. I have filed my US Tax returns, I am thankful for that, but all this FBAR stuff has really been a panic. 

Thanks to everyone contributing to this discussion so far, you've been a tremendous help!


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## Pathologic1

My US CPA accountant says that only about 30% of his clients send along such an explanation but it seems to make no difference. He suggests just saying that you were unaware of this requirement until now and are just trying to become compliant.


----------



## nbhms

*Ugh*

OK, can someone shed some light on this form 8891? I moved to Canada from the US in '95. I found out in 2006 that I was supposed to be filing taxes all that time in the US. I phoned HR Block at that time, and they put me in contact with a specialist who told me as long as I wasn't planning on going back in the next three years, just start filing that year. Which I did, and every year since, so I now have taxes filed since 2006. In no year since or any previous year would or have I owed taxes, most years I've been well under the foreign income exclusion.

However, the whole RRSP thing didn't occur to me till I was reading this forum and it was mentioned, and I haven't filed an 8891 or declared any earnings inside an RRSP in any of those tax years. Do I need to go back and ammend those tax filings with an 8891? Just start filing it next year?

And the FBAR thing is all news to me too, I need to start researching that. I guess I need to start trying to remember where I had RRSP's the last 6 years? I carefully keep tax documentation around, but anything that old RRSP related is lost or shredded, I only keep a year or two of that information. Anyone have any tips on that? I know for a fact that in 2006 I had RRSPs at places I don't even hold an account anymore (changed employers and RRSP plans).

Thanks for any and all info and insight,

nbhms



Pathologic1 said:


> As far as I am aware the Aug 31 date only applies to the amnesty program but the sooner its all done the better I suppose.
> 
> As far as RRSPs go there is a form (IRS 8891 I think) which needs to be filled out. It is an application to have the IRS treat the RRSP as CRA does, that is untaxed until withdrawn. This is actually another reason to become up to date with the IRS. They have been known to not allow this favorable tax treatment if you wait until they find you, in which case you will end up paying back taxes, interest and penalties.
> 
> But it's not all doom and gloom. If you come forth you can file form W9 with any investment companies you may have and this will decrease or stop the US from withholding taxes on thing like dividends and interest coming from the USA. Furthermore, according to my expat US accountant some people even end up getting refunds in spite of the fact they have not paid any US taxes at all.
> 
> I think this whole thing is way more frightening to honest taxpayers that have been reporting all of their income and paying their Canadian taxes all along. The IRS is really after those Americans that live in in low or no tax jurisdictions like the Caymans and pay little or no taxes and those that have accounts in multiple countries (including the US) but fail to report the income made in other jurisdictions on their taxes. I really do not think honest Canadian taxpayers have much to be afraid of, unless they wait until the IRS might find them. The worst thing one could do is arrange things so that it looks like you are trying to hide money from the IRS. They would interpret this as criminal tax evasion and they do not go easy on this (ie prison and huge fines). So in my view it would be better to do nothing than to do this.


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## fbar-fbomb

*need help in Vancouver*

I am freaking out here. I was born a US citizen but have lived here for over 30 years. I had no idea that I was supposed to file my US income taxes. Also, there is this whole deal with the FBAR (this would have only applied to me this past year and possibly 2009). What a mess!
I have consulted a tax lawyer and they are advising me that, because I have never filed my US taxes before, this is considered wilful tax evasion and they are trying to get me to go into the OVDI. I do not agree with this. Also, most accountants in Vancouver are charging anywhere from 800 to 1500 per return!
Then, you have the penalty for the OVDI.....frig!

Does anybody know of any tax preparers in Vancouver who are not gouging poor souls like us?


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## Pathologic1

If I was in your position I wouldn't be too worried.
Just file the 8891 as part of your next return.
The FBARs are more problematic. The Treasury dept wants 6 years back and it can be a real hassle to get all the info. It was for me. And you know for all that work they are just going to file them, never to be seen again. 

If I was you, I would probably just carry on filing as usual but include the 8891 next time and send the Treasury dept their FBARs from now on. If I could scrape up the FBAR info without too much hassle, I might send 1-3 past years of FBARs but I think its extremely unlikely that you are going to have any problems if everything else is ok.


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## Pathologic1

Fbomb

Don't let them scare you. Unless you have been evading Canadian taxes you really have nothing to worry about. It's not a big deal if you deal with it.
That doesn't mean it's not a hassle but forget OVDI. Anyone who suggests that you use it as an honest Canadian taxpayer is clearly misinformed, lawyer or not.

I'm not sure what you think is expensive but I used GREENBACK EXPAT TAX services and it was efficient and easy AND they do this all the time. I sent no paper and just uploaded my Canadian returns and answered a questionnaire. I thought the costs were reasonable and they did the returns, FBARs and 8891 for a fixed price, I think about 275 for the first return and 250 for additional years. The accountant I worked with was David Hillary. His email is <[email protected]>


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## nbhms

*ok*

Thanks for the prompt reply.

That's where my thoughts were going next - I don't have 6 years worth of filings with the IRS for 6 years worth of FBAR to match up to - or am I misunderstanding the relationship between these two things?

Are FBAR and tax filings in any way related? i.e. if I don't start filing 8891 till next year, but file as many back years of FBAR as I can find information for, will that cause me problems? (is someone going to correlate the fact that I have an RRSP fund on my FBAR but no 8891 for that year?)

My current thought is to file as far back on FBAR (up to 6 years) as I can find information for, and file a 1040-X with 8891 for those same years.

Thanks again.




Pathologic1 said:


> If I was in your position I wouldn't be too worried.
> Just file the 8891 as part of your next return.
> The FBARs are more problematic. The Treasury dept wants 6 years back and it can be a real hassle to get all the info. It was for me. And you know for all that work they are just going to file them, never to be seen again.
> 
> If I was you, I would probably just carry on filing as usual but include the 8891 next time and send the Treasury dept their FBARs from now on. If I could scrape up the FBAR info without too much hassle, I might send 1-3 past years of FBARs but I think its extremely unlikely that you are going to have any problems if everything else is ok.


----------



## Pathologic1

FBARs are collected by the Dept of Treasury and that is where they are sent. The IRS is the "enforcement" agent for the Treasury dept on these. The IRS tax forms only ask if you have any offshore accounts in a tic box but that is all the information they collect related to the FBAR (other than money these accounts may have made/lost). 

These are really two separate issues, taxes and FBARs, other than the compliance issues which are all handled by the IRS. The tax returns should be considered separate from the FBARs

No one has ever suggested to me that I file multiple 8891s. I think it is a one time application that is sent as part of a tax return. My US CPA had me do 6 years of taxes, 6 years of FBARs, and one 8891 as part of the most recent return.


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## fbar-fbomb

Thanks Pathologic. It's kinda hard not to get scared when you feel that what little you do have is going to be taken away. I think what's hardest is the feeling that the IRS thinks I am some kind of criminal. I know I have never filed US returns, so I now have an obligation to file at least six years; however, I am unsure as to how to proceed with the whole FBAR thing. It has only been in the past two tax years (2009 and 2010) that I had anything remotely over the 10K mark. So, am I expected to file FBAR's back six years as well when I did not have anywhere near that before 2009?

Thanks again for your help. I think local accountants should be answering more of these questions in the media instead of just scaring people and trying to coerce a thousand to fifteen hundred bucks per return from someone!


----------



## Pathologic1

You only file FBARs for the years where the max value was >10,000.


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## fbar-fbomb

*US citizens holding RESP and TFSA*

Not sure if I should have put this in a new thread or not, so apologies.

I have just read a good article on how the IRS views TFSA's, RESP's and non-US mutual funds. I would post, but I do not have those rights yet; however, the Canadian Tax firm that published it is Hutcheson & Co (just type in posting title into Google). Apparently, RESP's and TFSA's are deemed to be Foreign Trusts (collective sigh), as such they require two additional forms 3520 and 3520a, all rather extensive. Non-US mutual funds are deemed to be corporations (don't even get me started), as such, they may be classified as a PFIC. For 2010 and earlier, the PFIC rules require an individual to file form 8621. For 2011 on, the IRS is creating a new form (8938) which has yet to be released. Google form 8938 for a plethora of discussions on this topic. The good (or bad, not sure) news is that the IRS has issued a bulletin 2011-29 which essentially suspends this information reporting requirements until the form is released. Talk to your accountants and tax-filer about this matter as I am so confused that I am not even understanding what I type.


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## Bevdeforges

First of all, don't panic. The IRS has been known to publicize this stuff in order to inspire a little bit of fear and panic in the population. If you're not hiding "offshore" type accounts, chances are you can just start filing the appropriate forms with your next return and nothing will come of it.

If you have large accounts that are generating income you haven't been including with your US returns, then you need to get your forms in asap to fall under the "amnesty" thing.

If you're worried about filing that 8891, you can always file an amendment to your 2010 return, changing nothing about the actual return, but just adding the 8891 to what you initially filed.

The IRS has limited resources to pursue this sort of thing and they're normally not going to go after someone for not filing if there are no back taxes to be gleaned from the exercise. This especially holds true if the taxpayer involved is an overseas resident.
Cheers,
Bev


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## fbar-fbomb

*Fbar*

What really irks me is that the IRS has deemed hedge funds to be exempt from reporting on FBARs. Ironic really, considering that their "target audience" for this whole disclosure panic are the ones that are very likely to be investing (and reaping hand over fist) in these accounts.


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## Dualcit

Hi everyone,

Thanks to all for some great information here. I am a dual citizen (US/Canada) who has never filed taxes in the US, and didn't realize I needed to until yesterday when I heard about the OVDI on the radio.

I've gotten in touch with Greenback at your recommendation...they responded very quickly and seem on the ball. So thanks for that!

I do have a question before I proceed with them or the IRS. I was born in Canada, and have only ever lived and worked in Canada. I have citizenship through my mother, who has lived here for close to 35 years. 

Does the fact that I've never lived or worked in the states have any bearing on how best to proceed? Am I any different from someone who was born in the states or had at one point worked there before coming to Canada?


----------



## AmTaker

Pathologic1 said:


> Yes this is quite a mess the US has put all its expats in.
> 
> I have been in Canada working as a professional for over 25 years and have been paying my Canadian taxes since. I have no other worldly income or possessions. I knew I was supposed to be filing US income taxes but also knew that, especially with the foreign earned income deduction, I would owe no taxes, so filing seemed like a redundant, time consuming and costly waste. And everything has been fine this way. until now....
> 
> Now with the US FATCA coming in in 2013 which will require banks and brokers to report anyone born in or a citizen of the USA to the IRS I am worried. My savings and RRSPs are all in jepordy. And knowing that if they find you before you fess up to them they will be harsh I want to become up to date with the US IRS. But then I read about the FBAR amnesty program with its huge penalties of 5-50% of everything you have in any undisclosed accounts and now I'm not sure what to do. These amounts will destroy my retirement that I have worked so hard for. I am not a tax cheat so it's pretty irritating when uncle sam wants to treat you like one anyway.
> 
> From my reading (esp #17 in the IRS's Offshore Voluntary Disclosure Initiative Frequently Asked Questions and Answers [I'm not allowed to post the URL yet because I'm a newbie]) it seems that if you don't owe any US taxes, one could merely file all the delinquent FBARs and income taxes for the past 3-4 years and one should be fine.
> 
> Any comments would be appreciated



About FAQ 17, I think it says that if you reported all income AND paid all taxes, then you are fine. So if you had unreported income, even if there were no additional taxes due, then its not merely a matter of filing the delinquent FBARs. In fact, a later link in the FAQ (51.1) gives that specific case (unreported income, but no tax deficiency) as a case where penalty could be applied.


----------



## AmTaker

Pathologic1 said:


> My US CPA accountant says that only about 30% of his clients send along such an explanation but it seems to make no difference. He suggests just saying that you were unaware of this requirement until now and are just trying to become compliant.


In the past they would just accept old FBARs, from what I heard. Explanation or not. Even people who had serious tax problems and were hiding money got a pass. Now though, they think they have or will have other sources of information (FATCA in 2 years, summons to banks etc.) so they may be harsher. And they can collect large FBAR fines, so that makes it worth their while. Certainly they will notice if one files a lot of old FBARs (explanation or no). Maybe better to give a 'good explanation'. 

But I think they are not likely to go after people who live abroad unless really large sums are involved.


----------



## Bevdeforges

Dualcit said:


> I do have a question before I proceed with them or the IRS. I was born in Canada, and have only ever lived and worked in Canada. I have citizenship through my mother, who has lived here for close to 35 years.
> 
> Does the fact that I've never lived or worked in the states have any bearing on how best to proceed? Am I any different from someone who was born in the states or had at one point worked there before coming to Canada?


Technically it makes no difference whether you lived in the US or not. Practically speaking, however, as long as you have been reporting and paying your taxes in Canada all this time probably means that any tax liability to the US is minimal (if you have any liability at all). 

Despite all the hype, it's real unlikely they are going to take action against anyone simply for not filing the forms. What they're looking to find are those who have been hiding assets or income that IS subject to taxation. Given the tax treaties between the US and Canada (or any other country), as long as you've been reporting your income to you home country tax people, the treaties will minimize any back taxes that might have been due. (And the fact of having reported the income to your home tax authority certainly shows your good faith in the matter.)
Cheers,
Bev


----------



## Ricko

*How did you make out*

Hi I am also a Usa dual with an american dad,I am considering doing my own paperwork since I like you have a straight forward situation.Just wondering if you have proceeded and if you have any advice..Thanks Rick Brown







Saskslam said:


> So I spoke with a tax lawyer here in Ottawa. He confirmed (naturally) that my wife needs to file (he said 7 years) back tax forms with the IRS. He would meet with us and retain his US accountant. All of this for about $2500 (his fees) plus up to $1000 for each year for the accountant to process. So I'm sure with taxes and everything I'd be looking at $10,000 to bring my wife's file up to date.
> 
> He said he had taken at least 50 of these types of calls in Ottawa since he wrote an article on the subject this past March. The biggest thing that has changed obviously - is that in his opinion the Canadian Banks will have to divulge US citizen account holders in Canada. At which point if the IRS comes looking for you the penalties could be substantial. In addition to the economic situation in the US which will have them tracking down every last cent.
> 
> I guess for me the question is - can I handle filing the 1040s and schedules myself - and the FBARs? (I do our Canadian taxes - and our tax situation is relatively straight forward)


----------



## AmTaker

Pathologic1 said:


> FBARs are collected by the Dept of Treasury and that is where they are sent. The IRS is the "enforcement" agent for the Treasury dept on these. The IRS tax forms only ask if you have any offshore accounts in a tic box but that is all the information they collect related to the FBAR (other than money these accounts may have made/lost).
> 
> These are really two separate issues, taxes and FBARs, other than the compliance issues which are all handled by the IRS. The tax returns should be considered separate from the FBARs


I don't think that's correct. FBAR forms are sent to the IRS's Detroit computing center. Of course, IRS is a part of Treasury, but the thing about FBAR forms is that they can be shared with other government agencies as well because they are not tax forms and hence are not subject to tax confidentiality rules. But the IRS has access to them, and I guess they do some matching between FBAR forms and IRS returns. Certainly they have all the information do that matching. 

So the basic point is that they are separate only in the sense that people outside the IRS can read FBAR forms as well, but the IRS also has access to them and may be matching them to tax returns.


----------



## AmTaker

Bevdeforges said:


> The IRS has limited resources to pursue this sort of thing and they're normally not going to go after someone for not filing if there are no back taxes to be gleaned from the exercise. This especially holds true if the taxpayer involved is an overseas resident.
> Cheers,
> Bev


They do have FBAR penalties they can assess even if no taxes (0) are due. So, there is a financial incentive for them to pursue people even if there are no taxes due. But yes, I agree they are not likely to go after 'overseas' (in the broadest term) residents unless some tax is due. However, it is certainly the case that they seem to have become much more serious about enforcing tax and FBAR filing requirements.


----------



## nbhms

*"financial Account"*

Work on scraping together my "financial account" information to backfile the FBARs . . . I'm a little unclear on how all encompassing the term "financial account" is? Is a line of credit or a mortgage a "financial account" they want to know about? Or just checking, savings, RRSP, etc?



Pathologic1 said:


> If I was in your position I wouldn't be too worried.
> Just file the 8891 as part of your next return.
> The FBARs are more problematic. The Treasury dept wants 6 years back and it can be a real hassle to get all the info. It was for me. And you know for all that work they are just going to file them, never to be seen again.
> 
> If I was you, I would probably just carry on filing as usual but include the 8891 next time and send the Treasury dept their FBARs from now on. If I could scrape up the FBAR info without too much hassle, I might send 1-3 past years of FBARs but I think its extremely unlikely that you are going to have any problems if everything else is ok.


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## Pathologic1

They want savings, checking and investment accounts that are assets. Once you meet the threshold of an aggregate of 10,000 in a year they want all accounts no matter how small for that year. If the amount drops below 10,000 max in a year you don't need to file that year.

Debts like lines of credit and mortgages aren't included as far as I am aware.


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## nbhms

*ok*

OK, thanks (again).

I figured mortgage wasn't wanted, but was wondering on things like a line of credit (not sure what a "demand" account is, mentioned in the FBAR FAQ).

It's just going to look odd without my line of credit being reported, over the years I've done some major house renovations, paid for with my line of credit, and the amount was moved lump sum through my checking account to pay the contractor - so on the FBAR for some years my checking account has a really high "maximum value" that is nothing other than a load of debt 



Pathologic1 said:


> They want savings, checking and investment accounts that are assets. Once you meet the threshold of an aggregate of 10,000 in a year they want all accounts no matter how small for that year. If the amount drops below 10,000 max in a year you don't need to file that year.
> 
> Debts like lines of credit and mortgages aren't included as far as I am aware.


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## cathaea

I am genuinely fearful of loudly disclosing these past FBARs after reading some of the horror stories of people hit with non-filing FBAR penalties. Does anyone know what the probability of being hit with those penalties are if you are NOT up to date with your 1040s (even if you have no tax owing?). I am reading elsewhere that if you are behind with your 1040s, you are screwed but that if you are up to date with your 1040s, you're probably fine to go ahead and file the delinquent FBARs.


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## AmTaker

cathaea said:


> I am genuinely fearful of loudly disclosing these past FBARs after reading some of the horror stories of people hit with non-filing FBAR penalties. Does anyone know what the probability of being hit with those penalties are if you are NOT up to date with your 1040s (even if you have no tax owing?). I am reading elsewhere that if you are behind with your 1040s, you are screwed but that if you are up to date with your 1040s, you're probably fine to go ahead and file the delinquent FBARs.


If you have declared all income on 1040s, then there is no problem, you just need to file delinquent FBARs. Or if you have an account for which you can claim deferral under the US Canada tax treaty (RRSP), you can file FBARs and Form 8891. Its a little more problematic if there is some income (but no tax due), or if there is some tax due. 

I don't think anyone outside the IRS (and maybe only a few people inside) can determine the probability of being audited and penalized for FBAR non-filing. Until relatively recently, it was probably close to 0 except for willful evaders. Now, its hard to say, although I would guess that for someone who has little to no tax due because of foreign tax credits and lives outside the US, the probability of being penalized is very, very low (again, excluding willful evaders).


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## Pathologic1

Unless you have been cheating on your Canadian taxes you have nothing to fear. Quiet disclosure is the way to go. Just file your 1040's with the IRS and FBARs with the Treasury Dept and your done.


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## technopal

*Us taxes for dual citizens*

Pathalogical the information you provide is very valuable and I would like to thank you for all the time you have spent helping others.


Pathologic1 said:


> Unless you have been cheating on your Canadian taxes you have nothing to fear. Quiet disclosure is the way to go. Just file your 1040's with the IRS and FBARs with the Treasury Dept and your done.


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## AmTaker

Pathologic1 said:


> Unless you have been cheating on your Canadian taxes you have nothing to fear. Quiet disclosure is the way to go. Just file your 1040's with the IRS and FBARs with the Treasury Dept and your done.


I'm not sure the IRS cares that much about whether Canadian taxes are paid --the tax credit would eliminate tax liability, but not a potential FBAR penalty. On the other hand, they're very unlikely to pursue people living outside the US unless there are some 'badges of fraud'. The most they would assess would be a $500 accuracy penalty for the FBARs. 

[Incidentally, the FBAR is also filed with the IRS's Detroit Computing Center, although it is accessible to other Treasury agencies]


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## Pathologic1

The point there was if you have been paying Canadian taxes honestly you are unlikely to owe significant US taxes. (as it turns out if you have alot of dividends and capital gains you may actually end up owing)

If you owe a large amount of taxes to the US you are much more likely to be flagged as trying to hide income and avoid the taxes you are responsible for and more likely to be investigated and possibly penalized. 

If you owe no US taxes I have been told by the IRS you really have nothing to fear. Just file the back 1040s (taxes) and the FBARs quietly and your done. If you owe a large sum of taxes it's not so clear this will work as easily.


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## AmTaker

Pathologic1 said:


> The point there was if you have been paying Canadian taxes honestly you are unlikely to owe significant US taxes. (as it turns out if you have alot of dividends and capital gains you may actually end up owing)
> 
> If you owe a large amount of taxes to the US you are much more likely to be flagged as trying to hide income and avoid the taxes you are responsible for and more likely to be investigated and possibly penalized.
> 
> If you owe no US taxes I have been told by the IRS you really have nothing to fear. Just file the back 1040s (taxes) and the FBARs quietly and your done. If you owe a large sum of taxes it's not so clear this will work as easily.


There's a difference between 'more likely' and 'nothing to fear'. Unless someone from the IRS told you that officially, of course. Because what practitioners say (and one of the IRS FAQ examples indicates) is that unreported offshore income could be an issue even if its offset by foreign tax credits, capital losses, etc. (they also mention that there is no de minimis exception). Realistically, penalties are very unlikely for an expat if there are small amounts of tax due, but that's not the same as an official position.


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## Pathologic1

I have already shared my reply from the IRS on this forum. 

Briefly, they confirmed that item 17 in their FAQ:

<http://www.irs.gov/businesses/international/article/0,,id=235699,00.html>

applies to people like me that haven't filed FBARs or IRS forms for over 20 years but have been paying my Canadian taxes honestly all along and will likely owe little to no US taxes. This means file the FBARs and there won't be a problem. If you file the tax forms and owe nothing the IRS will not cause a problem either. 

If you wait until (and if) the IRS asks you for them you can expect penalties and problems with the FBARs and taxes. 

And yes there is a lot of scary threatening material out there about this, but I have concluded that for people like me living in Canada (which is NOT exactly a tax haven) and honestly paying their taxes the least scary and best options are to either file the FBARs and 1040s or renounce citizenship. I chose the former but will certainly be looking more closely at the latter in a more leisurely manner now.


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## AmTaker

Pathologic1 said:


> I have already shared my reply from the IRS on this forum.
> 
> Briefly, they confirmed that item 17 in their FAQ:
> 
> <http://www.irs.gov/businesses/international/article/0,,id=235699,00.html>
> 
> applies to people like me that haven't filed FBARs or IRS forms for over 20 years but have been paying my Canadian taxes honestly all along and will likely owe little to no US taxes. This means file the FBARs and there won't be a problem. If you file the tax forms and owe nothing the IRS will not cause a problem either.
> 
> If you wait until (and if) the IRS asks you for them you can expect penalties and problems with the FBARs and taxes.


I think that FAQ 17 actually says something different (it is rather confusingly phrased). I think the IRS 'official' position is that all income must be reported even if there is no tax due. FAQ 51.1 later on seems to specifically cover this type of situation (expat in Country A) where there is no tax due, even if there is unreported income, and suggests a 6 year non-willful penalty (at 10K per year) could be applied (and they also say that there is no threshold for income to be considered de minimis, so one would assume no threshold for tax due to considered de minimis too). 

Also, here is a letter submitted by the NYState Bar Tax Association to the IRS:

http://www.nysba.org/AM/Template.cfm?Section=Tax_Section_Reports2&ContentID=53523&template=/CM/ContentDisplay.cfm

Its somewhat long, but look at Item 5 there, which covers this mentioning specifically the case where people live in foreign countries such as the UK and Canada who owe no US tax because of foreign tax credits, and mentions that agents assert penalties under such circumstances. It also asks the IRS to change this policy to make no penalties due if there are no taxes due, but I haven't read that the IRS has done that. [ I presume these lawyers have clients in such positions]

The email you posted earlier does seem to indicate otherwise, but I saw before this year that the IRS FBAR email address often gives incorrect answers (even 2 different answers to the same question -- I was asking about gold accounts). The OVDI FAQ does mention a special offshore hotline, so maybe that could give a definitive answer.

Realistically, the IRS is very unlikely to assert penalties on expats if there are no taxes due, but I don't think thats an official or 'confirmed' position. Now, if their right hand would co-ordinate with their left hand.


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## Pathologic1

Basically it's still clear as mud and alarming as hell. It sure doesn't make you feel good to be an American.

The best options are still to file ASAP and get the statute of limitations clock ticking, chancing it by ignoring the whole thing, and/or renouncing your US citizenship. 

The more I understand about all of this more attractive and likely it is that I will ultimately renounce, even though I have just filed my 1040s and FBARs for the past six years.


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## Vangrrl

Thank you to everyone who has posted such useful information in this thread! I've been panicking since reading the article in the Vancouver Sun last Friday. My accountant in Canada referred me to a local US tax preparer (who is on holidays until Monday) and basically suggested what's been stated here - get caught up with 6 years of 1040's and FBAR.

I have some questions about FBAR that stem from the fact that while I am a relatively low earner (part-time work, mostly stay at home Mom for the last 6 years), my husband (who is entirely Canadian) is a high earner with his own business. We have mostly joint accounts and now I'm concerned that in effect what I'll be doing is disclosing bank balances that are in fact reflect his earnings and not mine.

(1) assuming you are up-to-date on your filings, is the amounts in the reported accounts relevant? I mean, as long as you report it correctly, does it matter if there is $5000 or $100,000 in the account? I can't do much about the past year's accounts (we've really only had money in the last 2 years) but going forward, should we be keeping our accounts separate so that I am not effectively reporting my husband's income to the IRS? I don't see how this could be considered tax evasion since my husband has no duty to report his income to the IRS.

(2) with regards to the requirement for Canadian banks to disclose US holder accounts: do you know if this will this be retroactive? I'd like to clean up our accounts to properly show our incomes as separate (so that I report only my income to the IRS) but for the last 4 years, I have had signing authority on my husband's business account (because I do the bookkeeping) - according to the IRS document on FBAR, you need to report any account for which you have signing privileges. That seems ridiculous to me - we could hire someone to do payroll and give them authority to sign cheques - that doesn't make it the company's money their money. In any case, if I don't report that account (which really isn't my account anyways) and then remove myself from signing authority, what are the chances that the IRS will find out?

Thanks again everyone for their advice. I'll report back with my own info once I meet my tax advisor hopefully next week.


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## Bevdeforges

Vangrrl said:


> (1) assuming you are up-to-date on your filings, is the amounts in the reported accounts relevant? I mean, as long as you report it correctly, does it matter if there is $5000 or $100,000 in the account? I can't do much about the past year's accounts (we've really only had money in the last 2 years) but going forward, should we be keeping our accounts separate so that I am not effectively reporting my husband's income to the IRS? I don't see how this could be considered tax evasion since my husband has no duty to report his income to the IRS.


It's not necessary to maintain separate accounts. On the FBAR form, you report separately any accounts held jointly with someone else (e.g. non-resident alien spouse). They don't (or shouldn't) assume any arbitrary split on either the sources of the funds or the earnings on the account. (And frankly, as long as the earnings have been properly reported on your Canadian tax returns, you've done your duty.)



> (2) with regards to the requirement for Canadian banks to disclose US holder accounts: do you know if this will this be retroactive? I'd like to clean up our accounts to properly show our incomes as separate (so that I report only my income to the IRS) but for the last 4 years, I have had signing authority on my husband's business account (because I do the bookkeeping) - according to the IRS document on FBAR, you need to report any account for which you have signing privileges. That seems ridiculous to me - we could hire someone to do payroll and give them authority to sign cheques - that doesn't make it the company's money their money. In any case, if I don't report that account (which really isn't my account anyways) and then remove myself from signing authority, what are the chances that the IRS will find out?


While you do have to report accounts over which you have signature authority, there is (again) a separate category to report those business accounts in - something confusing like, "signature authority but no financial interest." They won't assume any of that money is "yours."

When I worked for a big US company in one of their little overseas offices, I got a letter every year from the company saying that they had reported my signature authority over the plant account to the Treasury department so that I didn't have to include that one on my FBAR forms. It's really just a formality. These days I report our company account (my husband and I have a small business we run out of our home). 
Cheers,
Bev


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## Vangrrl

Thanks for your reply Bev. It didn't occur to me to just look up the FBAR form LOL. It does sound like there is a grey area as to signatory accounts that are held by family members (ie. they may not accept that I have no financial interest in the account held by my husband's corporation). 

Any speculation as to whether or not penalties will be applied for late FBAR disclosures for those of us who were unaware of the rules? Every account I will be listing on my FBAR with the exception my meagre RRSPs and perhaps my children's RESPs are joint with my husband, who is a non-US citizen and the bulk of money in those accounts is from his income and not mine. It would be unfair to apply a penalty that is a % of the total in those accounts when most of that money isn't mine. Oh well, I guess I just do what I can and wait and see.

With regards to a topic mentioned in earlier posts: how are some of you able to get away with having no US passport? Do you never travel to the US? My experience is that they expect to see a US passport and will hassle you if you don't show one. In fact, I get hassled about the fact that my Canadian-born daughter doesn't have a US passport, when in fact she doesn't even qualify for US citizenship (the rule is that if you are born abroad to only 1 US parent, then that parent needs to show that they have lived in the US for 5 years after age 14, which I haven't)


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## technopal

*Social Security Number*

Trying to comply with all the rules for Accidental Americans. In order to complete all the Us tax returns do I need to apply for a social security number if I never plan on living or working in the US?


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## Bevdeforges

Vangrrl said:


> Thanks for your reply Bev. It didn't occur to me to just look up the FBAR form LOL. It does sound like there is a grey area as to signatory accounts that are held by family members (ie. they may not accept that I have no financial interest in the account held by my husband's corporation).


Pay no attention to that "no financial interest" phrase - it's really misleading. If you read the technical definition of it, it just means that you have signature authority only over the account. (Of COURSE you have a financial interest in the well being of the company - but tax laws have little to do with logic.) 



> Any speculation as to whether or not penalties will be applied for late FBAR disclosures for those of us who were unaware of the rules? Every account I will be listing on my FBAR with the exception my meagre RRSPs and perhaps my children's RESPs are joint with my husband, who is a non-US citizen and the bulk of money in those accounts is from his income and not mine. It would be unfair to apply a penalty that is a % of the total in those accounts when most of that money isn't mine. Oh well, I guess I just do what I can and wait and see.


I notice that the real scare mongers on all this are those who prepare US tax returns for a living and who thus seem to be drumming up business for themselves. Diving into the regs a little bit, it's clear that the regulations for all this nonsense reporting are targeted at finding those with "offshore accounts" they have been trying to hide, or those with dodgy investment schemes to stash lucrative investments under cover of a corporate entity outside the US jurisdiction.

In hard times like this it's highly unlikely they're going to dedicate resources to routing out low level folks who weren't aware of the requirements, just to assess huge penalties they can't pay. Besides, they already have the right to compare your Canadian tax returns to what you file in the US and as long as there is no major discrepancy that promises to yield a big back-tax bill, they're not going to harass "accidental Americans" (I like that phrase).

Just FYI - up until a couple years ago, the FBAR forms didn't ask for exact balances. You only checked a box indicating the range of the balance in the accounts you were reporting (i.e. "less than $10,000" "$10,000- 50,000" etc.). Given the general nature of the disclosure in prior years, I'd just file the current year and wait to see if they ask you to file prior years or not.

I've had them come back and ask for additional information (once, anyhow) but it was clear that someone had misread the form. They wanted the "taxpayer i.d. number" of our company here in France although I had clearly marked it as a "non-US entity." If they thought there were going to get me to give them our French i.d. number, they were wrong. I just sent them a note explaining that is was not a US entity and never heard back from them again.

BTW, while you're asked to identify the joint owner of the accounts you report, the instructions clearly state you can leave blank any spaces for which the information is not available. This includes "Taxpayer identification number" - which presumably your Canadian spouse does not have. (Taxpayer identification number is a specific US issued number for non-resident aliens who file US taxes or who are claimed as dependents by US taxpayers.)
Cheers,
Bev


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## Bevdeforges

technopal said:


> Trying to comply with all the rules for Accidental Americans. In order to complete all the Us tax returns do I need to apply for a social security number if I never plan on living or working in the US?


Yes. Allegedly they will not accept tax returns or forms without a social security number.
Cheers,
Bev


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## Vangrrl

Bevdeforges said:


> I notice that the real scare mongers on all this are those who prepare US tax returns for a living and who thus seem to be drumming up business for themselves. Diving into the regs a little bit, it's clear that the regulations for all this nonsense reporting are targeted at finding those with "offshore accounts" they have been trying to hide, or those with dodgy investment schemes to stash lucrative investments under cover of a corporate entity outside the US jurisdiction.
> 
> Bev


Thanks Bev, a lot of common sense in your post. I've noticed the same regarding the above comment. 

BTW there is an article in the Vancouver Sun yesterday (I don't think I can post a link here) that states that the CRA has taken the position that it will not participate in "outing" Canadian citizens (dual US-Canada) for not filing US taxes nor collect any outstanding penalties assessed for not filing *so long as the person was also a Canadian citizen at the time of the "crime"* (ie. you didn't flee to Canada and take up Citizenship after running into trouble with the IRS). The CRA will still collect actual taxes owed to the IRS as per our tax treaty so this statement is in response to the situation that most of us are in that we are unlikely to owe taxes but there is a chance we might owe penalties for late-filing/non-disclosure. 

Some comfort to be drawn there I suppose


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## Vangrrl

Another question: at what age are you required to file tax returns? I have 5 year old son who is also a US citizen. He has a SIN number and a US passport. No income or bank accounts LOL. Do I need to submit something for him?


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## AmTaker

Bevdeforges said:


> I notice that the real scare mongers on all this are those who prepare US tax returns for a living and who thus seem to be drumming up business for themselves. Diving into the regs a little bit, it's clear that the regulations for all this nonsense reporting are targeted at finding those with "offshore accounts" they have been trying to hide, or those with dodgy investment schemes to stash lucrative investments under cover of a corporate entity outside the US jurisdiction.
> 
> In hard times like this it's highly unlikely they're going to dedicate resources to routing out low level folks who weren't aware of the requirements, just to assess huge penalties they can't pay. Besides, they already have the right to compare your Canadian tax returns to what you file in the US and as long as there is no major discrepancy that promises to yield a big back-tax bill, they're not going to harass "accidental Americans" (I like that phrase).
> 
> Just FYI - up until a couple years ago, the FBAR forms didn't ask for exact balances. You only checked a box indicating the range of the balance in the accounts you were reporting (i.e. "less than $10,000" "$10,000- 50,000" etc.). Given the general nature of the disclosure in prior years, I'd just file the current year and wait to see if they ask you to file prior years or not.
> 
> 
> Cheers,
> Bev


I agree that the IRS is not likely to harass expats who have not been indulging in big time tax evasion and/or have significant US assets to attach. There are also diplomatic and political considerations at play that would prevent the IRS from getting too touch on dual citizens. 

One point I would add is that there is a new form staring in the 2011 tax year that requires detailing all financial assets held outside the US (if > 50K), and the year the asset/account was opened/acquired. I think it would not be that long before they try and match this form up with FATCA data. So, its a good idea to get tax compliant now (for people who intend to keep US citizenship).


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## AmTaker

Bevdeforges said:


> It's not necessary to maintain separate accounts. On the FBAR form, you report separately any accounts held jointly with someone else (e.g. non-resident alien spouse). They don't (or shouldn't) assume any arbitrary split on either the sources of the funds or the earnings on the account. (And frankly, as long as the earnings have been properly reported on your Canadian tax returns, you've done your duty.)
> 
> 
> 
> Cheers,
> Bev


I would say that for tax purposes its probably still a good idea to maintain largely separate accounts if one has a non-resident alien spouse. Generally, when US residents file MFS, the IRS pays attention to local property laws (i.e. community property laws in states) when deciding how to split income. I'm not sure if the same rules apply for people with a non resident alien spouse (who are in essence filing MFS), i.e would they look at property laws in the foreign country ? 

But there could be several non tax reasons NOT to maintain separate accounts, and those could well trump tax reasons.


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## Pathologic1

Bevdeforges is no doubt correct and her comments are very practical, sensible, and useful. I don't really think you can do better than to follow her advice.

About the CRA not being willing to collect I think those comments and links are indicated. It appears that no official statement is available but as with everything else on this subject it is as clear as mud.

if you read this
CRA won't pile on victims of IRS tax penalty campaign

also read
Verbatim: What Canada says about collecting IRS non-filing penalties - Cayo


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## Vangrrl

Thanks Pathologic for posting those links. I hadn't seen the second one.

I'm travelling to the US this weekend and barring I don't get thrown in jail (I jest... kind of), hopefully I can get into compliance before having to travel there again. 

Once I'm in compliance and assuming the process is painless, I'm not seeing any benefits to renouncing my US citizenship if that in any way limits my ability to travel to the US (not sure it does, but since my Cdn passport will always say I'm born in the US, I expect it will always be a question I get asked at the border). We travel to the US a lot for vacations, visiting family (who are all ironically Canadian expats and not yet US citizens) and of course shopping. But its obviously something to keep on the back-burner going forward.


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## Bevdeforges

Vangrrl said:


> Another question: at what age are you required to file tax returns? I have 5 year old son who is also a US citizen. He has a SIN number and a US passport. No income or bank accounts LOL. Do I need to submit something for him?


It's not a function of age, but rather of income. He doesn't have to file until he has income in his own name that exceeds the filing threshold for his filing status (I'm assuming "single" ). Currently the filing threshold for single people is a bit more than $9,000 and it changes each year - normally upwards.
Cheers,
Bev


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## Bevdeforges

AmTaker said:


> I would say that for tax purposes its probably still a good idea to maintain largely separate accounts if one has a non-resident alien spouse. Generally, when US residents file MFS, the IRS pays attention to local property laws (i.e. community property laws in states) when deciding how to split income. I'm not sure if the same rules apply for people with a non resident alien spouse (who are in essence filing MFS), i.e would they look at property laws in the foreign country ?
> 
> But there could be several non tax reasons NOT to maintain separate accounts, and those could well trump tax reasons.


I don't have time to dig for it just now, but in Publication 54 at one time there was a statement to the effect that overseas filers married to non-resident aliens do NOT need to split salary income according to local property laws. (Good thing, too, for those living in France like I do!) They really only want you to declare income in your name.

I'm not as sure how they want you to treat interest on jointly held accounts, but until that becomes a significant amount, I suspect you could just claim that it "belongs" to the non-resident alien spouse and was declared on your local (i.e. Canadian) forms that way.
Cheers,
Bev


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## cathaea

So, I have a bit of a wrench in my intention to become tax-compliant that maybe some of you experienced friends can help with.

I have finished filing out all the 1040s and have declared my investment income properly on schedule B. I've checked off on schedule B that I do have financial accounts and that I'm aware that I have to file the FBAR if I have more than 10,000 aggregate (which I do).

However... I do not have access to statements pre-2009. I cannot begin to estimate the highest value of each of those accounts without getting old statements and since I have multiple accounts (all with piddly amounts in them), it would cost me literally over a thousand dollars to get them re-printed and mailed to me. I'm a student - I simply can't afford that.

Here is my concern: if I back file my 1040s and demonstrate my awareness of Schedule B (and the fact that I have to file FBARs) and then don't file those FBARs, am I opening myself up to more chance of penalty than option B, which is simply to start fresh this year and file both my 1040 and my FBAR late, claim ignorance, and hope they don't investigate the previous 5 years? I'd prefer to file and get the statute of limitations clock ticking but I'm hesitant to file FBARs that are inaccurate simply because I think it would cause more problems than not filing them at all. What option is likely to leave me with less headaches?

I'm tax compliant in Canada and my investment income is sub 1000/year so my standard deduction more than covers it. I don't owe any US taxes but I'm very concerned about the administrative penalties about the FBAR.

I genuinely had no idea until 2 weeks ago that any of this was required of me since I wasn't born in the US and have never worked there. What a mess!


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## AmTaker

cathaea said:


> So, I have a bit of a wrench in my intention to become tax-compliant that maybe some of you experienced friends can help with.
> 
> I have finished filing out all the 1040s and have declared my investment income properly on schedule B. I've checked off on schedule B that I do have financial accounts and that I'm aware that I have to file the FBAR if I have more than 10,000 aggregate (which I do).
> 
> However... I do not have access to statements pre-2009. I cannot begin to estimate the highest value of each of those accounts without getting old statements and since I have multiple accounts (all with piddly amounts in them), it would cost me literally over a thousand dollars to get them re-printed and mailed to me. I'm a student - I simply can't afford that.
> 
> Here is my concern: if I back file my 1040s and demonstrate my awareness of Schedule B (and the fact that I have to file FBARs) and then don't file those FBARs, am I opening myself up to more chance of penalty than option B, which is simply to start fresh this year and file both my 1040 and my FBAR late, claim ignorance, and hope they don't investigate the previous 5 years? I'd prefer to file and get the statute of limitations clock ticking but I'm hesitant to file FBARs that are inaccurate simply because I think it would cause more problems than not filing them at all. What option is likely to leave me with less headaches?
> 
> I'm tax compliant in Canada and my investment income is sub 1000/year so my standard deduction more than covers it. I don't owe any US taxes but I'm very concerned about the administrative penalties about the FBAR.
> 
> I genuinely had no idea until 2 weeks ago that any of this was required of me since I wasn't born in the US and have never worked there. What a mess!


How are you doing US tax returns without old account statements ? Just relying on Canadian returns for income ? Do you have access to some of your accounts online for old statements ? If you have a rough idea of max balance, you could use that. 

I would think its a bad idea to just file amended tax returns with Schedule B question marked. The IRS will notice such old returns and will likely discover that FBAR forms haven't been entered, and wonder if the FBAR forms haven't turned up because they show really huge balances. 

Filing tax returns starts the statute of limitations on tax returns. However, FBARs are not tax returns, the statute of limitations remains the same (6 years from due date) whether you file late or not at all.


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## Bevdeforges

Unless you've got accounts with seriously significant balances, use a good faith estimate for the back filings you're doing, especially on the smaller accounts with balances under $10,000. (Prior to a couple years ago, you only had to indicate ranges of balances - with the first range being "less than $10,000.")
Cheers,
Bev


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## cathaea

AmTaker said:


> How are you doing US tax returns without old account statements ? Just relying on Canadian returns for income ? Do you have access to some of your accounts online for old statements ? If you have a rough idea of max balance, you could use that.
> 
> I would think its a bad idea to just file amended tax returns with Schedule B question marked. The IRS will notice such old returns and will likely discover that FBAR forms haven't been entered, and wonder if the FBAR forms haven't turned up because they show really huge balances.
> 
> Filing tax returns starts the statute of limitations on tax returns. However, FBARs are not tax returns, the statute of limitations remains the same (6 years from due date) whether you file late or not at all.


Sorry, I think I was unclear. I have never filed a 1040 before - I didn't know I had to. So mine wouldn't amended, they would be brand new returns.

In terms of reporting Schedule B, I have Canadian T-5 sheets that tell me the total interest I received which I declared on my Canadian taxes. And I do have a rough idea of the accounts but it's only a rough idea and something like my chequing account, for instance, I would have no idea what the high value in that was over the year. 

So what I'm worried is that back-filing my 1040s with Schedule Bs and no FBARs might be more of a problem than just filing this year's taxes and hoping they don't investigate to see why I didn't file earlier.

I would really rather be tax-compliant, I just really don't want to pay any fines since I genuinely didn't know I ws obligated to the IRS! I don't have a lot of money but I've worked super hard to put myself through school - it's heart-breaking to think that the money I worked to save for tuition could be taken away through a non-willful disclosure penalty.


----------



## cathaea

Oops, accidental double post.


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## cathaea

Bevdeforges said:


> Unless you've got accounts with seriously significant balances, use a good faith estimate for the back filings you're doing, especially on the smaller accounts with balances under $10,000. (Prior to a couple years ago, you only had to indicate ranges of balances - with the first range being "less than $10,000.")
> Cheers,
> Bev



Thanks again for your help Bev. How much of a good faith estimate do you think would be required? I don't want to set off red flags with even numbers. Do you think I could put "less than 10,000 USD" as a legitimate number?

Also, what do you think are significant balances? The most I've ever had was around $30,000 that I had earmarked for tuition in a savings account a few years ago (plus a few other piddly amounts, for an aggregate total of less than $40,000). I've never invested, it was always meant for school. I have considerably less now since I did, in fact, use it for tuition.


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## technopal

*No Social Security Number*

Bev, thanks for all of your help, you really are providing a great service. One more question Since it will take a month to get a SS number should I send my forms in without it and send it in when I get the number?
Thanks


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## biglemoncoke

Hi All,

I've became restless ever since I read the Vancouver Sun article about not filing FBARs. Our family pays taxes in Canada every year and we never intend to dodge any tax duties. I've read stories online where hefty penalties are handed because individuals didn't file for their FBARs in time. I am not sure if we have filed for FBARs in the past; I'm the only son of my family and my rents are out on their business trip - hence I couldnt confirm any details at the moment: they're the ones who filed for our taxes until the last two years: we owe zero taxes and so my parents stopped filing taxes for the last two years seeing that it was largely a redundant and wasteful process. 

My concern is:
If we file for our taxes and FBARs now would we be penalized? I read that we could file for delinquent FBAR - However, I was thinking if we would be penalized for such filing. I know that there are no repercussions if we do not have under reported tax liabilities. If we haven't filed for taxes for the past two years does that mean we would not be eligible to receive no penalty from our late filings?


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## Bevdeforges

cathaea said:


> Thanks again for your help Bev. How much of a good faith estimate do you think would be required? I don't want to set off red flags with even numbers. Do you think I could put "less than 10,000 USD" as a legitimate number?
> 
> Also, what do you think are significant balances? The most I've ever had was around $30,000 that I had earmarked for tuition in a savings account a few years ago (plus a few other piddly amounts, for an aggregate total of less than $40,000). I've never invested, it was always meant for school. I have considerably less now since I did, in fact, use it for tuition.


Don't worry about the even numbers - you could put (est.) next to them if it makes you feel better to signal that they are only estimates.

Most of the information on the IRS website about these filings indicates clearly that they are looking for INCOME that is being hidden from their view. These days a bank account that has $30,000 is only going to be generating about $150 in income a year, so obviously they aren't going to come after you about that. (Especially if the income has already been declared to your home tax authority.) 

It's investment accounts throwing off thousands in income they're really after. All you're doing by reporting is covering your butt with the IRS and Treasury. The idea is to "prove" to them you aren't worth bothering with.
Cheers,
Bev


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## Bevdeforges

technopal said:


> Bev, thanks for all of your help, you really are providing a great service. One more question Since it will take a month to get a SS number should I send my forms in without it and send it in when I get the number?
> Thanks


I haven't confirmed this (at least not through personal experience) but I've been told that the IRS will not accept tax returns without a social security number (or "taxpayer identification number" for those not eligible for a social security number).

You could try sending in the forms, indicating "in process" in the space for SS number and see what happens. It's at least a good faith gesture.
Cheers,
Bev


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## Jade3

*Clarification on forms and investment income*



Bevdeforges said:


> First of all, don't panic. The IRS has been known to publicize this stuff in order to inspire a little bit of fear and panic in the population. If you're not hiding "offshore" type accounts, chances are you can just start filing the appropriate forms with your next return and nothing will come of it.


To clarify, Bev are you saying that:
1. Most people can ignore the extra forms for RESP and TFSA accounts and just file the taxes, FBARs and 8891 forms? That these extra forms (such as 3520 and 3520a) are a scare tactic? 



Bevdeforges said:


> If you have large accounts that are generating income you haven't been including with your US returns, then you need to get your forms in asap to fall under the "amnesty" thing.


2. What does the IRS consider substantial investment income?
3. If you have investment income and dividends from Canadian sources that in some years totalled an estimated $25-50,000, but have never filed taxes in the US because you were not a resident and did not know you needed to file, is it advisable to go under the 'amnesty' program? 

This is all so confusing, thanks everyone for your posts so far! I feel much better than when I first heard about this!

-Jade


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## Bevdeforges

Jade3 said:


> To clarify, Bev are you saying that:
> 1. Most people can ignore the extra forms for RESP and TFSA accounts and just file the taxes, FBARs and 8891 forms? That these extra forms (such as 3520 and 3520a) are a scare tactic?


No, what I'm saying is that you have standard sorts of small scale bank and investment accounts, you should probably just file the forms necessary to "get right" with the IRS. The extra forms relate to specific sorts of Canadian investments, I guess, and if you should be filing them, then do so. 

What I am saying is that, as long as you're not hiding high value investment accounts, you probably have little to worry about from the IRS. 



> 2. What does the IRS consider substantial investment income?


Those that result in significant amounts of taxable income due to the US (usually because that income isn't taxed elsewhere).



> 3. If you have investment income and dividends from Canadian sources that in some years totalled an estimated $25-50,000, but have never filed taxes in the US because you were not a resident and did not know you needed to file, is it advisable to go under the 'amnesty' program?


If you've got investments that throw off $25-50,000 per year of income, yes, you should probably do your best to get in under the amnesty program. (The deadline has been extended into September by the way, thanks to hurricane Irene.)

Though, if filing the back income tax returns you can show that you owe no back taxes on those investments (i.e. because you paid the Canadian government and thus are entitled to tax credits that cover all or most of your US liability), it may not really matter. The more you can "prove" to them that you don't owe any US taxes, the less likely they are to fuss about your investment declarations.

They are looking for hidden income - specifically accounts set up to obfuscate the ownership in order to avoid taxes. 
Cheers,
Bev


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## Vangrrl

Ugh, I just spoke to some local tax accountants who specialize in US taxes, and they are both saying that you have to remit your FBAR with the mandatory 25% penalty. They would not recommend quiet disclosure as they feel it is too risky. 

In any case, they also wouldn't take me as a client (or any other new cases) because they are inundated with clients. 

I'm back to being stressed out again.


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## Pathologic1

Likely not true. Lots of people are told this. And I had the same impression at times but as has been said many times on this thread, if you have been paying you Canadian taxes honestly all along you really are at minimal risk of having any problems.

I think there are lots of Xpat accountants out there which will disagree with what you have been told who have done lots of returns and FBARs for people like you through quiet disclosure without problems. Of course they would stand to make more money if they guide you inappropriately into OVDI.

I can tell you the accounting service I used was American Expatriate Tax Services | Greenback Expat Tax Services and the particular accountant I dealt with was David Hillary who can be emailed at 
[email protected] you may want to talk with him/them.


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## Vangrrl

Thanks for replying again Pathologic - I should have known that Vancouver US specialized tax accountants are some sort of borg entity speaking with a single voice (-: I emailed Greenback this morning so I hope to hear from them soon. 

May I ask, did you make the decision to retro-file 1040s and FBARs for the past 6 years based on their recommendation? This seems like the right idea to me, but I've also seen some info online (anecdotal of course) about the IRS being specifically on the look out for those opting for quiet disclosure and treating these as willfully attempting to circumvent the "willful disclosure program" (and avoiding the mandatory penalties that this so-called amnesty involves). Some are recommending instead just filing the current year and being compliant going forward. Personally that doesn't sit well with me because I won't be fully compliant (6 years of returns) by the time my US passport expires in 2015 (which I only keep in order to travel into the US) or by the time FATCA comes into place. 

Do you receive some kind of statement regarding whether or not you are compliant?

We don't know yet whether FATCA reporting will be retroactive, do we? 

I'm starting to see the benefits of renouncing my citizenship. My only concern is whether this would be inhibit my ability to travel freely into the US (being as my US birthplace appears on my Canadian passport). My husband and I both have siblings living in the US (who ironically are Canadian expats).


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## AdoptedCanuk

Pathologic1 - can you PM me info on the people in Spokane you refereed to for advise on this issue? I don't have enough posts yet to ask you for it...


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## justbrowsing

I have been following this thread for the last 4 days since I learned about the FBAR requirement. 

FWIW, today I spoke to the local H&R Block and a medium size accounting firm and was told to NOT do the OVDI program but to send in 1 FBAR (2010) and 3 years of returns. H&R told me they have been strongly advising clients across Canada to not join the program based on conversations they have had with the irs.

If we all get invoiced in a few months for massive penalties, then it is our responsibility to raise a royal fuss with our members of parliament who must push back for us.


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## biglemoncoke

I called the IRS to answer some of the queries and concerns I had in mind. I spoke with two different individuals (Ellen White included) and the general perception is "just cause you filed for your delinquent FBARs, it does not mean you would be penalized". They went on to tell me how we should file for the past six years and that the auditors would be looking for something specific.

Hopefully the information coming from them can be highly relied upon.


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## Pathologic1

I decided to file the last 6 years of tax and FBARs. That is the basic statute of limitations in the US. (for filed IRS tax returns it is 3 years but it's still six for FBARs). They are free to ask for more because you hadn't filed at all, but I understand that would be quite unusual. I made this decision after talking with several US and Canadian accountants and lawyers as well as my own online research but this is kind of new to everyone so there is a lot of misinformation. I do think that was Greenbacks recommendation as well.

The IRS will not pile on fines and penalties if you go to them with your tax returns. If they come after you it can be a different story. This much is clear.

If you don't really have large accounts or owe the IRS significant taxes you could probably get away with filing fewer years or even just starting now, but I just wanted it done with as much as possible.

It should be noted that if the US decides to ding you for late FBAR filings it is not clear they can collect easily in Canada. There are reports that the Finance ministry has said it will not collect the FBAR penalties for the IRS if the person was a Canadian citizen. They will continue to collect taxes and related penalties as part of the tax agreement. But FBARs are merely informational returns for the dept of Treasury and the fines they talk about are draconian. I think they must also know if they treat expats too harshly there will be a rush of renunciations (which sounds better all the time anyway).

Anyway its good to hear that H&R Block has some sense. As Bevdeforges has pointed out here, the only ones really talking about honest Canadians and huge fines, penalties and participating in OVDI are those that have something to gain by such fear mongering. It is clear to me that OVDI is inappropriate for honest Canadians who have paid their taxes all along. I think the previous email from the IRS regarding their FAQ #17 shows they believe the same.

Clearly the IRS is on the look out for certain quiet filers. But not ones that owe little or no taxes like almost all Canadians. What they are looking for those with large amounts of unreported or previously under reported income. So if you file or amend a return and owe a large amounts of tax you are going to be passed over to the criminal investigation unit who could find you you purposefully didn't file your FBARs and taxes with the intent of avoiding taxes and then there's BIG trouble. This is seen as tax avoidance and is basically what put Conrad Black and Martha Stewart in prison. Thay go after you with everything including no FBARs. So if you live in a tax haven country and don't file anywhere else or have unreported offshore income wherever you live OVDI might be an attractive option. This isn't innocent Canadian taxpayers that honestly report their income.

Renouncing does not inhibit travel. Here is a rather definitive guide to all aspects of renunciation.
Site Overview | Renunciation of U.S. Citizenship: A Web Guide

And no you won't receive anything saying you are compliant.


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## Bigmom

Pathologic1 said:


> Do not fret. The reason that there are many different opinions is because this is new and the "amnesty" program has caused much confusion. If you want to ask a professional I would strongly suggest an accountant or firm in the US that has dealt with expats for a long time. There are alot of misinformed people out there on both sides of the border.
> 
> I have said it before but the bottom line is that if you have honestly been paying your Canadian taxes based on world wide income you really have nothing to fear. Just back file your tax forms and FBARs for the past six years and you are home free. Do not wait until they find you. That is when things can go very bad.
> 
> I have obtained this information through US tax lawyers, accountants and the IRS itself. If you need advice in terms of the US accounting firm I am using I would be happy to provide it to you if you PM me. ( I am hesitant to put it here as it could be seen as advertising. I am in no way associated with the firm other than being one of their clients)


I am brand new to this forum and don't even know how to send a private message, but I have a US citizen husband and 2 grown daughters (US citizens born in Canada) in this predicament and we would love to know who your US accountant is. We live in BC, too. If you can't message me either, maybe I don't have such privileges, can you email me at: liz "at" lizard.ca


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## Bigmom

Pathologic1 said:


> Do not fret. The reason that there are many different opinions is because this is new and the "amnesty" program has caused much confusion. If you want to ask a professional I would strongly suggest an accountant or firm in the US that has dealt with expats for a long time. There are alot of misinformed people out there on both sides of the border.
> 
> I have said it before but the bottom line is that if you have honestly been paying your Canadian taxes based on world wide income you really have nothing to fear. Just back file your tax forms and FBARs for the past six years and you are home free. Do not wait until they find you. That is when things can go very bad.
> 
> I have obtained this information through US tax lawyers, accountants and the IRS itself. If you need advice in terms of the US accounting firm I am using I would be happy to provide it to you if you PM me. ( I am hesitant to put it here as it could be seen as advertising. I am in no way associated with the firm other than being one of their clients)


Sigh - my post disappeared - possibly because I tried to put my email address is it...I'm sorry - I wasn't trying to spam, I'm just too newbie to private message (just joined this forum this evening) and I didn't know what else to do. I'm quite desperate and really would like Pathologic1 to give me the name of his US accountant who seems to be somewhat reasonable, effective and works well with Canadian accountants. My husband is a US citizen and we have lived here since 1975. And all our grown kids are dual, so we have 3 families involved.


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## Vangrrl

BigMom - I'm obviously not Pathologic, but I've quoted his message below that gives his accountant's name.

I just got a reply from Greenback - the front line guy is giving me the same "OVDI might be beneficial for you" schtick that I've heard from the other accountants. I emailed him back telling him that my own research would indicate that quiet disclosure would be more appropriate in my case. I hope the accountant they assign me to will see things the same way. 



Pathologic1 said:


> I can tell you the accounting service I used was American Expatriate Tax Services | Greenback Expat Tax Services and the particular accountant I dealt with was David Hillary who can be emailed at
> [email protected] you may want to talk with him/them.


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## Bigmom

Vangrrl said:


> BigMom - I'm obviously not Pathologic, but I've quoted his message below that gives his accountant's name.
> 
> I just got a reply from Greenback - the front line guy is giving me the same "OVDI might be beneficial for you" schtick that I've heard from the other accountants. I emailed him back telling him that my own research would indicate that quiet disclosure would be more appropriate in my case. I hope the accountant they assign me to will see things the same way.


Thanks for this - and I agree with you, if we're just normal people paying our Canadian taxes properly, then why would we go with the OVDI? Maybe I can ask for David Hillary...


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## Bevdeforges

Bigmom said:


> Thanks for this - and I agree with you, if we're just normal people paying our Canadian taxes properly, then why would we go with the OVDI? Maybe I can ask for David Hillary...


Filing US taxes isn't all that daunting unless you have complicated financial arrangements. To be honest, filing through an accountant or tax attorney is more likely to raise red flags for the IRS than if you just file a nice, simple good faith return on your own. (Even if you make a few mistakes.)

They really are looking specifically for tax evaders here - people who are setting up elaborate overseas accounts or corporations for the purpose of hiding taxable income from the US government.

If all you've got is salary income and maybe a retirement fund or two, plus the usual sorts of household investment accounts, I'd say just file going forward (well, three years back for the income tax returns) and let them contact you if they have problems with anything you've sent them. (If they decide to audit you, they have to maintain a certain average "return" - i.e. collection of back taxes due - and if you're careful to show them that you don't owe any back taxes, they'll find someone else who improves their average.)

US residents agonize over their tax returns and pay preparers huge amounts to file for them. As overseas residents, once you eliminate most or all of your salary income (thanks to the overseas earned income exclusion) you really don't need to mess with things like mortgage interest or other itemized deductions you hear about all the time from the US residents.
Cheers,
Bev


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## AmTaker

Pathologic1 said:


> This is seen as tax avoidance and is basically what put Conrad Black and Martha Stewart in prison. Thay go after you with everything including no FBARs. So if you live in a tax haven country and don't file anywhere else or have unreported offshore income wherever you live OVDI might be an attractive option.
> Renouncing does not inhibit travel. Here is a rather definitive guide to all aspects of renunciation.
> Site Overview | Renunciation of U.S. Citizenship: A Web Guide
> 
> And no you won't receive anything saying you are compliant.


Just to be pedantic . Neither Martha Stewart nor Black were actually tried or convicted of tax crimes. 

But I agree with the overall point that the IRS is unlikely to pursue expats who have few US assets and have not been guilty of major tax evasion.


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## AmTaker

justbrowsing said:


> I have been following this thread for the last 4 days since I learned about the FBAR requirement.
> 
> FWIW, today I spoke to the local H&R Block and a medium size accounting firm and was told to NOT do the OVDI program but to send in 1 FBAR (2010) and 3 years of returns. H&R told me they have been strongly advising clients across Canada to not join the program based on conversations they have had with the irs.


I wouldn't normally rely on H&R Block for anything tax related that's not trivial but they may be correct for once (although of course, it would depend on the individual case).


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## justbrowsing

It is much worse than I thought.

Just spoke to several larger accounting firms in the Toronto area and the latest word from the US lawyers they use, is that RRSP's, RESP, and TFSA are certainly being included in the 5% penalty for OVDI.

This is so maddening for someone who has saved money due to not having a pension.

PLEASE CONTACT YOUR MEMBER OF PARLIAMENT TODAY TO VOICE YOUR CONCERNS.


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## Pathologic1

Just another reason why one should never enter OVDI unless you were cheating the Canadian taxman.

My member of Parliament wrote about this in a local paper which is how I found out about it. He has already spoken to the Minister of Finance who has publically stated that Canada should not be treated as a tax haven and should be exempt from FATCA. But so does Germany, Britan, Australia, etc and I can't see the US changing its ways anytime soon.


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## AmTaker

justbrowsing said:


> It is much worse than I thought.
> 
> Just spoke to several larger accounting firms in the Toronto area and the latest word from the US lawyers they use, is that RRSP's, RESP, and TFSA are certainly being included in the 5% penalty for OVDI.


Is that for all, or only if a distribution was taken ?


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## Vangrrl

I agree about not going with OVDI after reading what I have. This is clearly for US residents who want to repatriate foreign accounts without going to jail. But hey, if the IRS can squeeze some penalties out of law-abiding but scared Canadians (and their by-the-book tax lawyers), well they aren't complaining about it.

The thought of penalties is making me lose sleep at night but seriously if I never went back to the US again, it would be their loss. I do a lot of shopping/vacationing there (-:

I'm getting my papers in order today and hopefully will hear from a Greenback accountant soon. Based on my financial information that I have in front of me I should be able to easily file back to 2006, so I will be compliant once I file 2011. 

I'm also cleaning up and streamlining all my finances going forward. Probably not an issue for single and Americans married to Americans, but I don't want one red cent of my Canadian husband's earnings/savings to be exposed to the IRS. I also forgot that I am joint on my mother-in-law's account just so I can do their online banking/bill paying for them. So now I'll have to report that account.


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## JustinL

Hello everyone,

I'm a dual citizen born and raised in Edmonton. I've learned way more about US taxes then I ever hoped to over the last 2 weeks. I went through all the same stages that we all seem to go through. 1. Shock 2.Panic 3. Confusion 4. More panic 5. Rage 6. Disillusionment 

I seriously considered the OVDI before I started reading and talking to people. The threats leveled by the IRS in their FAQ are enough to scare the finances out of you. I didn't like the idea of coughing up over $5000 to confess to the "crime" of not reporting my chequing (that's right IRS, I spell it with a Q!) account and retirement savings.

I do want to be a good citizen to both of my countries and I filed all my U.S. taxes from 2003. I didn't throw myself under the bus with the OVDI though, for a few reasons. 1. It doesn't pass my moral test to confess to a "crime" that I didn't know I was committing and when that crime is failing to file a form. The punishment doesn't pass my "reasonable" test. 2. 5% of the most money you've ever had is not a reasonable thing to try to extract as a punishment. I.e., the punishment doesn't fit the crime. 3. The OVDI wants your passport number and as I travel on my Canadian passport, I don't want the IRS linking my CAN passport to my IRS account. 4. If they do come after me it won't be easy for them to collect on these penalties.

Filing taxes:
I did it all by hand and for the most part it is pretty straight forwards. Start with the 2555 and exclude your foreign income. Follow the instructions and make a note on your 1040 that says: See Form 2555 when you do the exclusion. If you have no investments, then the rest of the form is pretty much all zeros. If you have investments, then you can't exclude them with the 2555. They will go towards your income. If you don't exceed the exemptions and deductions it goes to zero again. If you do, then you need to learn about foreign tax credits. You can't claim the tax you paid on the income you excluded with 2555, but you can claim tax you paid on whatever is not included. Get schedule B and check the boxes about foreign accounts etc. Next start filling out the FBAR forms. They are easy to do, but getting ancient account values is the hard part. If you have RRSPs, then get form 8891 and fill that out. This is the form that let's you defer taxes on the RRSP accounts. 

TFSA is the conundrum; the IRS wants you to do the form 3520, but this is way beyond what most people can do. I didn't have a clue where to start so I asked an accountant about it and his eyes bulged at the requirements. I'm still not sure what to do about these, but I included them in my FBAR and when I sell the stuff in the account I will treat it as an untaxed capital gain for U.S. purposes.

After all was done, I still owe zero taxes to both of my countries. If they come after me for delinquent FBARs, I'll deal with that. I don't see them coming after upstanding citizens based on a cost benefit analysis. The IRS has far more to gain by keeping track of me; my honest potential future taxes are far more collectable than penalties for past FBAR forms.

*DISCLAIMER: This information is only how I did my taxes and made my decision, not guidance about how you should do yours. I'm just a guy learning about all this too.*


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## justbrowsing

AmTaker said:


> Is that for all, or only if a distribution was taken ?


5% of the highest value it had during the year is what I was told...the same as any other non-disclosed account.

So let's see, I have to cash in some RRSP to pay the 5% but then CRA will want tax on the redemption so I have to cash in more RRSP... it never ends.


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## Vangrrl

I'd definitely like to do my own taxes going forward, but I think I can accept $300/year in accounting as the "cost of being a US expat" for the time being. 

My finances aren't complicated from a Canadian perspective - I easily file my own with Quicktax. But in the past 6 years, I've been on maternity leave (EI benefits) twice and receive a small dividend from my husband's corporation, and of course RRSP and RESP. No idea what the equivalent terms for any of these things even are in the US tax lingo.

Where I really need help is the FBARs and where to put which accounts.

Are any of you married to non-Americans? It sounds like to file as a married-filing-separately your spouse needs to also have a US tax number? I would really prefer to keep the rest of my family under-the-radar. We joke that when my husband dies, our youngest child (who is Canadian by birth and not registered with the US) will inherit everything and she can choose to provide for me and her brother if she wishes.

Edited to add: Just got an email from Sean at Greenback. I'm looking forward to getting the process underway. Thanks again to everyone who has shared their experiences on this thread. I'll be writing my MP today. I live in a suburb of Vancouver that has a border crossing - lots of Americans living here. He needs to hear from all of us.


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## justbrowsing

The FBAR is pretty clear for the accounts. Your personal accounts on the one page and any joint accounts on page 2. Several accountants have suggested to me that I should do that part myself and have them do the 1040.


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## Vangrrl

justbrowsing said:


> The FBAR is pretty clear for the accounts. Your personal accounts on the one page and any joint accounts on page 2. Several accountants have suggested to me that I should do that part myself and have them do the 1040.


I know, I am just feeling paranoid because of the threat of penalties based on amounts in accounts. In the FAQs they make a point that accounts where you are "Signatory on a Corporate account for which you have no Financial Interest" can be subject to penalty when the company is owned by a family member. Obviously this is to weed out expats setting up corporations in their spouses/kids name to avoid tax liabilities, and in my case my husband's corporation is based entirely on his specialized skills (that I don't have). I want this to be as clear to them as possible as these are 6-figure accounts/investments that I will be reporting.

What gets me is that hubby and I (whose families both originally come from overseas), could count at least a dozen families that we know in Asia and East Africa that are non-resident US citizens/greencard holders (people who took US rights as a foot-in-the-door in case things ever get hairy in their home country). These people are millionaires (easy to do when you live in Tax Havens). I can't imagine any of these people are even aware, or bothered in the least by these IRS threats. Its just us law-abiding shmucks with who are losing sleep over this.


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## justbrowsing

Just heard back from Finance Minister Jim Flaherty's office and they are being inundated with calls, letters, and emails. It is vital that all people affected by this contact their MP or Mr. Flaherty's office.

Just google "jim flaherty" . It is the 2nd hit and go to the contact section on the home page.

I don't think it is realistic to expect the US to back off on this, but we can reasonably hope to have them raise the threshold of who gets these enormous penalties.

Contact your MP or Mr. Flaherty today.


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## AmTaker

Vangrrl said:


> What gets me is that hubby and I (whose families both originally come from overseas), could count at least a dozen families that we know in Asia and East Africa that are non-resident US citizens/greencard holders (people who took US rights as a foot-in-the-door in case things ever get hairy in their home country). These people are millionaires (easy to do when you live in Tax Havens). I can't imagine any of these people are even aware, or bothered in the least by these IRS threats. Its just us law-abiding shmucks with who are losing sleep over this.


Such people (or US residents with unreported foreign accounts) are the main target of the IRS. Realistically, they won't pursue, as you put it 'law abiding' folks. I think some of the hysteria is being blown out of proportion by some cross border practitioners. Even if people don't participate in OVDI, these practitioners hope to be hired to do US tax returns.


----------



## Vangrrl

After reading through all the information that I had the stomach for: IRS, forum, blog and otherwise and speaking to accountants (in Canada), I'm quite disheartened by the number of people who appear to be throwing themselves under the OVDI bus on the advice of tax professionals. I will be speaking to my Greenback accountant on Thursday, but I am no longer of the opinion that I can trust a tax professional to advise me on how to proceed. I need to make my own plan and be willing to face the consequences if there are any.

So my plan is to have the accountant file my returns for 2007-2010 ASAP and I will disclose them quietly. I'm having some difficulty finding some of my documentation for years prior to 2007 (we moved provinces, banks and accounts, other issues) and I don't want to delay the whole process while I track down old information. So I will submit the past four years of returns which I am fairly confident will show that I have no tax owing, and from there I will file forward. I will correspondingly quietly disclose FBARs for 2007-2010. I don't believe I had aggregate balances greater than $10,000 prior to 2006 anyways. 

Incidentally, Scotiabank couldn't locate any info on a GIC that I cashed out and closed in 2006. It had fallen off their system. That could give us a clue as to the practical limitations of FATCA reporting going backwards. Banks aren't holding onto unlimited account information especially for closed accounts.

A question for those who have disclosed quietly: what did you write in your "cover" letter in order to explain your lack of timely filings/disclosures? I would be very grateful if you could share your wording. I would like to put myself in the same boat as all the other ignorant dual Canadian expats. There's a lot of us and chances are we either all go down together, or we are collectively found not worth the hassle.


----------



## MarkQQ

Vangrrl said:


> I know, I am just feeling paranoid because of the threat of penalties based on amounts in accounts. In the FAQs they make a point that accounts where you are "Signatory on a Corporate account for which you have no Financial Interest" can be subject to penalty when the company is owned by a family member. Obviously this is to weed out expats setting up corporations in their spouses/kids name to avoid tax liabilities, and in my case my husband's corporation is based entirely on his specialized skills (that I don't have). I want this to be as clear to them as possible as these are 6-figure accounts/investments that I will be reporting.





There is a narrow exception to FBAR and signatory authority accounts. If you are employee of husband's co, based in foreign country and company does not do business in the USA you do not need to disclose the banks or balances, just have to give the name of the company and other details such as address.


----------



## Bevdeforges

MarkQQ said:


> There is a narrow exception to FBAR and signatory authority accounts. If you are employee of husband's co, based in foreign country and company does not do business in the USA you do not need to disclose the banks or balances, just have to give the name of the company and other details such as address.


Where did you hear that one? I don't see that exception in the instructions for the Treasury form anywhere.

The one exception I know of that is somewhat like this is that if you work for a large company that reports their US account signers to the Treasury dept en masse, you don't have to include the company accounts on your personal form. Normally your employer will send you a letter saying that they are reporting you as a signer on the company accounts.
Cheers,
Bev


----------



## justbrowsing

Vangrrl said:


> A question for those who have disclosed quietly: what did you write in your "cover" letter in order to explain your lack of timely filings/disclosures? I would be very grateful if you could share your wording. I would like to put myself in the same boat as all the other ignorant dual Canadian expats. There's a lot of us and chances are we either all go down together, or we are collectively found not worth the hassle.


As I have seen here and in other forums:

- how long you have lived here and from what age
- what citizenship you currently have
- lack of financial or residential ties to the US
- only recently became aware of the need to file returns and fbar
- request consideration for reasonable cause for failure to file
- advise who may have provided you guidance to do this...accountant, irs hotline, etc.


----------



## Vangrrl

Bevdeforges said:


> Where did you hear that one? I don't see that exception in the instructions for the Treasury form anywhere.
> 
> The one exception I know of that is somewhat like this is that if you work for a large company that reports their US account signers to the Treasury dept en masse, you don't have to include the company accounts on your personal form. Normally your employer will send you a letter saying that they are reporting you as a signer on the company accounts.
> Cheers,
> Bev



Bev, I think Mark is referring to these instructions (from the FBAR form). I've bolded the part that I think is relevent:
*
Modified Reporting for United States Persons Residing and
Employed Outside of the United States. A United States person who
(1) resides outside of the United States, (2) is an officer or employee of
an employer who is physically located outside of the United States, and
(3) has signature authority over a foreign financial account that is owned
or maintained by the individual's employer should only complete Part I
and Part IV, Items 34-43 of the FBAR. Part IV, Items 34-43 should only
be completed one time with information about the individual's employer.*_
For Items 15-23, see Part II.
Items 34-42. Provide the name, address, and identifying number of the
owner of the foreign financial account for which the individual has
signature authority over but no financial interest in the account. If there
is more than one owner of the account for which the individual has
signature authority, provide the information in Items 34-42 for the
principal joint owner (excluding the filer). If account information is
completed for more than one account of the same owner, identify the
owner only once and write “Same Owner” in Item 34 for the succeeding
accounts with the same owner.
Item 43. Enter filer's title for the position that provides signature
authority (e.g., treasurer)._
-----------------------------------------------------

That does read to me that if you are a signatory employee, then you just report your employers name and address (Part IV, items 34-42) and of course your own information (Part I). 

If I'm interpreting this statement correctly, that is the best thing I've read all day!! I'll definitely be asking my accountant to clarify.


----------



## MarkQQ

That does read to me that if you are a signatory employee, then you just report your employers name and address (Part IV, items 34-42) and of course your own information (Part I). 

If I'm interpreting this statement correctly, that is the best thing I've read all day!! I'll definitely be asking my accountant to clarify.[/QUOTE]


Yes this was from the FBAR instructions, March 2010 revision
Thats the way I read it. As long as your an employee of a foreign co, and it does not do business in USA, you just give them a few simple answers, it does not say you need the balances. Its one less thing for the IRS to poke around on especially if those balances are big and they involve several accounts.

But that leads to another problem if you own shares in the foreign company - ask your accountant about form 5471


----------



## AmTaker

justbrowsing said:


> As I have seen here and in other forums:
> 
> - how long you have lived here and from what age
> - what citizenship you currently have
> - lack of financial or residential ties to the US
> - only recently became aware of the need to file returns and fbar
> - request consideration for reasonable cause for failure to file
> - advise who may have provided you guidance to do this...accountant, irs hotline, etc.


Add
-- Totally Tax compliant in Canada 
-- Little to no tax liability owing to Foreign tax credits, earned income exclusion.


----------



## Vangrrl

MarkQQ said:


> But that leads to another problem if you own shares in the foreign company - ask your accountant about form 5471


Ok I looked up 5471 - looks like you need to be a minimum 10% shareholder. Its all good.

I've been tracking down all my maximum balances for FBAR and banging my head on the wall. Its paints such an inaccurate picture of my whole finances to just include my positive balance accounts and these "snapshot" maximum balances. I moved the same $10,000 between 3 different accounts one year, and now need to report a maximum balance of $10,000ish for all 3 accounts. Its the same freaking lump of money identified 3 times, not a total of $30,000! And while I'm at it, why can't I include my crushing half a million dollar Vancouver mortgage for some interest relief (like Americans do - or can I?) and 6 figures of student loans? 

As I wait to get started with my accountant another question: do you also submit a copy of your Canadian tax return and the original forms (T3,4,5 etc...) or is it like e-filing where you just hang onto the forms unless you are asked for them?


----------



## MarkQQ

Vangrrl

Definitely do not have to include the Canadian return and forms.

I think your right about the FBAR forms

I am Canadian with unfiled tax returns, small amounts of interest income and outstanding FBAR's back to 2002. I had a US tax attorney tell me on Monday that by back filing the old tax returns first, you could make the argument on the voluntary disclosure letter that there is no "unreported income" and sign the letter. Sort of like the chicken and the egg argument - which came first. I like this tactic. Because there is no unreported income, there is no penalty, just the voluntary disc letter, the prior years returns and the FBAR's and hope it goes through. The IRS has been so unclear in this area to the point where nobody can give a straight and correct answer. This isn't a tax law, its just a bunch of administrative procedures to catch tax evaders. So we're throwing this back in their face so to speak.


----------



## Vangrrl

MarkQQ said:


> Vangrrl
> 
> Definitely do not have to include the Canadian return and forms.
> 
> I think your right about the FBAR forms
> 
> I am Canadian with unfiled tax returns, small amounts of interest income and outstanding FBAR's back to 2002. I had a US tax attorney tell me on Monday that by back filing the old tax returns first, you could make the argument on the voluntary disclosure letter that there is no "unreported income" and sign the letter. Sort of like the chicken and the egg argument - which came first. I like this tactic. Because there is no unreported income, there is no penalty, just the voluntary disc letter, the prior years returns and the FBAR's and hope it goes through. The IRS has been so unclear in this area to the point where nobody can give a straight and correct answer. This isn't a tax law, its just a bunch of administrative procedures to catch tax evaders. So we're throwing this back in their face so to speak.


Mark, thank you for your information. 

I see what you are saying and I agree with that tactic: once you have no outstanding tax returns (which is presumably the minute the old returns are in the mail or efiled) you can now honestly say at you have "no unreported income" and are therefore in a position to just send in the delinquent FBARs.

I'm just hoping that I can use this tactic but only file back to 2007. I don't even have Canadian tax returns or bank account info going back further than 2005. It could take me weeks to requisition the info I need to file back any further than that, if I can even get it. I'd prefer not to wait.


----------



## JustinL

Vangrrl said:


> I've been tracking down all my maximum balances for FBAR and banging my head on the wall. Its paints such an inaccurate picture of my whole finances to just include my positive balance accounts and these "snapshot" maximum balances. I moved the same $10,000 between 3 different accounts one year, and now need to report a maximum balance of $10,000ish for all 3 accounts. Its the same freaking lump of money identified 3 times, not a total of $30,000! And while I'm at it, why can't I include my crushing half a million dollar Vancouver mortgage for some interest relief (like Americans do - or can I?) and 6 figures of student loans?
> 
> As I wait to get started with my accountant another question: do you also submit a copy of your Canadian tax return and the original forms (T3,4,5 etc...) or is it like e-filing where you just hang onto the forms unless you are asked for them?


The way I understand the FBAR forms is that you report the highest "aggregate" balance. This to me means the moment that you had the highest balance of all your accounts combined. So if you choose December 31st as the day of your highest value, then you report your account balances from that day. That way you don't report the same $ in multiple accounts. This is what my accountant told me to do, and it makes sense to me.

In my letter I was also very clear about having no underreported income to the states, just unreported zeros. I sent an email to the IRS asking exactly this question and never heard back. The hotline about FBARS on their website is not available to people outside the country, so I feel like I did my due diligence on trying to get an answer. I actually asked my father to call from the states and ask; the answer he got was that if I didn't owe anything then there shouldn't be any penalties.

I printed out my last 2 Canadian tax returns from the CRA My account page and attached them to the 2009 and 2010 returns as I had to use some tax credits to balance things out and I wanted to show what numbers I was using.


----------



## Vangrrl

JustinL said:


> The way I understand the FBAR forms is that you report the highest "aggregate" balance. This to me means the moment that you had the highest balance of all your accounts combined. So if you choose December 31st as the day of your highest value, then you report your account balances from that day. That way you don't report the same $ in multiple accounts. This is what my accountant told me to do, and it makes sense to me.


I don't think this is right. Highest aggregate balance is the threshold for determining whether or not you are above the $10,000 range. But it clearly states on the form instructions that you are reporting the maximum value of each account separately in that calendar year:

_Item 15. Determining Maximum Account Value.
Step 1. Determine the maximum value of each account (in the currency
of that account) during the calendar year being reported. The maximum
value of an account is a reasonable approximation of the greatest value
of currency or nonmonetary assets in the account during the calendar
year. Periodic account statements may be relied on to determine the
maximum value of the account, provided that the statements fairly
reflect the maximum account value during the calendar year. *For Item
15, if the filer had a financial interest in more than one account, each
account must be valued separately*_

Again this process is designed to weed out the dude with the single $1Million off-shore account and I imagine it wasn't set up to monitor people's multiple household accounts. But I do think its pretty clear that you report the maximum value separately for each account at whatever day that occurred.


----------



## JustinL

Vangrrl said:


> I don't think this is right. Highest aggregate balance is the threshold for determining whether or not you are above the $10,000 range. But it clearly states on the form instructions that you are reporting the maximum value of each account separately in that calendar year:


You could be right about that. The wording does get very confusing. I assumed consistency was something that the IRS would have...

In theory, you could move the same $9999 through 10 different accounts and never break the $10K aggregate limit to trigger the reporting requirement. If you did that with $10,001 you would have to report all 10 accounts and be assessed a penalty based on $100,010.

A more realistic sale of a house situation, you could put $100K into your chequing, move it to your savings and the IRS thinks you're worth twice as much as you are.

Thankfully in my computation, the max values were almost always the max aggregate values. It's almost worth expatriating just to never have to deal with crap like this again.


----------



## technopal

*Who is my congressman person?*

If I am a Canadian born American and I have never lived or worked in the US who would my representative be? I think a war was fought to say no taxation without representation.


----------



## Vangrrl

technopal said:


> If I am a Canadian born American and I have never lived or worked in the US who would my representative be? I think a war was fought to say no taxation without representation.


I got swept up in the "Yes We Can" movement and considered voting for the first time in the last US election. So I looked into this. My family moved to Canada when I was 9 months old, and apparently my electroral district would be determined based on our last address in the US. Never followed through with the voting bit since I was born in California and Obama was going to be a sure win there anyways. Now I'd like to smack him for signing FATCA into law.

I would guess in your case, you would be represented by the district where your American parent last lived?


----------



## Bevdeforges

Vangrrl said:


> Bev, I think Mark is referring to these instructions (from the FBAR form). I've bolded the part that I think is relevent:
> *
> Modified Reporting for United States Persons Residing and
> Employed Outside of the United States. A United States person who
> (1) resides outside of the United States, (2) is an officer or employee of
> an employer who is physically located outside of the United States, and
> (3) has signature authority over a foreign financial account that is owned
> or maintained by the individual's employer should only complete Part I
> and Part IV, Items 34-43 of the FBAR. Part IV, Items 34-43 should only
> be completed one time with information about the individual's employer.*_
> For Items 15-23, see Part II.
> Items 34-42. Provide the name, address, and identifying number of the
> owner of the foreign financial account for which the individual has
> signature authority over but no financial interest in the account. If there
> is more than one owner of the account for which the individual has
> signature authority, provide the information in Items 34-42 for the
> principal joint owner (excluding the filer). If account information is
> completed for more than one account of the same owner, identify the
> owner only once and write “Same Owner” in Item 34 for the succeeding
> accounts with the same owner.
> Item 43. Enter filer's title for the position that provides signature
> authority (e.g., treasurer)._
> -----------------------------------------------------
> 
> That does read to me that if you are a signatory employee, then you just report your employers name and address (Part IV, items 34-42) and of course your own information (Part I).
> 
> If I'm interpreting this statement correctly, that is the best thing I've read all day!! I'll definitely be asking my accountant to clarify.


Ooh, thanks for that. It appears they have changed the rules a bit. It's not related to the employer being your spouse, but simply to the fact that the employer is a foreign entity.
Cheers,
Bev


----------



## AmTaker

Vangrrl said:


> Ok I looked up 5471 - looks like you need to be a minimum 10% shareholder. Its all good.
> 
> I've been tracking down all my maximum balances for FBAR and banging my head on the wall. Its paints such an inaccurate picture of my whole finances to just include my positive balance accounts and these "snapshot" maximum balances. I moved the same $10,000 between 3 different accounts one year, and now need to report a maximum balance of $10,000ish for all 3 accounts. Its the same freaking lump of money identified 3 times, not a total of $30,000! And while I'm at it, why can't I include my crushing half a million dollar Vancouver mortgage for some interest relief (like Americans do - or can I?) and 6 figures of student loans?
> 
> As I wait to get started with my accountant another question: do you also submit a copy of your Canadian tax return and the original forms (T3,4,5 etc...) or is it like e-filing where you just hang onto the forms unless you are asked for them?



There are complicated family attribution rules for constructive ownership of stock controlled by a direct family member. (spouse, children, parents). I'm not entirely sure of the interaction of these rules with 5471 foreign corporation rules, but this is intended as a cautionary note. 

You should most definitely be able to claim the mortgage interest deduction on your main home. Not for student loans in most cases.


----------



## AmTaker

JustinL said:


> You could be right about that. The wording does get very confusing. I assumed consistency was something that the IRS would have...
> 
> In theory, you could move the same $9999 through 10 different accounts and never break the $10K aggregate limit to trigger the reporting requirement. If you did that with $10,001 you would have to report all 10 accounts and be assessed a penalty based on $100,010.


Under the OVDI scheme, duplication is supposed to be removed for penalty. Outside it, I don't know.


----------



## AmTaker

MarkQQ said:


> Vangrrl
> 
> Definitely do not have to include the Canadian return and forms.
> 
> I think your right about the FBAR forms
> 
> I am Canadian with unfiled tax returns, small amounts of interest income and outstanding FBAR's back to 2002. I had a US tax attorney tell me on Monday that by back filing the old tax returns first, you could make the argument on the voluntary disclosure letter that there is no "unreported income" and sign the letter. Sort of like the chicken and the egg argument - which came first. I like this tactic. Because there is no unreported income, there is no penalty, just the voluntary disc letter, the prior years returns and the FBAR's and hope it goes through. The IRS has been so unclear in this area to the point where nobody can give a straight and correct answer. This isn't a tax law, its just a bunch of administrative procedures to catch tax evaders. So we're throwing this back in their face so to speak.


This strikes me as a little too pat. What would stop a genuine tax evader from doing exactly the same (i.e. filing amended or new returns), then claiming no FBAR penalty on the grounds that there was no unreported income? Such a person would pay tax, but would avoid the draconian FBAR penalty. 

The FBAR penalty, after all, is technically independent of tax (i.e. you could owe no tax and still be liable for the penalty), and its an act of administrative grace (strange term to use !!) on the part of the IRS to say that there would be no penalty if no income was unreported and that delinquent FBARs would be accepted in such a case (which they are not required to do). So I doubt the IRS would accept that reasoning by itself unless the facts of a case support the idea of no penalty imposition (in which case one wouldn't need this rather 'lawyerly' argument). I think filing returns would pretty much immunize you against tax penalties, but not against FBAR penalties.

I'm not saying its a bad idea to file old returns and FBARs, I'm saying that using this argument strikes me as dubious. Probably better to just attach a note explaining some of the points people have made earlier for claiming penalty relief.


----------



## Bevdeforges

AmTaker said:


> There are complicated family attribution rules for constructive ownership of stock controlled by a direct family member. (spouse, children, parents). I'm not entirely sure of the interaction of these rules with 5471 foreign corporation rules, but this is intended as a cautionary note.
> 
> You should most definitely be able to claim the mortgage interest deduction on your main home. Not for student loans in most cases.


Don't go confusing the 5471, FBAR and other "overseas asset" reporting rules with the income tax filings. The FBAR and other asset reporting rules are literally only reporting. You don't need to offset your maximum balances with your debts. They're just looking to see what accounts (and other financial assets) you're holding.

And don't waste too much time digging through old records for a precise high balance - a good faith estimate (rounded up rather than down) will do, unless you actually have been hiding income bearing accounts.
Cheers,
Bev


----------



## Vangrrl

Bevdeforges said:


> Ooh, thanks for that. It appears they have changed the rules a bit. It's not related to the employer being your spouse, but simply to the fact that the employer is a foreign entity.
> Cheers,
> Bev


That's correct. The fact that I work for hubby's business still leaves me more vulnerable than if you are a signatory at a 3rd party business. But in good faith I can send in the FBARs without his company bank accounts reported. As we are all well aware of, from there who knows what will really happens. 

Going forward, obviously we will now have to keep US taxes in mind before any restructuring is done (family trusts etc...). I suspect I will have renounced my US citizenship long before we get into those issues.


----------



## Vangrrl

Just talked to my accountant at Greenback and feel much more at ease about this process now. Much of the same information I've been hearing here:

His feeling was that compliance truly means going back and filing for every year you ever had income. So assuming that anyone over the age of 30 isn't going to be doing that, he felt that I should pick a number of returns that I felt established a pattern of my income and finances and most importantly that I'm not owing US taxes. Based on my particular case, he thought filing 4 returns (back to 2007) was reasonable. He said the IRS can *always* come back to you for past tax returns whether you file 3, 6 or 15 since there is no statue of limitation for unfiled returns. But establishing a pattern of not owing US taxes for a few years makes it less likely that they will devote resources to examining your case further especially considering that the IRS is currently being completely overwhelmed by the number off-shore returns and disclosures coming in.

He felt that FATCA (if and when it ever comes into effect for any particular institution) is highly unlikely to be retroactive, so good faith efforts in reporting bank balances should be fine (this was worrying me since I'm missing some account info).


----------



## Arlington

*But establishing a pattern of not owing US taxes for a few years makes it less likely that they will devote resources to examining your case further especially considering that the IRS is currently being completely overwhelmed by the number off-shore returns and disclosures coming in.* 

That's what I've been thinking . .there is going to be a crush of paperwork received by the IRS. I want to silently disclose during that crush.

I'll be spending my three day weekend trying to finalize six years worth of returns. Thanks, everyone, for the specific advice offered here as well as the reassurance that I'm not alone and things really aren't as bad as they seemed.


----------



## Pathologic1

If anyone gets a response from the IRS or through OVDI PLEASE PLEASE post it here. 

This would be extremely helpful to those that are still stuck in this quagmire.

I have just submitted FBARs and tax returns for six family members and IF I hear anything I will report it here. Please do the same.


----------



## Canadark

Pathologic1 said:


> If anyone gets a response from the IRS or through OVDI PLEASE PLEASE post it here.
> 
> This would be extremely helpful to those that are still stuck in this quagmire.


Lots of great information on this thread. I wanted to make just one small contribution, as someone who worked for H&R Block for six years, prior to moving to Canada from the US (and as a US taxpayer/filer for 30+ years). Note: this applies to normal expat filings with the International IRS tax office in Austin, TX, not to the OVDI.

Please let me set your expectations about responses from the IRS: they will NOT send you anything like a Canadian "Notice of Assessment". They will send you exactly NOTHING. If you mail in a cheque to pay your taxes, they will cash it. If they send you a cheque for your refund, that's all you will get. 

The IRS does not send cheery little CRA-esqe letters saying "Thank you for filing your taxes; we agree with your submission and you are all set for another year." It just doesn't happen. What the response from the IRS will sound like is crickets. With the IRS, "No News = Good News"


----------



## Pathologic1

True. But if its bad news they will contact you.


----------



## syn2012

useful information


----------



## Bevdeforges

Pathologic1 said:


> True. But if its bad news they will contact you.


Don't let it get to you. Sometimes they'll contact you if they have a question. And sometimes the question can be really, really stupid. Just reply briefly and truthfully and chances are, you won't hear from them again.
Cheers,
Bev


----------



## Arlington

Question on TFSA reporting. I understand forms 3520 and 3520A are required. They are incomprehensible. Truly eerie forms. 

What if I declare the TFSA earned income each year and report the TFSA on my FBAR form? Shouldn't that be sufficient? 

I wouldn't have known about the 3520 requirement had I not read it on this forum. 

If my investment advisor hadn't sent me a link to a Globe and Mail article about US tax filing requirements for residents abroad, I still would not known about any of this. I haven't seen one article in print or online that I would have stumbled upon on my own. I'd still be in bliss!


----------



## Pathologic1

I have chosen to completely ignore form 3520. My excuse is I "have never heard of it" and my accountant said nothing about it. It is ridiculously complicated and they estimate what about 40 hours to fill it out. Forget that. Renunciation is much simpler.

3520 is another "informational return" like the FBAR but I suspect the penalties are far less. They would be a hassle to collect in Canada since the CRA won't collect penalties for informational returns.


----------



## Arlington

Thanks, Pathologic1. I will ignore it, too. For the same reasons. I've really enjoyed your posts . . very informative.


----------



## Vangrrl

Canadark said:


> Lots of great information on this thread. I wanted to make just one small contribution, as someone who worked for H&R Block for six years, prior to moving to Canada from the US (and as a US taxpayer/filer for 30+ years). Note: this applies to normal expat filings with the International IRS tax office in Austin, TX, not to the OVDI.
> 
> Please let me set your expectations about responses from the IRS: they will NOT send you anything like a Canadian "Notice of Assessment". They will send you exactly NOTHING. If you mail in a cheque to pay your taxes, they will cash it. If they send you a cheque for your refund, that's all you will get.
> 
> The IRS does not send cheery little CRA-esqe letters saying "Thank you for filing your taxes; we agree with your submission and you are all set for another year." It just doesn't happen. What the response from the IRS will sound like is crickets. With the IRS, "No News = Good News"


That's good to know. My accountant suggested sending the returns with some sort of "confirmation of delivery" because if you have no tax owing, you won't have any other way of even knowing that they received anything. I remember from other US mailings that this is a PITA to do from Canada. 

The only way you could be certified as compliant is if you participate in OVDI and at the end of the process there is some sort of written certification of compliance.


----------



## Vangrrl

Arlington said:


> Question on TFSA reporting. I understand forms 3520 and 3520A are required. They are incomprehensible. Truly eerie forms.
> 
> What if I declare the TFSA earned income each year and report the TFSA on my FBAR form? Shouldn't that be sufficient?
> 
> I wouldn't have known about the 3520 requirement had I not read it on this forum.


Forgive my ignorance but does this also apply to a RESP? I have an RRSP, and RESP and received a dividend. I submitted my RRSP receipts and my T5 (for the dividend) and then reported account info and the balance of my RESP and RRSP for FBAR purposes. But I take it there's more to this? My accountant would know what to do?

I've only been invested for 2 years, and I'm fairly certain that none of my investments have made a single penny in that time. 

I'm not sure if its possible to remove my name from my kids RESPs, but if it is, that may be the next step in project "simplify my financial identity".


----------



## Arlington

RESP's and TFSA's are treated as foreign trusts and require forms 3520 and 3520a from what I've seen. The forms are impossible to fill out. Impossible. We don't have RESP's but I'm ignoning the 3520 for the TFSA and instead including the interest earned (a truly pitiful amount) in income.

Are we having fun yet? I'm having a blast digging through my box of 2005 to find old bank statements. Next is 2007. Can't seem to find 2006 yet. What a great holiday weekend. 

Vangrrl, maybe we can meet and renounce together. 

I still have to do all of this for our three adult children . .and none of them have social security numbers and are quite resistant to getting them (understandably).


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## Vangrrl

Arlington said:


> RESP's and TFSA's are treated as foreign trusts and require forms 3520 and 3520a from what I've seen. The forms are impossible to fill out. Impossible. We don't have RESP's but I'm ignoning the 3520 for the TFSA and instead including the interest earned (a truly pitiful amount) in income.
> 
> Are we having fun yet? I'm having a blast digging through my box of 2005 to find old bank statements. Next is 2007. Can't seem to find 2006 yet. What a great holiday weekend.
> 
> Vangrrl, maybe we can meet and renounce together.
> 
> I still have to do all of this for our three adult children . .and none of them have social security numbers and are quite resistant to getting them (understandably).


So the interest earned would be reported somewhere for my RESP? Like a year end statement? Back into the box of papers I go....

Loads of fun!! This is ALL I have been thinking about for 2 weeks now, and finally I spent until 2am yesterday getting everything uploaded for my accountant. I'm pretty sure my bank branch is going to be putting my phone number on block soon because I have been hounding them daily for trivial information. I don't have bank statements for my chequing account for 2008-2009 because I decided to go green and paperless but never saved electronic copies. D'OH!

Are your kids born in the US? If not, then I would let sleeping dogs lie. How would the IRS even know they are American? My younger kid is born in Canada and since my husband isn't American she does not have automatic citizenship (I would have to prove that I lived in the US for 5 years after the age of 14 for her to be eligible - which I could do that, but have no intention of doing). I intend to keep her completely off the IRS radar if I can. No such luck for my other one, who has a SSN number and a passport but at least I can claim him as a deduction if I need to.

Maybe this will all be easy and mundane for years going forward but if it isn't I definitely see a renunciation party in my future!


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## Arlington

Vangrrl - Two of our children were registered as Americans born abroad. I never registered the third as by then we all felt like Canadians. The first two were supposed to declare their interest in being citizens of the US when they turned 18 if they wanted to be. They never did that. The rules have changed now and you can't get rid of US citizenship. Not easily. 

We've all received inheritances from the states this year, and I'd like us all to be compliant so no one gets their hands on that. Also, I read that it's better to become compliant now while they're younger and don't have any investments (except for my oldest ). 

I've enjoyed reading your posts . .I could tell you were a kindred spirit, not sleeping, sick with worry. For a month I thought I was the only one. 

I feel immensely better having read this forum. I talked to my sister today and told her I was doing taxes all weekend. She said, "But you don't sound upset!" She could tell just from my voice that I was a lot more relaxed. So, thanks to everyone on this site.


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## Vangrrl

Arlington said:


> Vangrrl - Two of our children were registered as Americans born abroad. I never registered the third as by then we all felt like Canadians. The first two were supposed to declare their interest in being citizens of the US when they turned 18 if they wanted to be. They never did that. The rules have changed now and you can't get rid of US citizenship. Not easily.
> 
> We've all received inheritances from the states this year, and I'd like us all to be compliant so no one gets their hands on that. Also, I read that it's better to become compliant now while they're younger and don't have any investments (except for my oldest ).
> 
> I've enjoyed reading your posts . .I could tell you were a kindred spirit, not sleeping, sick with worry. For a month I thought I was the only one.
> 
> I feel immensely better having read this forum. I talked to my sister today and told her I was doing taxes all weekend. She said, "But you don't sound upset!" She could tell just from my voice that I was a lot more relaxed. So, thanks to everyone on this site.


Arlington - I never thought about inheritance and how it can potentially "out" your kids. I totally see why you are being proactive (and I'm sorry for your loss, I assume inheritance means a death of a parent/grandparent). My husband and I have only really been earning/investing for the past few years so in many ways I'm thankful that I can plan to do things "right" going forward. I can only imagine the stress that those of you further along in your careers and retirement savings must be feeling. You made all those plans and financial decisions following one set of rules, and suddenly all the rules have changed!

Its definitely comforting that there are many of us in the same position and have ultimately come to the same conclusions with regards to how to proceed. When the dust settles on this thread, I might start another one on renouncing citizenship (unless that is contrary to the spirit of this expat forum!) as that's the next thing I imagine many of us are thinking about.


----------



## Vangrrl

Arlington said:


> RESP's and TFSA's are treated as foreign trusts and require forms 3520 and 3520a from what I've seen. The forms are impossible to fill out. Impossible. We don't have RESP's but I'm ignoning the 3520 for the TFSA and instead including the interest earned (a truly pitiful amount) in income.


It looks like the clarification that identifies a TFSA/RESP as a foreign trust and thus requiring the 3520s came from earlier this year. So it seems totally reasonable (to me) to have "never heard of it", especially in filing previous years returns.

So then going forward is it worthwhile ditching these investment vehicles? Or is the interest tax due as a result still going to be offset by the otherwise higher tax we pay in Canada? 

I'm going to attempt to transfer ownership of the RESP to my husband or my mother if that's even possible (sounds like there is some difference of opinion on that issue). I don't have a TFSA yet but it was on my to-do list for 2012.

I'm assuming we are all working towards an end-game of owing no tax to the US (since god knows we all pay enough to the CRA)? If anyone is meeting with their financial planner/accountant to discuss your plans going forward as a double tax filers, please share their/your insights with us. Again once the dust settles on this topic, that might be a new thread topic.


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## technopal

*How important is the Aug 9 deadline?*

My US accountant has not completed all the paperwork. His recommendation is a quiet disclosure. I have never lived or worked in the US. I am what they call an Accidental American.
thanks for all of your help


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## Canadark

The extended deadline for the formal OVDI program is now Sept 9, 2011, due to the expected disruptions caused by Hurricane Irene. "Quiet disclosure" is not affected and has no deadline. Make sure your accountant does a good job and submit the returns when they are ready.


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## Bevdeforges

Canadark said:


> The extended deadline for the formal OVDI program is now Sept 9, 2011, due to the expected disruptions caused by Hurricane Irene. "Quiet disclosure" is not affected and has no deadline. Make sure your accountant does a good job and submit the returns when they are ready.


Further to that, the main thing to "quiet disclosure" is to demonstrate through your filing that none of your overseas accounts is abusive in nature, that you've been reporting them to the Canadian government according to the tax laws, and that, even if they came back and audited you, any back tax amounts would be minimal.

They aren't going to bother auditing or harassing someone they can't flog back taxes out of. 
Cheers,
Bev


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## AmTaker

Vangrrl said:


> T
> 
> The only way you could be certified as compliant is if you participate in OVDI and at the end of the process there is some sort of written certification of compliance.


If you send in delinquent FBARs, you could get a warning letter (which is actually a good sign, because it typically means the IRS has closed your case with no penalty).


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## AmTaker

Arlington said:


> Vangrrl - Two of our children were registered as Americans born abroad. I never registered the third as by then we all felt like Canadians. The first two were supposed to declare their interest in being citizens of the US when they turned 18 if they wanted to be. They never did that. The rules have changed now and you can't get rid of US citizenship. Not easily.


Its not difficult to get rid of US citizenship, unless you happen to be a 'covered' expatriate (income and asset tests). Fortunately, or unfortunately, I happen to be one.


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## Arlington

Great article by Don Cayo in the Vancouver Sun today with a letter written to President Obama from a person in the same situation as most of us on this site. 

I don't think it will do much good unless it gets some good press in the US. 

I could see 60 Minutes doing a good story on this. Or the New York Times.


----------



## justbrowsing

I think many of the excellent points in the Vancouver Sun letter are the same ones to include in emails to our Canadian federally elected officials.


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## Bevdeforges

Arlington said:


> Great article by Don Cayo in the Vancouver Sun today with a letter written to President Obama from a person in the same situation as most of us on this site.
> 
> I don't think it will do much good unless it gets some good press in the US.
> 
> I could see 60 Minutes doing a good story on this. Or the New York Times.


The main US expat groups have been hammering away about this taxation issue for years (see websites for AARO and ACA) and never seem to get anywhere. One issue has always been the number of tax attorneys who make their living overseas advising US expats - and somehow they are the ones who advise the associations that "Congress will never lift the tax obligation on Americans living abroad."

What's discouraging, too, is that if we try to write or contact "our" congressional representatives, we're generally ignored because most Congress persons won't look at any letter or take any phone call that comes from outside their Congressional district. Many of them aren't even aware that American resident overseas are able to vote and that they represent voters who actually do live outside their districts.
Cheers,
Bev


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## AtHomeInCanada

From all I've been reading here, I should be filing taxes and FBARS, with a letter explaining my circumstances.

However, I got swept up in the fear of penalties and sent in my application for OVDI. I told my brother and mother to do the same! However I am a law abiding, honest resident of Canada. I am NOT a criminal hiding assets. I had no idea of the filing requirements of my US citizenship. I have lived in Canada since I was a child, have no US income, etc.

How do I get *out* of the OVDI? Will I now be flagged for an audit if I go the other route? I am terrified of losing my savings to penalties. I have Canadian RRSPs and a TFSA. I understoood OVDI was the route to go if you had these investments (even if you draw NO income from them).

Please help! I think we need to get out of OVDI, but now we are flagged in the system as having applied under the *criminal* amnesty program! I'm sick to my stomach over this.


----------



## AtHomeInCanada

Sorry for the duplicate post!


----------



## AtHomeInCanada

*Decision Tree - OVDI vs. Quiet Disclosure - from an accountant*

I would like to add that I made my initial decision to apply under OVDI because I received a "decision tree" from a Bellingham accountant, which said:

Definitely consider OVDI if:
* low, but several foreign bank balances and RRSP balances, or ... (this is me)
* 10% or greater ownership in active foreign corporation, or ...
* any ownership in foreign corporation with passive income or rental income, or ....
* fear of Quiet Disclosure risks

Maybe consider OVDI if:
* had U.S. income more than $10,000/year over the last 8 years, or ..
* you lived in the U.S. at some point during 2003-present, or ...
* didn't report income in foreign country where you reside

Consider Quiet Disclosure if ...
* have less than $10,000 in a foreign bank account or RRSP, or ....
* earned less than $10,000/year in the U.S. for past 8 years.

So considering I have MORE than $10,000 in my RRSPS, this decision tree was saying to go OVDI. There is also a bullet point under "Quiet Disclosure" that says:

* RRSP is not deferred, but taxed

That to me says simply, if you go Quiet Disclosure, you have to pay tax on your Canadian RRSPs. How else would you interpret this?


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## Arlington

AtHomeIn Canada . .I am using Form 8891 U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans. This gets submitted with the 1040. This is to DEFER taxes on RRSP's until the money is withdrawn.

I listed every RRSP account with the balance for each year. Section 6A is the important part. For the oldest year (2005), I checked 6a "no" and checked off 6c, declaring I want to defer taxes on the undistributed earnings. For subsequent years, I checked 6a "yes" and entered "2005" in 6b. I haven't submitted them yet so if anyone sees fault with this, please let me know.

For the TFSA's . . I included the income earned on my 1040.

Also, there are ways to opt out of OVDI . .but I'm not sure when the opting out is done. Google it . .and look on the IRS site as well. 

Keep reading this forum and you're going to feel a lot better. I do.


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## AtHomeInCanada

Arlington said:


> AtHomeIn Canada . .I am using Form 8891 U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans. This gets submitted with the 1040. This is to DEFER taxes on RRSP's until the money is withdrawn.
> 
> I listed every RRSP account with the balance for each year. Section 6A is the important part. For the oldest year (2005), I checked 6a "no" and checked off 6c, declaring I want to defer taxes on the undistributed earnings. For subsequent years, I checked 6a "yes" and entered "2005" in 6b. I haven't submitted them yet so if anyone sees fault with this, please let me know.


Arlington, thank you. I looked at form 8891. In both cases above, you would stop entering information after line 8, correct?

Also, this is a silly question, but I would be the beneficiary of my own RRSP?

What if I had a "spousal RRSP" from a former marriage? (now divorced) Would I be the annuitant? The definitions aren't helping me


----------



## JustinL

AtHomeInCanada said:


> From all I've been reading here, I should be filing taxes and FBARS, with a letter explaining my circumstances.
> 
> However, I got swept up in the fear of penalties and sent in my application for OVDI. I told my brother and mother to do the same! However I am a law abiding, honest resident of Canada. I am NOT a criminal hiding assets. I had no idea of the filing requirements of my US citizenship. I have lived in Canada since I was a child, have no US income, etc.
> 
> How do I get *out* of the OVDI? Will I now be flagged for an audit if I go the other route? I am terrified of losing my savings to penalties. I have Canadian RRSPs and a TFSA. I understoood OVDI was the route to go if you had these investments (even if you draw NO income from them).
> 
> Please help! I think we need to get out of OVDI, but now we are flagged in the system as having applied under the *criminal* amnesty program! I'm sick to my stomach over this.


If I were in your position, I would grab the penalty calculator from the IRS OVDI section and grind through that first. It's an excel document that calculates the penalty under the amnesty program. You probably would fit in to the 5% penalty structure, again check the FAQ section 52 I think. Change the penalties in the workbook to 5% and figure out how much you would have to pay under the OVDI.

Once you've got this calculated, you can make a better decision on how to proceed. There is a way to get out of OVDI and I understand your hesitancy as now the IRS knows about you.

Most of us have been through the same emotions you're feeling and you will come out of this alright. We all suffer varying degrees of pain in this process, from lost sleep to financial costs to time costs.


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## Pathologic1

I totally sympathize with you. This is the first reaction many of us had. Being in OVDI is probably going to create more hassle but I think it will come out OK as you can always opt-out of OVDI if you don't like the result. So I think you will probably end up opting out. They will then scare you about the "consequences" but if you don't owe any taxes get out. Do not agree to pay any of the ridiculous penalties they may suggest. 

This whole thing is being hyped to the max. First FBAR penalties are not automatic. They cannot simply levy the fines against you like the taxman or court can do. They have to take you to court. It is not even clear they are constitutional according to the lawyers I have spoken with. The fact you are in Canada would complicate this immensely for the IRS. Getting a Canadian court to agree would be even more difficult and the Ministry of Finance has already said they will not help in the collection of this type of fine. And it would be big news in Canada with hundreds of thousands of Canadians watching and applying political pressure to the Canadian government and renouncing their citizenship en mass. I also don't think the IRS wants it tested in court, especially against an honest Canadian. 

They have never taken anyone to court for FBAR penalties other than obvious tax cheats. Not a single case against someone like an honest Canadian taxpayer. I don't think they could collect. One case some people make a big deal of is Michael Schiavo's. That involved relatively small amounts of money ($100,000) and he tried quiet disclosure. He now owes around 65,000 in fines and ongoing criminal prosecution. Sounds scary. However if you look into it he was sophisticated investor (a bank director) with a $100,000 account filled with unreported income transferred from his then secret UBS account and years of interest . Then he makes a quiet "partial" disclosure to the IRS but did NOT amend his income tax return to include the income he had just alerted them to, presumably so he still didn't have to pay any taxes (not very smart, eh?). So the guy wants to cheat every step along the way and pay no taxes. That is a far cry from a Canadian like you. Again there are ZERO cases of people like you being forced to pay these fines.

So I'd just wait and see but have a plan of opting out at that time. You are not guilty of any criminal offense and they are extremely unlikely to try and collect any FBAR penalties. 

Please let us know how it unfolds as this will be of great interst to anyone else that may find themselves in a similar position.


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## Vangrrl

I think the reason that ex-pats are never formally excluded from the taxation process because that might be viewed as an invitation for would-be tax frauds to intentionally set up dual-nationalities and make a plan to exit the US specifically with that in mind. Easier for IRS to look mean on paper, but be selective in their enforcement.


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## AmTaker

Pathologic1 said:


> I
> This whole thing is being hyped to the max. First FBAR penalties are not automatic. They cannot simply levy the fines against you like the taxman or court can do. They have to take you to court. It is not even clear they are constitutional according to the lawyers I have spoken with. The fact you are in Canada would complicate this immensely for the IRS. Getting a Canadian court to agree would be even more difficult and the Ministry of Finance has already said they will not help in the collection of this type of fine. And it would be big news in Canada with hundreds of thousands of Canadians watching and applying political pressure to the Canadian government and renouncing their citizenship en mass. I also don't think the IRS wants it tested in court, especially against an honest Canadian.
> 
> They have never taken anyone to court for FBAR penalties other than obvious tax cheats. .


I agree generally, but with 2 caveats

1) I think anyone challenging the FBAR laws or penalties on constitutional grounds isn't going to get far. People challenge the US tax laws (FBAR laws are not tax laws, but many other reporting laws are tax laws) on US constitutional grounds all the time, and go nowhere. The full FBAR penalties (could be 300% of account size) may be unconstitutional, but those are never levied. 
2) We wouldn't really know of audits that don't go to court (the vast majority of audits), because they are confidential. 

That being said, I don't think there is much for an expat with no to little US source income and little to no tax due to worry about. The IRS has far bigger fish to fry or even smaller fish in their own pond.


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## AtHomeInCanada

The Bellingham accountants also wrote this:

"If you have RRSP balances greater than $50,000, we highly recommend you complete and file a Private Letter Ruling prior to August 31, 2011 to potentially reduce additional penalties. (Requires filing fee based on income.)"

What is a Private Letter Ruling? Is that the outcome of the OVDI program?

And if you defer your taxes on your RRSP (using form 8891) why would it matter what the size of your RRSPs are?


----------



## AmTaker

AtHomeInCanada said:


> The Bellingham accountants also wrote this:
> 
> "If you have RRSP balances greater than $50,000, we highly recommend you complete and file a Private Letter Ruling prior to August 31, 2011 to potentially reduce additional penalties. (Requires filing fee based on income.)"
> 
> What is a Private Letter Ruling? Is that the outcome of the OVDI program?
> 
> And if you defer your taxes on your RRSP (using form 8891) why would it matter what the size of your RRSPs are?


A private letter ruling generally means asking the IRS for guidance on a particular matter. You need to request a private letter rulling for deferring tax on RRSP earnings if an original form 8891 was not filed in time. That letter has to be attached to a late form 8891. Its not really related to VD. 

I don't know why the size of the account would specifically matter.


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## Pathologic1

If you Google FBAR and unconstitutional you will see there is related case law and valid legal arguments against the FBAR penalties' constitutionality. 

I also can think of no other so obviously excessive fine or punishment for such a minor offence in US law. A person's lifetime of savings wiped out for innocently not filing a simple informational return and not avoiding any taxes. Preposterous. This is forbidden by the constitution. The 8th Amendment of the Consitution _"Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted."_ 

The reason we don't have any direct FBAR case law to refer to, is because they have not taken anyone to court other than some flagrant bona fide tax cheats. Apparently they cannot simply levy these fines but must go to court for the fine to have it imposed and this simply hasn't happened. It costs money and if they lose it wouldn't be such a threat. It's more useful as a boogeyman to bludgeon taxpayers into compliance with.

Add to this that the Ministry of Finance has said they will not enforce these fines on Canadians and that Canadian courts will not subject Canadians to punishments that are deemed too harsh, and even the IRS will have a tough time collecting anything from an honest Canadian in Canada.


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## Bevdeforges

I have to say that I agree wholeheartedly with Pathologic1. The FBAR and related filings are not tax forms - they are disclosure forms, pure and simply. What the IRS is looking for are potential sources of income that is not being reported. 

Now, the issue of having to file US income tax forms if you're an "accidental citizen" or just a US citizen residing abroad is a long-standing and annoying one. But I have yet to hear of any US citizen living abroad who has been pursued simply for failure to file. I do know of several US citizens who have lived abroad for 20 or 30 years without filing (either "didn't realize they had to" or just didn't bother). As long as there is no willful evasion of taxes due, the IRS isn't going to waste their time investigating.

Under most tax treaties, pensions or pension savings accounts are generally subject to tax first and foremost in the country in which they originate. I don't know anything about the Canadian RRSP accounts, but frankly, the US tax people are not looking for that sort of thing at all (unless you've found a way to evade or cheat on your taxes somehow by making use of an RRSP).

Easiest thing to do is to file your US income tax forms for the last 3 to 4 years. (The statute of limitations runs for 3 years from the due date of the return. The 6 year rule everyone has been stessing over only applies if there is an omission of 25% or more in the reporting.) If those show that you owe no (or very little) tax, then just keep filing going forward. As long as you're not hiding anything from them, the most you'll get is an occasional question back from them. 

If you have interest from savings accounts, then file the FBAR forms and list the bank and investment accounts for them. Don't stress out over the "maximum balance" thing - a good faith estimate is perfectly acceptable. As long as your income tax return includes the income from the accounts you report, you've "passed the test." If they decide they want any further information from you, they'll get in touch - and in fact they must first contact you to give you a chance to explain before they can resort to an audit - and what they're looking for with the FBAR stuff is evidence to call for an audit.
Cheers,
Bev


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## Arlington

AtHomeInCanada said:


> Arlington, thank you. I looked at form 8891. In both cases above, you would stop entering information after line 8, correct?
> 
> Also, this is a silly question, but I would be the beneficiary of my own RRSP?
> 
> What if I had a "spousal RRSP" from a former marriage? (now divorced) Would I be the annuitant? The definitions aren't helping me



Yes . . stop entering information after line 8. The remaining lines would be used if you were not deferring taxes.

Yes, you are the beneficiary.

If you're going to get the payout in the future from a spousal RRSP, you are the beneficiary. I understand the form to mean the annuitant is the person receiving a payout in the current tax year - thus requiring lines 7a and 7b.


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## AmTaker

Pathologic1 said:


> If you Google FBAR and unconstitutional you will see there is related case law and valid legal arguments against the FBAR penalties' constitutionality.
> 
> I also can think of no other so obviously excessive fine or punishment for such a minor offence in US law. A person's lifetime of savings wiped out for innocently not filing a simple informational return and not avoiding any taxes. Preposterous. This is forbidden by the constitution. The 8th Amendment of the Consitution _"Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted."_


Asset Forfeiture under US law, sometimes for minor drug infractions is pretty draconian too (and as I understand, the government can seize houses, boats, fields, and then you have to go to court and try to get them back). There are plenty of draconian US laws, and the Supreme Court rarely overrules them. 

I did google FFBAR and unconstitutional, and I saw 2 posts on the first page from lawyers who deal with foreign account matters (Jack Townsend & Hodgen) essentially knocking down the idea (Jack, who has an excellent blog on criminal tax law writes a detailed entry explaining that he thought a 50% penalty would be constitutional, but a 100% one may not be (based on previous case law). [There are a lot of US tax protesters who argue that tax laws are unconstitutional, and they rarely go anywhere except to the poorhouse or jail. ]

All of this is largely academic -- the penalties would likely stand up constitutionally, but the DoJ will likely still enforce only a subset and only against people who are big time willful evaders. And yes, since these are not tax penalties, they cannot be retrieved through the normal IRS collection method, but I think the Treasury has to bring a separate collection case. In any case, they can't retrieve non US property. My only objection was to the 'unconstitutional characterization' (just because something is nasty and unfair, its not necessarily unconstitutional in the US].


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## technopal

*Legal Division of Matrimonial Assets*

Moving forward I have one more question. if a Canadian is married to another Canadian with US citizenship should they use Alberta law regarding the division of matrimonial assets to put a formal legal stamp on pensions, RRSPS and property? Would Alberta law trump IRS?
Thanks for all the help


----------



## Pathologic1

AtHomeInCanada said:


> From all I've been reading here, I should be filing taxes and FBARS, with a letter explaining my circumstances.
> 
> However, I got swept up in the fear of penalties and sent in my application for OVDI. I told my brother and mother to do the same! However I am a law abiding, honest resident of Canada. I am NOT a criminal hiding assets. I had no idea of the filing requirements of my US citizenship. I have lived in Canada since I was a child, have no US income, etc.
> 
> How do I get *out* of the OVDI? Will I now be flagged for an audit if I go the other route? I am terrified of losing my savings to penalties. I have Canadian RRSPs and a TFSA. I understoood OVDI was the route to go if you had these investments (even if you draw NO income from them).
> 
> Please help! I think we need to get out of OVDI, but now we are flagged in the system as having applied under the *criminal* amnesty program! I'm sick to my stomach over this.


It is important that you read what this person did and how opting out was good for her.
Damsel in Distress – a VDP Success Story | Hodgen Law Group, PC | Hodgen Law Group, PC


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## TO_andrew

*CRA won't collect fines or levies*

There is an article in at the Vancouver Sun, stating the the CRA won't collect fine or levies issued by the IRS. The subsequent part of this, is that the CRA won't allow anyone to reach into RRSP, RESP, TFSA, etc.

Google "Opinion: Canada Revenue Agency won’t pile on victims of IRS campaign against Canadian residents" dated August 22st.


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## vancover99

*looking for contact info*

Hi there- all of this has just some to my attention. As a naturalized US citizen (I had a US parent but was born in Canada) who lives, works and pays Canadian taxes I have not been filing US taxes as have no income/ accounts/ investments there and assumed that I would not owe anything. But now with the potentially hefty penalties for not reporting my Canadian investments and accounts I am scrambling. I intend on back filing my US taxes for the past 6 yrs including the FBAR's so that I will be compliant and can move forward with a clean slate. 

I've read a fair bit over the past couple of days on this and am now in search of an experienced US/CDN tax accountant and possibly lawyer.

Pathalogic, how do do I PM you (I am a newbie to this forum, this being my first post)? I would be very keen to use to professionals you have used.

Thanks!!




Pathologic1 said:


> Do not fret. The reason that there are many different opinions is because this is new and the "amnesty" program has caused much confusion. If you want to ask a professional I would strongly suggest an accountant or firm in the US that has dealt with expats for a long time. There are alot of misinformed people out there on both sides of the border.
> 
> I have said it before but the bottom line is that if you have honestly been paying your Canadian taxes based on world wide income you really have nothing to fear. Just back file your tax forms and FBARs for the past six years and you are home free. Do not wait until they find you. That is when things can go very bad.
> 
> I have obtained this information through US tax lawyers, accountants and the IRS itself. If you need advice in terms of the US accounting firm I am using I would be happy to provide it to you if you PM me. ( I am hesitant to put it here as it could be seen as advertising. I am in no way associated with the firm other than being one of their clients)


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## Pathologic1

Vancouver99 see pg 11 post#107


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## CanadianHoosier

*You are not alone....*

I read the article in the National Post in August, "Americans among US" This prompted me to send an email to to the editor, Diane Francis. She is also a US citizen

I provided my summary:

Moved to Canada from the US in 1982 to marry a Canadian.
Lived and worked in Canada for 30 years. Acquired Canadian citizenship in 2003.

NO source of US income. Have not submitted a US tax return since 1981.

Submit CDN tax returns every year. I have RRSP's, RESP's and TFSA's.

Her response: Get professional advice.

So I contacted a local certified accountant, he took my Canadian returns for the past 5 years, completed US income tax returns. 

2010 - Zero owed
2009 - Zero owed
2008 - $3101 owed
2007 - $507 owed
2006 - Zero owed

Completed a document that summarized my individual and joint bank accounts and account numbers, as well as all RRSP's account numbers and same for TFSA's and RESP's. He charged me $1300 bucks.

Wrote a cheque to the IRS and sent it down to the US on Wednesday.

I am now working on Renouncing my US citizenship.
I am also contacting my Minister of Parliament, Jim Flaherty






AmTaker said:


> Asset Forfeiture under US law, sometimes for minor drug infractions is pretty draconian too (and as I understand, the government can seize houses, boats, fields, and then you have to go to court and try to get them back). There are plenty of draconian US laws, and the Supreme Court rarely overrules them.
> 
> I did google FFBAR and unconstitutional, and I saw 2 posts on the first page from lawyers who deal with foreign account matters (Jack Townsend & Hodgen) essentially knocking down the idea (Jack, who has an excellent blog on criminal tax law writes a detailed entry explaining that he thought a 50% penalty would be constitutional, but a 100% one may not be (based on previous case law). [There are a lot of US tax protesters who argue that tax laws are unconstitutional, and they rarely go anywhere except to the poorhouse or jail. ]
> 
> All of this is largely academic -- the penalties would likely stand up constitutionally, but the DoJ will likely still enforce only a subset and only against people who are big time willful evaders. And yes, since these are not tax penalties, they cannot be retrieved through the normal IRS collection method, but I think the Treasury has to bring a separate collection case. In any case, they can't retrieve non US property. My only objection was to the 'unconstitutional characterization' (just because something is nasty and unfair, its not necessarily unconstitutional in the US].


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## Ladyhawk

Hello All, I'm a newby here and have read this entire topic, and it has made me feel much better, thank you all so very much for your advice and thoughts and sensible responses to this distressing situation.

My question is this: If a female US citizen is married to a Canadian and he owns the family home, ie it is only his name on the deed, does the US citizen have to include this on the FBARS? What is the situation if the Canadian spouse then changes the deed to include the wife as joint owner? And what are the implications for this regarding the report on the FBAR? Will this situation then alter her status in the eyes of the IRS, and will the IRS then require information about the Canadian spouse's finances? In other words, does the spouse's name on the deed alter her financial status, or is it assumed she has a financial stake in property based on marriage? Is she required to report the family property only if her name is on the deed?

Thanks to all for the great support here.


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## Vangrrl

Ladyhawk said:


> Hello All, I'm a newby here and have read this entire topic, and it has made me feel much better, thank you all so very much for your advice and thoughts and sensible responses to this distressing situation.
> 
> My question is this: If a female US citizen is married to a Canadian and he owns the family home, ie it is only his name on the deed, does the US citizen have to include this on the FBARS? What is the situation if the Canadian spouse then changes the deed to include the wife as joint owner? And what are the implications for this regarding the report on the FBAR? Will this situation then alter her status in the eyes of the IRS, and will the IRS then require information about the Canadian spouse's finances? In other words, does the spouse's name on the deed alter her financial status, or is it assumed she has a financial stake in property based on marriage? Is she required to report the family property only if her name is on the deed?
> 
> Thanks to all for the great support here.


The FBAR just asks you to list bank accounts, not other types of assets. 

The accounts are divided in a few different categories: sole owner (which for me is just my RRSP), joint ownership (all of our bank accounts are here), and then some other categories for 3rd party accounts that you might have signing authority.

In terms of property ownership, I think this will only come into play when you sell a property (rental) and there are capital gains which need to be reported on your tax return; when you die, then its part of your assets for the purposes of the estate tax and if you renounce your US citizenship, in which case you tally up your assets much in the same way as if you died.

My husband and I have decided to clean up our finances a little since we don't know what how the FBAR type reporting might change going forward. Obviously the less info we need to report to the IRS the better. We are taking my name off the kids RESPs and off an account that we have jointly with my mother-in-law (just so we can help her with online banking). We are also opening up a checking account solely in my husband's name so that if we ever have needs of transferring large amounts of money (ie. from a sale of a house/car or moving money from our line of credit), we'll do it through that account. Probably not necessary to do so, but it makes me nervous to have to report the maximum balance of an account over the year in those years when there is an "outlier" balance. We have had rental properties in the past, and may choose to invest that way again. Again, might we worthwhile putting those in hubby's name alone. It really depends on the Canadian tax implications as well.


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## Pathologic1

The home isn't reportable on FBARs. The FBAR forms are odd and apply only to financial accounts. For instance if you personally hold stock certificates say of the Bank of Montreal they don't need to be reported. But if they are held by your broker in an account they do. Your home is not a financial account and doesn't need to be reported on the FBAR or to the IRS.


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## AtHomeInCanada

Pathologic1 said:


> The home isn't reportable on FBARs. The FBAR forms are odd and apply only to financial accounts. For instance if you personally hold stock certificates say of the Bank of Montreal they don't need to be reported. But if they are held by your broker in an account they do. Your home is not a financial account and doesn't need to be reported on the FBAR or to the IRS.


Are RRSPs and TFSAs considered "financial accounts" for the FBAR reporting? Or is it just accounts with Canadian banks (eg. RBC, Bank of Nova Scotia, etc.)


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## Ladyhawk

Thanks to Vangrrl and Pathologic1. That definitely simplifies things. Perhaps it was under the OVDI that assets had to be reported - or that the IRS intended at one time to fine you a percentage of all your assets. This does not apply in my case.

Another question: when I file my US tax returns, I used Form 1116 to report Foreign Tax Credit for the Canadian taxes I paid. Now I see others have submitted form 2555, Foreign Earned Income. This is something I was not aware of because I did not see any reference to it on the 1040, only 1116 on line 47 of the 1040 where you report your foreign tax credit. Form 2555 looks like it applies to US residents who have been temporarily out of the country and earning money outside the US. I am a dual citizen and have lived my entire adult and working life in Canada.

Which is it, or is it both? TX in advance.


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## Chris72

I'm in the same boat as you. But in my case I haven't sent any letter for OVDI. I'm working with a tax accountant/ legal attorney to help me. File quietly for the past 4 years. I'm so anxious and scared of any penalties but I can't live like this. 



AtHomeInCanada said:


> From all I've been reading here, I should be filing taxes and FBARS, with a letter explaining my circumstances.
> 
> However, I got swept up in the fear of penalties and sent in my application for OVDI. I told my brother and mother to do the same! However I am a law abiding, honest resident of Canada. I am NOT a criminal hiding assets. I had no idea of the filing requirements of my US citizenship. I have lived in Canada since I was a child, have no US income, etc.
> 
> How do I get *out* of the OVDI? Will I now be flagged for an audit if I go the other route? I am terrified of losing my savings to penalties. I have Canadian RRSPs and a TFSA. I understoood OVDI was the route to go if you had these investments (even if you draw NO income from them).
> 
> Please help! I think we need to get out of OVDI, but now we are flagged in the system as having applied under the *criminal* amnesty program! I'm sick to my stomach over this.


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## TO_andrew

*OVDI - Penalties*

OVDI was meant for people "hiding" money. 

Fines and levies for not reporting accounts on FBAR are a civil matter and not a tax matter. You would have to be found guilty of "hiding money" intentionally from the IRS. RRSPs, RESPs, TFSA, brokerage accounts are accounts that are in the open. So if you didn't declare one of these accounts or the revenue, its a oversight that can be corrected with an amended form.

IF you have no assets in the US, i.e. bank accounts, etc. or you are a Canadian citizen, the IRS does not have mechanism to collect fees, penalities or levies against your accounts.


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## Chris72

TO_andrew said:


> OVDI was meant for people "hiding" money.
> 
> Fines and levies for not reporting accounts on FBAR are a civil matter and not a tax matter. You would have to be found guilty of "hiding money" intentionally from the IRS. RRSPs, RESPs, TFSA, brokerage accounts are accounts that are in the open. So if you didn't declare one of these accounts or the revenue, its a oversight that can be corrected with an amended form.
> 
> IF you have no assets in the US, i.e. bank accounts, etc. or you are a Canadian citizen, the IRS does not have mechanism to collect fees, penalities or levies against your accounts.


That sounds reassuring Andrew. Don't know if you read my post of my situation. Born in 72 landed immigrant in 73. Had US passport expire 2003 but became a Canadian citizen ( born abroad to CDN father) in 2004. I have TFSA's, RRSP's, atwood pension plans....a spousal RRSP with my common law partner. I've always paid my taxes and am current with CRA. I honestly didn't know that I had to file for the US. I have total assests over the FBAR threshold but nothing in the US, my life is here. I hope to file quietly without penalties.... This is all so damn scary. I know I'm not the only one at least. I've worked hard my life so far... I'm an honest person and hope to clear this up.


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## TO_andrew

Chris72 said:


> That sounds reassuring Andrew. Don't know if you read my post of my situation. Born in 72 landed immigrant in 73. Had US passport expire 2003 but became a Canadian citizen ( born abroad to CDN father) in 2004. I have TFSA's, RRSP's, atwood pension plans....a spousal RRSP with my common law partner. I've always paid my taxes and am current with CRA. I honestly didn't know that I had to file for the US. I have total assests over the FBAR threshold but nothing in the US, my life is here. I hope to file quietly without penalties.... This is all so damn scary. I know I'm not the only one at least. I've worked hard my life so far... I'm an honest person and hope to clear this up.


I contacted two accountants and both said to do the "quiet reporting".


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## Bevdeforges

Ladyhawk said:


> Thanks to Vangrrl and Pathologic1. That definitely simplifies things. Perhaps it was under the OVDI that assets had to be reported - or that the IRS intended at one time to fine you a percentage of all your assets. This does not apply in my case.
> 
> Another question: when I file my US tax returns, I used Form 1116 to report Foreign Tax Credit for the Canadian taxes I paid. Now I see others have submitted form 2555, Foreign Earned Income. This is something I was not aware of because I did not see any reference to it on the 1040, only 1116 on line 47 of the 1040 where you report your foreign tax credit. Form 2555 looks like it applies to US residents who have been temporarily out of the country and earning money outside the US. I am a dual citizen and have lived my entire adult and working life in Canada.
> 
> Which is it, or is it both? TX in advance.


It's up to you whether you want to file using tax credits (form 1116) or the Foreign Earned Income Exclusion (form 2555). The Earned Income Exclusion usually works out better - simpler, neater, especially if your salary is under the max (about $92,000 these days). But if you used the form 1116 tax credits and still wound up with 0 tax to pay, then fine.
Cheers,
Bev


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## Nursiegirl

*Advice Needed *

I am a dual citizen, born in USA and moved to Canada in 1996. I have complied with filing income taxes in Canada since then, never aware I had to file in the US even though no US income or assets. VERY frustrating! 
I only found out about the reporting requirement late in August and I have been struggling to get all my paperwork in order and file back 3 years of taxes and FBARs. I am absolutely terrified of being slapped with penalties for not filing and reporting. I do not make big money and certainly have no large accounts to hide. All I have to report on my FBAR's is for 2008 we sold our home in which a 24,000 deposit was made to then go on our next home down deposit. Then in 2009, we had to take out a consolidated bank loan for 35,000 in which they put that amoutn into our chequing to immediately pay off other loans and credit cards. I think its highly unfair they may penalize me for these amounts that are clearly not "income" and money sitting in my account. The only other "asset" I have that H&R block is making me report is my municipal pension. Does anyone know if the IRS is taxing us on our pensions values? Is this reporting on the FBAR?
I am losing sleep at night over all this and I know its affecting my health. The only peace of mind has been seeing comments on here and thats helped put my mind at ease somewhat. 
I have choosen to silently disclose my info as soon as H&R block has completed my returns. I did not feel I fit the category of the OVDI and the strict penalties. I have drafted a letter to the IRS to go with both my tax returns and the FBAR's.

Does anyone kow if we have to declare a life insurance policy as well? My husband is the policy owner. I am just a rider.

Thanks so much.

Sleepless in BC


----------



## technopal

*Timeline For Renouncing in Alberta*

Has anyone checked the timeline for renouncing in Alberta ?
Thanks


----------



## Nononymous

I'm also interested to hear how long the wait to renounce is - phone must have been ringing off the hook at the US consulate last week.

Couple of questions, now that we're into the happy post-OVDI-deadline period and this story will drop off the media radar (unbelievable the amount of inaccuracy and hysteria - tax accountants and lawyers must be raking in the money). 

Two considerations in favour of filing some ballpark 1040s at some point this fall:

(1) I cannot renew my US passport without swearing that I'm caught up on tax returns. According to federal law, as a US citizen I must use a US passport when entering the US. However, last year I entered the US half a dozen times on my Canadian passport, for work and personal visits, disclosing my dual citizenship when asked. No problem at all. Has this been an issue for anyone? Or can I just bring along my expired passport and say oops?

(2) I've seen reports on some forums of people actually getting an $800 refund for the 2008 stimulus tax credit thing - thank you George W. Bush. Now that, rather than an amnesty with reduced penalties, might convince me to deal with the paperwork. Has anyone heard of this happening?


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## Bevdeforges

Nursiegirl said:


> I am a dual citizen, born in USA and moved to Canada in 1996. I have complied with filing income taxes in Canada since then, never aware I had to file in the US even though no US income or assets. VERY frustrating!
> I only found out about the reporting requirement late in August and I have been struggling to get all my paperwork in order and file back 3 years of taxes and FBARs. I am absolutely terrified of being slapped with penalties for not filing and reporting. I do not make big money and certainly have no large accounts to hide. All I have to report on my FBAR's is for 2008 we sold our home in which a 24,000 deposit was made to then go on our next home down deposit. Then in 2009, we had to take out a consolidated bank loan for 35,000 in which they put that amoutn into our chequing to immediately pay off other loans and credit cards. I think its highly unfair they may penalize me for these amounts that are clearly not "income" and money sitting in my account. The only other "asset" I have that H&R block is making me report is my municipal pension. Does anyone know if the IRS is taxing us on our pensions values? Is this reporting on the FBAR?
> I am losing sleep at night over all this and I know its affecting my health. The only peace of mind has been seeing comments on here and thats helped put my mind at ease somewhat.
> I have choosen to silently disclose my info as soon as H&R block has completed my returns. I did not feel I fit the category of the OVDI and the strict penalties. I have drafted a letter to the IRS to go with both my tax returns and the FBAR's.
> 
> Does anyone kow if we have to declare a life insurance policy as well? My husband is the policy owner. I am just a rider.
> 
> Thanks so much.
> 
> Sleepless in BC


The FBAR reporting is nothing but reporting - there are no taxes involved. So, those two "freak" balances above $10,000 are nothing to be worried about. Chances are, those were the only times you were expected to report anything anyhow. (The way the rules are now, you wouldn't have owed anything on the sale of your house - and if you don't owe, you don't even declare it these days.)

I really wonder if you have to be reporting your pension fund unless it's a 401K type fund, where you are basically just "saving up" you own money to withdraw at retirement. And in the US "life insurance" isn't normally a reportable "financial account." (The Americans don't really recognize the difference between "life insurance" and "life assurance" anyhow.)
Cheers,
Bev


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## AmTaker

Bevdeforges said:


> Th
> 
> I really wonder if you have to be reporting your pension fund unless it's a 401K type fund, where you are basically just "saving up" you own money to withdraw at retirement. And in the US "life insurance" isn't normally a reportable "financial account." (The Americans don't really recognize the difference between "life insurance" and "life assurance" anyhow.)
> Cheers,
> Bev


For FBAR purposes, a life insurance policy with a cash value is a reportable account.


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## Pathologic1

If you are not the policy owner and don't have signing authority then I don't think you need to claim anything on the life insurance policy


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## Saskslam

Just a quick update as I gleaned as much advice as possible from all the great discussion. I ended up using an accountant firm here in Ottawa to file the last 6 years of tax forms and FBARs. This was filed "quietly" by August 31. I have never used an accountant to do my Canadian taxes and hopefully going forward now - I'll complete myself using the template. The firm I used had a fair amount of experience in doing this and have previously never seen the IRS come after the "average Joe". However, there are of course still risks - and I had to sign-off all kinds of waivers.

Oh yah - the final bill was $2500 plus HST for the 6 years of taxes and FBARs - not really something I thrilled to have to pay - but wasn't prepared to do myself.


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## Nursiegirl

Bevdeforges said:


> The FBAR reporting is nothing but reporting - there are no taxes involved. So, those two "freak" balances above $10,000 are nothing to be worried about. Chances are, those were the only times you were expected to report anything anyhow. (The way the rules are now, you wouldn't have owed anything on the sale of your house - and if you don't owe, you don't even declare it these days.)
> 
> I really wonder if you have to be reporting your pension fund unless it's a 401K type fund, where you are basically just "saving up" you own money to withdraw at retirement. And in the US "life insurance" isn't normally a reportable "financial account." (The Americans don't really recognize the difference between "life insurance" and "life assurance" anyhow.)
> Cheers,
> Bev


Bev- I really appreciate all your posts and reply back to my post. You have made me calm myself down as all the other online readings (Other websites and newspapers) are so horrific and can make anyone admit themselves into a mental ward quickly!  Thanks


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## Nursiegirl

AmTaker said:


> For FBAR purposes, a life insurance policy with a cash value is a reportable account.


Ok, Mine has no cash value, its just a term life insurance policy. I should be in the clear.:clap2:


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## Pathologic1

they for sure won't care about that. term life has no surrender or other cash value


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## Nursiegirl

I love this site! You all have made me feel so much better. Thanks so much!


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## Vangrrl

Some of these finer points of FBAR reporting, I'm going to worry about going forward when I have more time to think about it. My immediate goal in terms of back-filing and back-reporting is to make a good faith effort to identify myself and my accounts and emphasize the fact that I owe no taxes but will be filing regularly going forward. 

I'm already giving them tons of info to come after me on if they really want to. I'm hoping they don't, obviously, but I personally don't think the reporting or non-reporting of my kids piddly RESP is what is going to make-or-break my attempt at quiet disclosure.


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## Nursiegirl

Vangrrl said:


> Some of these finer points of FBAR reporting, I'm going to worry about going forward when I have more time to think about it. My immediate goal in terms of back-filing and back-reporting is to make a good faith effort to identify myself and my accounts and emphasize the fact that I owe no taxes but will be filing regularly going forward.
> 
> I'm already giving them tons of info to come after me on if they really want to. I'm hoping they don't, obviously, but I personally don't think the reporting or non-reporting of my kids piddly RESP is what is going to make-or-break my attempt at quiet disclosure.



I agree with you. Hopefully the IRS can distinguish between people who are actually "hiding" money and us innocent people just trying to make a living and save for our children. The websites indicating the fines are scary though and completely not fair. I am so glad I did not jump the gun and go into the OVDI.


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## Nursiegirl

Nursiegirl said:


> I agree with you. Hopefully the IRS can distinguish between people who are actually "hiding" money and us innocent people just trying to make a living and save for our children. The websites indicating the fines are scary though and completely not fair. I am so glad I did not jump the gun and go into the OVDI.



This is the email I just recieved from the tax professional completing my returns:

The US tax research department at my Head Office has received a very clear and concise letter from the IRS on this topic – do we report or do we not report RPPs on the FBARs form. The answer is “yes”.

So if you could get me the value for each year, as difficult as I am sure it will be, I would appreciate it.


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## Ladyhawk

Nursiegirl said:


> This is the email I just recieved from the tax professional completing my returns:
> 
> The US tax research department at my Head Office has received a very clear and concise letter from the IRS on this topic – do we report or do we not report RPPs on the FBARs form. The answer is “yes”.
> 
> So if you could get me the value for each year, as difficult as I am sure it will be, I would appreciate it.


Yes, I thought so -- however there is a form you use to "defer" any taxes until you start withdrawing from it, the 8891. Certainly worth doing I'd say.


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## Arlington

Done! I finished our joint returns and FBAR's for the past six years and mailed them off today. I appreciate all the help this site offered - the reassurance and the specific knowledge. I'll wait a few months to see if I hear anything . .and then I'll encourage our three grown children to get social security numbers and I'll do their returns as well. Then they can decide if they want to renounce.


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## Nursiegirl

Ladyhawk said:


> Yes, I thought so -- however there is a form you use to "defer" any taxes until you start withdrawing from it, the 8891. Certainly worth doing I'd say.


Me too, thanks so much! Hopefully the tax professional i have knows to file that form, now I will know to look for it before mailing it all off with my fingers and toes crossed.


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## Ladyhawk

Like others here, I am very glad I found this site. Reading through this topic, there seems to have developed a consensus about what innocent people should do, namely send in some type of quiet disclosure of X years of back tax returns, then file FBARs for the same, and stay compliant going forward. Good idea to add a cover letter describing what you are doing, maybe explaining the late filing (didn't know, got bad advice etc) and your intentions going forward. Then you are on record as working hard at being honest and law-abiding. 

The point here is that anyone who has not deliberately hidden income is not who the IRS is looking for through the OVDI -- see the IRS FAQ, questions 2, 17 and 46. I'm not old enough to post the URL yet.

I doubt that the IRS would launch a criminal investigation unless they thought there was a willful attempt to evade taxes. Their evidence for this has to be stronger than "preponderance of evidence", it has to show "clear and convincing" evidence of intent. That is hard to do. They won't spend their resources chasing small fry who owe them trivial amounts or nothing at all. And there have ALWAYS been US citizens who have just not bothered to file tax returns, sometimes for years, so it's not like the IRS doesn't deal with this all the time. They'll have their protocols for people like us. It's the big tax cheats they want to nail. 

There seem to be enough innocent folks here in the same boat that by sharing our information and experiences, we can help each other out. There must be thousands of people like us all over the globe, maybe hundreds of thousands, and the IRS simply will have to filter out the ones that will yield results for them. There is also a Tax Advocacy Service at the IRS which, reportedly, is helpful and even sympathetic to the fact that the US tax laws are confusing and labyrinthine. There are large numbers of people here in Canada and presumably in other countries who are complaining to their governments about the fear and stress this whole thing is inflicting on innocent people. Maybe there will be enough heat to get the IRS to moderate their methods a bit.

Unfortunately, the hype around it, and the media reports, were not clear about who should enter the OVDI and who should not, and so many people volunteered their data and are now in the system. This will allow the IRS to fine a lot of people who will pay them just for peace of mind.


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## AmTaker

Ladyhawk said:


> I doubt that the IRS would launch a criminal investigation unless they thought there was a willful attempt to evade taxes. Their evidence for this has to be stronger than "preponderance of evidence", it has to show "clear and convincing" evidence of intent. That is hard to do. They won't spend their resources chasing small fry who owe them trivial amounts or nothing at all. And there have ALWAYS been US citizens who have just not bothered to file tax returns, sometimes for years, so it's not like the IRS doesn't deal with this all the time. They'll have their protocols for people like us. It's the big tax cheats they want to nail.


Actually, its 'beyond a reasonable doubt' (even stronger burden ) for criminal cases, for civil cases, its either of the 2 standards above. Realistically, if you don't live in the US and have little to no US source income or assets, or tax due there's not much they can do or would bother to do. If someone does live in the US, has assets there, has been filing out US tax returns, but not including foreign income, and has some tax due, it could be a different story. Filing tax returns incorrectly is 'worse' than not filing tax returns at all.


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## northof60

Hi. I'm new to all this and and my head is just spinning. I have a couple of thoughts I would appreciate feedback on.
My wife is a US expat, and holds Canadian citizenship. Has for 30 years. I am Canadian through-and-through. 
1. I am concerned about my wife visiting the US. She will use her Canadian passport. She has no US income, never filed a US tax return, and is not compliant with FBAR. Does anyone know if there is any risk of being nabbed as she crosses the border? 
2. Since all of our accounts are joint, complying with FBAR would mean giving my personal financial and banking information to the government of a foreign country. I am not about to consent to this. Does anyone know if I am standing on firm ground? Thanks.


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## AmTaker

northof60 said:


> Hi. I'm new to all this and and my head is just spinning. I have a couple of thoughts I would appreciate feedback on.
> My wife is a US expat, and holds Canadian citizenship. Has for 30 years. I am Canadian through-and-through.
> 1. I am concerned about my wife visiting the US. She will use her Canadian passport. She has no US income, never filed a US tax return, and is not compliant with FBAR. Does anyone know if there is any risk of being nabbed as she crosses the border?
> 2. Since all of our accounts are joint, complying with FBAR would mean giving my personal financial and banking information to the government of a foreign country. I am not about to consent to this. Does anyone know if I am standing on firm ground? Thanks.


1) I think the risk of being struck by a bolt of lightning is greater 
2) I don't think there is any way of avoiding that, sorry.


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## Vangrrl

northof60 said:


> Hi. I'm new to all this and and my head is just spinning. I have a couple of thoughts I would appreciate feedback on.
> My wife is a US expat, and holds Canadian citizenship. Has for 30 years. I am Canadian through-and-through.
> 1. I am concerned about my wife visiting the US. She will use her Canadian passport. She has no US income, never filed a US tax return, and is not compliant with FBAR. Does anyone know if there is any risk of being nabbed as she crosses the border?
> 2. Since all of our accounts are joint, complying with FBAR would mean giving my personal financial and banking information to the government of a foreign country. I am not about to consent to this. Does anyone know if I am standing on firm ground? Thanks.


With regards to the first issue, has she never had issues crossing the border using a Canadian passport with a US birthplace indicated on it? As of 2008, the law is that Americans need to travel into the US on a US passport. I've been hassled on that issue on the border (I showed my Cdn passport and was directly asked "where's your US passport"?) and we once had to have an passport issued on an emergency basis for my US-citizen son because we were caught unawares and had a trip planned (I assumed he could travel on his Cdn passport, since his US passport had expired). So that's probably your wife's more pressing issue with regards to US travel.

Now that said, I travel to the US probably 10 times a year or more, always on my US passport, and have done so twice in the last month since I even found out about this OVDI business, and no one has said asked me about my tax filing status. I would assume that the IRS could contact *me* first before they declare me a criminal and pass my information on to Border Services. 

It is very possible that the ability to renew a US passport will require proof of tax compliance going forward, which is precisely why I am addressing this issue now (my passport expires in 2013). In fact that's how I even found out about this reporting business - the consulate staff that renewed my son's passport asked me to read a little blurb about "tax filing requirements of all American citizens".

Second issue: I think by opening an account with an American, you are opening yourself up to the tax rules that she needs to play by as an American. Not sure how you can get around that other that separating your finances (which my Canadian husband and I are going to be doing to some extent going forward). If you figure out a way around this, please let me know!


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## Nursiegirl

AmTaker said:


> 1) I think the risk of being struck by a bolt of lightning is greater
> 2) I don't think there is any way of avoiding that, sorry.


I agree. From all the advice and information I have collected from both professionals in canada and the IRS directly, there is no way to avoid the accounts that are joint. i am in same boat as I am dual and my husband is just canadian. As long as my name is on the account, it has to be reported on FBAR.


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## Nursiegirl

...Also, I have been traveling many times to US on my canadian passport that indicates I was born in USA. They have NEVER said anything to me and it's been 16 years!


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## northof60

Vangrrl said:


> With regards to the first issue, has she never had issues crossing the border using a Canadian passport with a US birthplace indicated on it? As of 2008, the law is that Americans need to travel into the US on a US passport. I've been hassled on that issue on the border (I showed my Cdn passport and was directly asked "where's your US passport"?) and we once had to have an passport issued on an emergency basis for my US-citizen son because we were caught unawares and had a trip planned (I assumed he could travel on his Cdn passport, since his US passport had expired). So that's probably your wife's more pressing issue with regards to US travel.
> 
> Now that said, I travel to the US probably 10 times a year or more, always on my US passport, and have done so twice in the last month since I even found out about this OVDI business, and no one has said asked me about my tax filing status. I would assume that the IRS could contact *me* first before they declare me a criminal and pass my information on to Border Services.
> 
> It is very possible that the ability to renew a US passport will require proof of tax compliance going forward, which is precisely why I am addressing this issue now (my passport expires in 2013). In fact that's how I even found out about this reporting business - the consulate staff that renewed my son's passport asked me to read a little blurb about "tax filing requirements of all American citizens".
> 
> Second issue: I think by opening an account with an American, you are opening yourself up to the tax rules that she needs to play by as an American. Not sure how you can get around that other that separating your finances (which my Canadian husband and I are going to be doing to some extent going forward). If you figure out a way around this, please let me know!


Thanks for that. We don't travel that frequently, but as far as I know she has never been asked to produce a US passport. She hasn't had one for over 30 years.


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## Ladyhawk

Regarding passports and which ones you use, it seems to depend on the border agent. My US passport has expired and I intend to renew it, but then I read that Border Services and the IRS are now allowed to share information, that you may be denied a passport renewal until you are compliant with US taxes, and that some people have been stopped at the border and questioned about their tax status. It's a Catch-22: you have to go to the US as a US citizen, but you may not get your passport renewed if you are behind on your taxes. 

I carry my Cdn and my expired US passports when I travel but obviously go both ways as a Canadian for now. The Cdn passport states the US as my country of birth, but no border agent has remarked on it. When I crossed over last month, I had no problems, but I took the precaution of taking a photocopy of my 2010 US return plus the receipt for the fact that I'd sent it by registered mail to the IRS. 

Northof60, does your wife have a SSN? Even if she does, the fact she has never filed a US tax return may mean she is not in the IRS database. In that case you may not have a problem at border crossings, unless some border agent sees her country of birth on her Cdn passport and decides to ask the IRS if she's compliant. I can't actually imagine a border agent doing that, it isn't their job to do that sort of sleuthing (s/he might ask your wife about her tax compliance however), but my heightened level of paranoia these days allows me to imagine just about anything.


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## Arlington

With regards to the first issue, has she never had issues crossing the border using a Canadian passport with a US birthplace indicated on it? As of 2008, the law is that Americans need to travel into the US on a US passport. 



How are we supposed to know that? They change the rules . .but don't publicize it very well. 

I have travelled to the states at least 10 times in the last three years as recently as two weeks ago and I have never been told that I needed a US passport. They even commented on my birth city and state and still never suggested I needed a US passport. I really don't want one. 


There is also something wrong when so many Americans abroad didn't know about the tax filing requirements either.


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## northof60

Ladyhawk said:


> Regarding passports and which ones you use, it seems to depend on the border agent. My US passport has expired and I intend to renew it, but then I read that Border Services and the IRS are now allowed to share information, that you may be denied a passport renewal until you are compliant with US taxes, and that some people have been stopped at the border and questioned about their tax status. It's a Catch-22: you have to go to the US as a US citizen, but you may not get your passport renewed if you are behind on your taxes.
> 
> I carry my Cdn and my expired US passports when I travel but obviously go both ways as a Canadian for now. The Cdn passport states the US as my country of birth, but no border agent has remarked on it. When I crossed over last month, I had no problems, but I took the precaution of taking a photocopy of my 2010 US return plus the receipt for the fact that I'd sent it by registered mail to the IRS.
> 
> Northof60, does your wife have a SSN? Even if she does, the fact she has never filed a US tax return may mean she is not in the IRS database. In that case you may not have a problem at border crossings, unless some border agent sees her country of birth on her Cdn passport and decides to ask the IRS if she's compliant. I can't actually imagine a border agent doing that, it isn't their job to do that sort of sleuthing (s/he might ask your wife about her tax compliance however), but my heightened level of paranoia these days allows me to imagine just about anything.


Yes, she has a SSN. She doesn't know if she ever filed, but if so she was a minor at the time. No US income or tax filing since moving to Canada as a teenager.


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## Vangrrl

That's interesting that no one else has had problems travelling on their Canadian passports. I never had any issues prior to 2008, but its definitely been commented upon when I've crossed the border by air (at Pearson and YVR) and land crossings in Vancouver. I finally looked it up online after being harassed two times in a row at the border. 

Now mind you, I'm of Indian descent, so I have the added joy of "travelling while brown" which obviously makes me and my 5 year old a greater threat to national security. 

It is absolutely the rule, though: from the US government website: Questions About Visas?

_I have dual citizenship. Which passport should I use to travel to the United States?

*All U.S. citizens, even dual citizens/nationals, must enter and depart the United States using his/her U.S. passport.*_


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## CanadianHoosier

*Border crossing*

Born in the USA, chose to become a Canadian.

I traveled on my Canadian passport since 2003. My US Passport was expired.

Two challenges:

While crossing in Sarnia about 3 years ago when the crusty customs agent indicated that I should carry my US passport. He let us pass thru.

Last November I was flying to Vegas on my CDN passport and was challenged on whereabouts of my US passport. I indicated that it had expired and I was a Canadian. He asked me specifically "Have you renounced your US citizenship?"

I said no. He lectured me on the rules, indicated that if he"let me into the US as a foreign national, he had the right to throw my ass out". 

Strongly encouraged me to renew my US passport and let me pass. After that experience I renewed my US passport by mailing in the expired one. Cost me about $115 bucks. (BTW renouncing costs $475)

No cross reference on the Social Security or IRS, I haven't filed for 30 years while filing my CDN taxes.

I have quietly disclosed previous 5 years and the FBAR. Have started the renouncing process.


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## HangOn

Hi All, I too would like to thank everyone who has contributed to this discussion.

I am just starting to get into all this now. I'm not residing in Canada but my situation is not dissimilar to many of you who've posted here. I'm a usc married to a non usc living in Norway for the past 20 years.

My initial dig brought me to the websites of international tax lawyers. They seem to be very good at getting there websites onto the very first result pages when doing a google search using the words " expat fbar ovdi". Some of these sites had very detailed info but instead of empowering/enlightening me to make an informed decision, I pretty much felt overwhemled and on the edge of surrendering myself to their services and by extension OVDI. Fortunately I added "forum" to that google search and eventually came here.

I've now read from page one of this thread to present and, unless I've missed something, there seems to be one thing missing from the discussion. I remember it being stated on one of the lawyer websites that the non usc spouse would have apply for a special US SSN for tax purposes because both spouses would have to file there taxes together and that this number would be needed. Since many of you who've previously posted have this spousal arrangement, can anyone shed any light on this subject?


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## Bevdeforges

HangOn said:


> I've now read from page one of this thread to present and, unless I've missed something, there seems to be one thing missing from the discussion. I remember it being stated on one of the lawyer websites that the non usc spouse would have apply for a special US SSN for tax purposes because both spouses would have to file there taxes together and that this number would be needed. Since many of you who've previously posted have this spousal arrangement, can anyone shed any light on this subject?


No, no, no, no, no! (Gee, can you tell this is a hot button with me?) If you're a US citizen married to a non-resident alien, you file your US taxes as married, filing separately - and where they ask for the SSN or "taxpayer identification number" for your spouse, you put in "NRA" (non-resident alien - NOT national rifle association).

IF you want (and are able to) file a joint return, you can get an ITIN (International Taxpayer Identification Number) for your spouse - but unless you are trying to take an exemption for your spouse (as your dependent), there is no need to do so. Your non-resident alien spouse does not need to report to the IRS nor sign up with the IRS for anything until and unless he has business dealings or taxable income of his own coming from the US.
Cheers,
Bev


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## Nononymous

For what it's worth, I went to the US half a dozen times last year, via Calgary and Toronto, on a Canadian passport with US birthplace, and had zero issues. Was asked about citizenship twice and said US/Canada dual. So I think it's up to the border agent.

I looked at the passport renewal form, you have to provide address and SSN and sign a little oath that you're up to date on taxes, on penalty of a $500 "perjury" fine if you're not. I don't know if this means they will check with the IRS first and deny you the passport, or just send you a bill if they discover that you've lied. (One could always claim they were "starting the process of getting all the paperwork organized" or something.)


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## AtHomeInCanada

*About my visit to the U.S. Consulate in Calgary*

I thought some of you may be interested to hear about my experience at the U.S. Consulate in Calgary yesterday.

The purpose of my visit was to verify my identity in person, so I could apply for a Social Security number. (I left the U.S. when I was a child, and was never issued one.) Then I will be able to meet my tax filing requirements.

I filled out three forms, and was then told I must provide evidence for *every single year* I have lived in Canada. This means producing hard copy records going back to 1975 (when everything was a handwritten document) ... school records, immunization records, tax records, whatever you can get. Photographs do not count. I imagine most institutions have destroyed those records by now. Most organizations have only a 7-year records retention policy, as required by Canada Revenue Agency.

So I now have a huge burden of documentation to scour up, before I even qualify for a SSN. It's quite the bureaucracy. My head is literally spinning.

Also .... for those of you discussing renunciation of US citizenship. I asked one of the employees about the paragraph in the U.S. passport that says you may lose your citizenship if you are "naturalized to a foreign state." Certainly I believe I am naturalized to Canada! However I was told that this does not really apply to Canada, which is very similar to the United States. If I were to be naturalized to Iran, for example, that would probably prompt loss of citizenship.

There is an entirely different process for renunciating your US citizenship. I believe it would be as much of a bureaucratic nightmare as the whole tax issue. Has anyone in this forum successfully done this recently?


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## Pathologic1

Renunciation is considerably easier than one would think, See
Site Overview | Renunciation of U.S. Citizenship: A Web Guide


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## AtHomeInCanada

Vangrrl said:


> It is absolutely the rule, though: from the US government website: Questions About Visas?
> 
> _I have dual citizenship. Which passport should I use to travel to the United States?
> 
> *All U.S. citizens, even dual citizens/nationals, must enter and depart the United States using his/her U.S. passport.*_


This was confirmed to me yesterday by an official at the U.S. Consulate. You must declare yourself as a US citizen when on US soil. You may not represent yourself as a citizen of any other country (dual citizen or not) if you hold US citizenship.


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## AtHomeInCanada

Pathologic1 said:


> Renunciation is considerably easier than one would think, See
> Site Overview | Renunciation of U.S. Citizenship: A Web Guide


Wow, thank you, this looks like a GREAT site!


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## Arlington

The purpose of my visit was to verify my identity in person, so I could apply for a Social Security number. (I left the U.S. when I was a child, and was never issued one.) Then I will be able to meet my tax filing requirements.

I filled out three forms, and was then told I must provide evidence for *every single year* I have lived in Canada. This means producing hard copy records going back to 1975 (when everything was a handwritten document) ... school records, immunization records, tax records, whatever you can get. 

Also .... for those of you discussing renunciation of US citizenship. I asked one of the employees about the paragraph in the U.S. passport that says you may lose your citizenship if you are "naturalized to a foreign state." Certainly I believe I am naturalized to Canada! However I was told that this does not really apply to Canada, which is very similar to the United States. If I were to be naturalized to Iran, for example, that would probably prompt loss of citizenship.


First . .on getting a social security number ...is all the documentation required because you were born in the states? I just checked the site for getting SS cards for our adult children (born in Canada). Because they are over 12, they have to apply in person. Which means a trip to Bellingham, WA for two of them and Maine for the other. Let's see . .that means a 25 hour drive from the Yukon to Bellingham. Piece of cake. And the kid in eastern Canada doesn't have a vehicle at all. This is not going to go well. Any suggestions?

And secondly . .loved the comment about Canada is like the US so naturalization here doesn't count. Yeah . .Iran would be a different story.


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## Nononymous

Arlington said:


> First . .on getting a social security number ...is all the documentation required because you were born in the states? I just checked the site for getting SS cards for our adult children (born in Canada). Because they are over 12, they have to apply in person. Which means a trip to Bellingham, WA for two of them and Maine for the other. Let's see . .that means a 25 hour drive from the Yukon to Bellingham. Piece of cake. And the kid in eastern Canada doesn't have a vehicle at all. This is not going to go well. Any suggestions?


If your kids were all born in Canada and therefore do not have US birthplaces listed on their Canadian passports, I would strongly suggest they simply ignore the whole business. Particularly if you never took steps to claim their US citizenship. Who would ever know?

(Update: are your kids even US citizens? It doesn't pass automatically, you need to have lived a certain number of years in the US, etc. before they can have a claim to citizenship, and you moved to Canada as a child so perhaps it's not an issue for them.)


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## Nursiegirl

Nononymous said:


> If your kids were all born in Canada and therefore do not have US birthplaces listed on their Canadian passports, I would strongly suggest they simply ignore the whole business. Particularly if you never took steps to claim their US citizenship. Who would ever know?


I would like to know the answer to that as well. I have two children, both born in canada. I think because i was 16 years old when leaving the U.S, I think that states that my children are Dual as well and therefore, marked as U.S citizens. I would prefer to ignore that as well and if I cannot, I would liek to get them re-nounced as well as myself once all this tax crisis is dealt with. I dont want my children having to go through all this when they are older.


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## Nononymous

Nursiegirl said:


> I would like to know the answer to that as well. I have two children, both born in canada. I think because i was 16 years old when leaving the U.S, I think that states that my children are Dual as well and therefore, marked as U.S citizens. I would prefer to ignore that as well and if I cannot, I would liek to get them re-nounced as well as myself once all this tax crisis is dealt with. I dont want my children having to go through all this when they are older.


As I understand it - and the rules may have changed on this since I did it for my daughter ten years ago, so do check - it goes like this:

If one parent is a US citizen and the child is born outside the US, you have to register the birth to claim citizenship, and the child is only eligible for citizenship if the parent has lived five years in the US including a certain duration (two or three years I believe) over the age of 14. (Obviously this prevents US citizenship being inherited through families who've not lived in the US for several generations.)

So if you left at 16 you might be eligible to claim citizenship for them, but if you took no steps to register them, the US doesn't have them on the books as citizens and has utterly no way of knowing (and unlike kids actually born in the US, they may not be "automatically" considered citizens, even if technically they are eligible to claim citizenship). 

So possibly it's not a problem at all for them.


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## Vangrrl

Nursiegirl said:


> I would like to know the answer to that as well. I have two children, both born in canada. I think because i was 16 years old when leaving the U.S, I think that states that my children are Dual as well and therefore, marked as U.S citizens. I would prefer to ignore that as well and if I cannot, I would liek to get them re-nounced as well as myself once all this tax crisis is dealt with. I dont want my children having to go through all this when they are older.


As far as I'm concerned a Canadian citizen born in Canada who has no financial links to the US is not someone that is ever going to be on the radar of the IRS. How can they be when there is no identifying information?

Lets be realistic. Most of us (born in the US dual citizens) are probably not on the IRS radar. That's why there is such a campaign for wanting us to identify ourselves. Most of us have some reason for doing so (ie. a US passport, a SSN etc...). I would encourage our children to fly under the radar is at all possible.


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## Vangrrl

AtHomeInCanada said:


> I thought some of you may be interested to hear about my experience at the U.S. Consulate in Calgary yesterday.
> 
> The purpose of my visit was to verify my identity in person, so I could apply for a Social Security number. (I left the U.S. when I was a child, and was never issued one.) Then I will be able to meet my tax filing requirements.
> 
> I filled out three forms, and was then told I must provide evidence for *every single year* I have lived in Canada. This means producing hard copy records going back to 1975 (when everything was a handwritten document) ... school records, immunization records, tax records, whatever you can get. Photographs do not count. I imagine most institutions have destroyed those records by now. Most organizations have only a 7-year records retention policy, as required by Canada Revenue Agency.
> 
> So I now have a huge burden of documentation to scour up, before I even qualify for a SSN. It's quite the bureaucracy. My head is literally spinning.
> 
> Also .... for those of you discussing renunciation of US citizenship. I asked one of the employees about the paragraph in the U.S. passport that says you may lose your citizenship if you are "naturalized to a foreign state." Certainly I believe I am naturalized to Canada! However I was told that this does not really apply to Canada, which is very similar to the United States. If I were to be naturalized to Iran, for example, that would probably prompt loss of citizenship.
> 
> There is an entirely different process for renunciating your US citizenship. I believe it would be as much of a bureaucratic nightmare as the whole tax issue. Has anyone in this forum successfully done this recently?


I'm sorry, but these kinds of rules are exactly what forces people underground!! Either you are a US citizen (and therefore entitled to a SSN and required to pay tax) or you are not.


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## Arlington

Nonymous . .

They're American . .born in Canada . .to American parents who both were in our late twenties when we arrived in Canada. 

The two oldest were registered as Americans Born Abroad. We got lazy with the third . .lost interest. I don't even know how he'd apply for American status. I'm sure it will be a hassle. And because they're eligible for social security numbers, they can't just use ITIN's.

None of them want to be Americans but since they all received inheritances this year from the states, I'd hate to see any of that touched. If there were no FATCA, I would defnitely encourage them to stay quiet.


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## Nononymous

Arlington said:


> Nonymous . .
> 
> They're American . .born in Canada . .to American parents who both were in our late twenties when we arrived in Canada.
> 
> The two oldest were registered as Americans Born Abroad. We got lazy with the third . .lost interest. I don't even know how he'd apply for American status. I'm sure it will be a hassle. And because they're eligible for social security numbers, they can't just use ITIN's.
> 
> None of them want to be Americans but since they all received inheritances this year from the states, I'd hate to see any of that touched. If there were no FATCA, I would defnitely encourage them to stay quiet.


If there's an inheritance in play, that does change things. But still I would imagine you could fly under the radar just fine with a Canadian birthplace on a Canadian passport. 

And I'm not too worried about FATCA - it's already been pushed out a year until 2014.


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## Bevdeforges

Arlington said:


> Also .... for those of you discussing renunciation of US citizenship. I asked one of the employees about the paragraph in the U.S. passport that says you may lose your citizenship if you are "naturalized to a foreign state." Certainly I believe I am naturalized to Canada! However I was told that this does not really apply to Canada, which is very similar to the United States. If I were to be naturalized to Iran, for example, that would probably prompt loss of citizenship.


Actually, it has no real impact what country you were naturalized in/to. Back in about 1990 there was a court case where the supreme court in the US ruled that simply taking another nationality does not imply any intent to renounce your US citizenship. It's since then that you pretty much have to go before a consular official and formally renounce. 

I don't think they've actually taken anyone's US citizenship away from them since that ruling. The laws are still on the books saying that you can lose your citizenship by taking on another one, or by serving in a foreign army or working for a foreign government, but they don't really seem to mean it.
Cheers,
Bev


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## Ladyhawk

I had a friend who had been born in Chicago but raised in Canada. His parents were Canadian so he had Cdn citizenship. When he went to grad school in the US, he checked into his status as a US citizen.
They asked him, "Have you ever voted in a Canadian election?" Yes.
"Have you ever sworn allegiance to another government/Queen?" Yes.
"Have you ever served in the military in Canada?" Yes.
'But when you did all those things, was it your intention to renounce your claim to US citizenship?" No.
"OK, you qualify." He got his US status.

Regarding renouncing, you do have to go through the procedure, which as I understand it will require you to declare all your financial assets as if you were in the OVDI. You may not just say "I renounce my US citizenship" because citizenship is both granted and revoked only by decision of the state.


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## Ladyhawk

For anyone here who did enter the OVDI program but is not criminally involved in hiding assets, there is some measure of comfort in a post on Jack Townsend's Federal Tax Crimes blog. The blog is for tax lawyers, not lay people, but he's written a lot about OVDI in the past 3 months. There is an opt-out pathway for people who volunteered but are not appropriate subjects for an amnesty because they are not guilty of willful violations. Google it, you should be able to find it.

His guest blogger writes in part:"As we turn the corner, taxpayers who entered the program and who were not aware of their obligation to file an FBAR or to report their worldwide [income] need to consider opting out of the voluntary disclosure program. Under the program, the IRS and DOJ assumed every taxpayer acted intentionally or willfully. However, in fact, I think in many cases, it will be very difficult for the government to prove that a taxpayer willfully violated the law. " 

And " the IRS has said that it will not refer a case for criminal prosecution because the taxpayer opted out of the program so long as the taxpayer was honest and truthful in their program submissions."

And also "As a Title 31 penalty, the IRS can assess the penalty but it cannot collect it under the Internal Revenue Code with lies and levies and other IRS collection tools. Instead, the IRS is treated just like any other creditor. To collect the FBAR penalty, the IRS must make a referral to DOJ’s Tax Division, which then must seek a judgment in US district court against the taxpayer. Once in court, the taxpayer may assert a lack of willfulness as a defense and have his day in court. "

There is much more in this post, including specifics about what evidence is needed to show "wilfullness". This post is dated Saturday September 10. Hope this helps anyone here who opted into the OVDI but thinks they do not belong there.


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## AmTaker

Ladyhawk said:


> Regarding renouncing, you do have to go through the procedure, which as I understand it will require you to declare all your financial assets as if you were in the OVDI. You may not just say "I renounce my US citizenship" because citizenship is both granted and revoked only by decision of the state.


I think that 'declaration of financial assets' is only required for 'covered' expats who have either worldwide assets >US $2M or meet an income test. And (un)fortunately, I happen to be one.


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## AtHomeInCanada

Ladyhawk said:


> There is much more in this post, including specifics about what evidence is needed to show "wilfullness". This post is dated Saturday September 10. Hope this helps anyone here who opted into the OVDI but thinks they do not belong there.


Hi Ladyhawke -- I am one of the posters here who joined OVDI in a panic (not really knowing what it was all about) and have been questioning ever since the 'wisdom' or 'foolishness' of that quick decision.

However, after spending $250 today for 1 hour of a Cdn-US tax specialist's time .... I feel much more comfortable being in the program. A 5% penalty may seem punitive but to clear up 8 years worth of tax returns in one fell swoop, and move forward being totally caught up ... seems to hold a certain emotional value ... especially considering how this newly discovered stress + responsibility extends to one's spouse and other family members.

This particular accountant strongly recommended carrying through with OVDI.

I tell you, I have been back and forth so many times, but since I have been accepted, I guess I will venture forth and tackle the mountain ahead.


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## Ladyhawk

AtHomeInCanada said:


> Hi Ladyhawke -- I am one of the posters here who joined OVDI in a panic (not really knowing what it was all about) and have been questioning ever since the 'wisdom' or 'foolishness' of that quick decision.
> 
> However, after spending $250 today for 1 hour of a Cdn-US tax specialist's time .... I feel much more comfortable being in the program. A 5% penalty may seem punitive but to clear up 8 years worth of tax returns in one fell swoop, and move forward being totally caught up ... seems to hold a certain emotional value ... especially considering how this newly discovered stress + responsibility extends to one's spouse and other family members.
> 
> This particular accountant strongly recommended carrying through with OVDI.
> 
> I tell you, I have been back and forth so many times, but since I have been accepted, I guess I will venture forth and tackle the mountain ahead.


I wish you well and hope that this will bring you the peace of mind you need and deserve. If you want to keep us posted about it, I am sure many of us would like to know all is well with you.


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## technopal

*So Much Kindness Here*

People on this forum are very kind, honest and helpful and I thank all of you. What I have learned: American people are wonderful, government are bullies I owe no taxes, have never lived in the US but feel like I should divorce my spouse of 38 years to save him and his Canadian $ from the US. I have been robbed of happiness and have done everything I can to comply but will not feel free until I am away from this mess


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## Vangrrl

technopal said:


> People on this forum are very kind, honest and helpful and I thank all of you. What I have learned: American people are wonderful, government are bullies I owe no taxes, have never lived in the US but feel like I should divorce my spouse of 38 years to save him and his Canadian $ from the US. I have been robbed of happiness and have done everything I can to comply but will not feel free until I am away from this mess


Technopal - if you were born in Canada, have no SSN, have only one American parent (who I presume lives in Canada), why do you think the IRS would ever find you or identify you as a US citizen? If you are in your 60's then I assume your american parent is in her 80's - what kind of documentation is there on when he/she moved to Canada? Assuming you took your husband's name, you don't even have the same last name as you American parent

Don't you think you could fly under the radar?

I totally understand your fear and frustration and I share them but I really think you have nothing to worry about.


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## Nononymous

AtHomeInCanada said:


> Hi Ladyhawke -- I am one of the posters here who joined OVDI in a panic (not really knowing what it was all about) and have been questioning ever since the 'wisdom' or 'foolishness' of that quick decision.
> 
> However, after spending $250 today for 1 hour of a Cdn-US tax specialist's time .... I feel much more comfortable being in the program. A 5% penalty may seem punitive but to clear up 8 years worth of tax returns in one fell swoop, and move forward being totally caught up ... seems to hold a certain emotional value ... especially considering how this newly discovered stress + responsibility extends to one's spouse and other family members.
> 
> This particular accountant strongly recommended carrying through with OVDI.
> 
> I tell you, I have been back and forth so many times, but since I have been accepted, I guess I will venture forth and tackle the mountain ahead.


Have a look at hodgen dot com slash damsel-in-distress-a-vdp-success-story (or if the software strips the link, Google hodgen vdp damsel in distress success story) for an account of someone opting back out of OVDI and getting a zero penalty. Took some doing but it worked.

In your case I'd say that 5% is about 5% too high.


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## technopal

*Was Born and Raised in Cnada*

I was born and raised in Canada would probably never been identified but wanted to do the right thing I have never even had a parking ticket but am what they call an Accidental American.


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## Bevdeforges

Was looking for something the other day on the IRS website and stumbled onto a newly revised information page on the whole OVDP mess. They now seem to be stating that the purpose of all this is to detect those who have been willfully hiding income bearing assets and evading taxes. This strongly implies that they really have no interest in hassling "accidental Americans" or those who have been living overseas for ages with no real financial ties to the US. 

From their "questions and answers" page: 

>>The objective remains the same as the 2009 OVDP – to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance with United States tax laws.<<

While the US remains about the only country that insists on tax filings from all its citizens, whether or not they are resident in the US, they have no history of pursuing overseas residents for simple failure to file unless there is some indication of willful tax evasion.
Cheers,
Bev


----------



## Ladyhawk

Bevdeforges said:


> Was looking for something the other day on the IRS website and stumbled onto a newly revised information page on the whole OVDP mess. They now seem to be stating that the purpose of all this is to detect those who have been willfully hiding income bearing assets and evading taxes. This strongly implies that they really have no interest in hassling "accidental Americans" or those who have been living overseas for ages with no real financial ties to the US.
> 
> From their "questions and answers" page:
> 
> >>The objective remains the same as the 2009 OVDP – to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance with United States tax laws.<<
> 
> 
> Cheers,
> Bev


Yes, this is from Question 2 on the IRS FAQ page, describing the purpose of the OVDI for 2011. I think it has been there for awhile, a few weeks anyway. It wasn't exactly strongly emphasized by the accountatnts and the media, was it?


----------



## AmTaker

Bevdeforges said:


> Was looking for something the other day on the IRS website and stumbled onto a newly revised information page on the whole OVDP mess. They now seem to be stating that the purpose of all this is to detect those who have been willfully hiding income bearing assets and evading taxes. This strongly implies that they really have no interest in hassling "accidental Americans" or those who have been living overseas for ages with no real financial ties to the US.
> 
> Cheers,
> Bev


They do have the 5% penalty level though, a standard that pretty much all long term expats would meet, and another 5% for 'accidental' Americans who didn't know they were American citizens (and clearly could not have been guilty of willful avoidance). So the VD prime focus is indeed US residents with undeclared offshore accounts, but they haven't explicitly said that expats are totally off the hook. There could well be (and likely are) expats residing in tax havens such as the Caymans who may have significant US tax due, so I doubt you'll see a blanket statement to that effect. (Practically, they aren't going to do anything to a long term expat without US income and assets and miniscule tax due).


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## Chris72

If one didn't participate in the OVDI and is filing back 4 years (2010 - 2007, never filed before) but found they owed in 2009 all others didn't owe... Is there a possibility of just paying the regular penalty? and not getting harassed? I would think showing 2 years of nothing owing prior would be enough??


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## AmTaker

Chris72 said:


> If one didn't participate in the OVDI and is filing back 4 years (2010 - 2007, never filed before) but found they owed in 2009 all others didn't owe... Is there a possibility of just paying the regular penalty? and not getting harassed? I would think showing 2 years of nothing owing prior would be enough??


You would have to pay interest on tax due for sure, but in these days of ultra low rates that's not likely to be much.


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## DualCitizeninCanada

For anyone who's interested, the Globe and Mail is having a live discussion on this today. Look on their website for "Are you on the IRS hit list?"


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## Nononymous

The Globe & Mail discussion was good, far better than much of the media coverage, but nothing we don't already know. At least the expert was honest in constantly saying he has no idea how this is going to play out or whether the IRS would enforce penalties, etc.

What's become pretty clear to me is that OVDI is *not* the right path to take for the average Canadian-resident dual citizen. I'm very glad that my first reaction, after the initial shock, was not "oh my god I've got to get these forms filed before the deadline or they'll come and get me" but rather "this is absurd - no way in hell - they'll never find me!" The idea of owing them even one cent for these reporting requirements is basically outrageous; the notion of handing over my chequing account number only slightly less so. 

So for now I'm going to continue taking a wait and see attitude - who knows, there could be some moderation of FBAR and FATCA for non-residents, when the merde really hits the fan in a few years' time. And, as we know, the various penalties would be nearly impossible to collect from a non-resident with no US assets - so where's the risk?

It's not so much that the filing requirements are onerous. I imagine the point isn't to be exact, just to prove that you are a very small fish - I would do what a friend does and write his total income onto a 1040, say zero tax owed, and staple it to a copy of his Canadian return (works just fine apparently). Rather the point is that I am stubborn.

Only two things might make me become compliant: one, if it becomes increasingly difficult for me (with a US birthplace) to enter the US with a Canadian passport; two, the possibility of claiming the Bush stimulus tax credit with a 2008 return is so darkly funny - siphoning money out of the US is precisely the opposite of the intended effect - that it's almost enough to lure me back onto the IRS radar.


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## Nursiegirl

Nononymous said:


> The Globe & Mail discussion was good, far better than much of the media coverage, but nothing we don't already know. At least the expert was honest in constantly saying he has no idea how this is going to play out or whether the IRS would enforce penalties, etc.
> 
> What's become pretty clear to me is that OVDI is *not* the right path to take for the average Canadian-resident dual citizen. I'm very glad that my first reaction, after the initial shock, was not "oh my god I've got to get these forms filed before the deadline or they'll come and get me" but rather "this is absurd - no way in hell - they'll never find me!" The idea of owing them even one cent for these reporting requirements is basically outrageous; the notion of handing over my chequing account number only slightly less so.
> 
> So for now I'm going to continue taking a wait and see attitude - who knows, there could be some moderation of FBAR and FATCA for non-residents, when the merde really hits the fan in a few years' time. And, as we know, the various penalties would be nearly impossible to collect from a non-resident with no US assets - so where's the risk?
> 
> It's not so much that the filing requirements are onerous. I imagine the point isn't to be exact, just to prove that you are a very small fish - I would do what a friend does and write his total income onto a 1040, say zero tax owed, and staple it to a copy of his Canadian return (works just fine apparently). Rather the point is that I am stubborn.
> 
> Only two things might make me become compliant: one, if it becomes increasingly difficult for me (with a US birthplace) to enter the US with a Canadian passport; two, the possibility of claiming the Bush stimulus tax credit with a 2008 return is so darkly funny - siphoning money out of the US is precisely the opposite of the intended effect - that it's almost enough to lure me back onto the IRS radar.


I read the link on the globe and mail. Kinda puts that sickening feeling back in the stomach. It would be nice to get a clear statement from the IRS to state they are looking for the big fish and wont penalize all us small account holders, especially for those of us who have been compliant with our canadian taxes all along. It's just frustrating to get reassurance we have nothing to worry about from one source and then from another its a different story. I am scared to send my tax returns in with not knowing what the final verdict will be. I am back filing 3 years and have a refund coming. I would just prefer the IRS agent assessing my returns just keep the money and buy a coffee for himself and not penalize me (Wishful thinking)


----------



## DualCitizeninCanada

I agree. What's most frustrating is not getting a clear answer from anyone, including experts. While I'm fairly confident that someone like me (middle income, well below the allowance, and fully compliant in Canada) is unlikely to be pursued by the IRS, I can't imagine any professional advising me to not bother reporting. I expect there is little to no chance of the IRS pursuing the assets of a dual citizen with no US assets - especially if I _owe _exactly $0.00 - but I visit the USA frequently, and I don't want to have to break out in a sweat each time worrying about being pulled over. Someone earlier in the forum made the point that if I don't owe anything it's better to report so the IRS knows I'm not worth pursuing, and that seems to make the most sense to me. So I think I'll go with a quiet filing at some point - 1040 and FBAR, from what I understand. It'll be a hassle to get the past few years together, but I figure moving forward, it's just a quick form to fill out each spring. All things considered, I can't help but be moderately amused by the absurdity of being required to fill out a form to inform the IRS I don't owe them anything.


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## Nursiegirl

DualCitizeninCanada said:


> I agree. What's most frustrating is not getting a clear answer from anyone, including experts. While I'm fairly confident that someone like me (middle income, well below the allowance, and fully compliant in Canada) is unlikely to be pursued by the IRS, I can't imagine any professional advising me to not bother reporting. I expect there is little to no chance of the IRS pursuing the assets of a dual citizen with no US assets - especially if I _owe _exactly $0.00 - but I visit the USA frequently, and I don't want to have to break out in a sweat each time worrying about being pulled over. Someone earlier in the forum made the point that if I don't owe anything it's better to report so the IRS knows I'm not worth pursuing, and that seems to make the most sense to me. So I think I'll go with a quiet filing at some point - 1040 and FBAR, from what I understand. It'll be a hassle to get the past few years together, but I figure moving forward, it's just a quick form to fill out each spring. All things considered, I can't help but be moderately amused by the absurdity of being required to fill out a form to inform the IRS I don't owe them anything.


I agree with you 100%. The U.S owes me apparently 500.00. Now isnt that funny that they are putting themselves more into debt by pursuing us!


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## northof60

Nononymous said:


> The Globe & Mail discussion was good, far better than much of the media coverage, but nothing we don't already know. At least the expert was honest in constantly saying he has no idea how this is going to play out or whether the IRS would enforce penalties, etc.
> 
> What's become pretty clear to me is that OVDI is *not* the right path to take for the average Canadian-resident dual citizen. I'm very glad that my first reaction, after the initial shock, was not "oh my god I've got to get these forms filed before the deadline or they'll come and get me" but rather "this is absurd - no way in hell - they'll never find me!" The idea of owing them even one cent for these reporting requirements is basically outrageous; the notion of handing over my chequing account number only slightly less so.
> 
> So for now I'm going to continue taking a wait and see attitude - who knows, there could be some moderation of FBAR and FATCA for non-residents, when the merde really hits the fan in a few years' time. And, as we know, the various penalties would be nearly impossible to collect from a non-resident with no US assets - so where's the risk?
> 
> It's not so much that the filing requirements are onerous. I imagine the point isn't to be exact, just to prove that you are a very small fish - I would do what a friend does and write his total income onto a 1040, say zero tax owed, and staple it to a copy of his Canadian return (works just fine apparently). Rather the point is that I am stubborn.
> 
> Only two things might make me become compliant: one, if it becomes increasingly difficult for me (with a US birthplace) to enter the US with a Canadian passport; two, the possibility of claiming the Bush stimulus tax credit with a 2008 return is so darkly funny - siphoning money out of the US is precisely the opposite of the intended effect - that it's almost enough to lure me back onto the IRS radar.


One thing that was said on the Globe and Mail chat was that the Canadian government's reaction to this will likely depend on the outrage expressed by those affected. So GET ON IT, people! Contact the PM, the Minister of Foreign Affairs, and your MP, toot sweet! I have and will continue to do so. Jump up and down and scream loudly! Get everyone you know to write on your behalf. I would hope that, with enough pressure, the Canadian government will say to the IRS "sorry, guys, this is absurd. We won't cooperate. Leave us out of this".


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## Vangrrl

Nursiegirl said:


> I read the link on the globe and mail. Kinda puts that sickening feeling back in the stomach. It would be nice to get a clear statement from the IRS to state they are looking for the big fish and wont penalize all us small account holders, especially for those of us who have been compliant with our canadian taxes all along. It's just frustrating to get reassurance we have nothing to worry about from one source and then from another its a different story. I am scared to send my tax returns in with not knowing what the final verdict will be. I am back filing 3 years and have a refund coming. I would just prefer the IRS agent assessing my returns just keep the money and buy a coffee for himself and not penalize me (Wishful thinking)


I agree that some clarity would be useful, but on the other hand I do understand the IRS's position. Why would they voluntarily announce loopholes in their intended crackdown? I can just imagine the American crooks around the world waiting to hear what the practical threshold was and set up their holdings accordingly. 

As I've mentioned before, coming from an immigrant family, everyone I know in the US has an account back in the "homeland" usually for benign reasons of being able to transfer money to family back home or manage their elderly parents affairs but also to collect an inheritance etc... I don't see any of these people jumping on OVDI or any other type of disclosure. Its not even on their radar. We Canadians, law-abiding as we are, shouldn't lose our heads over this issue. 

I was at the bank today cleaning up my accounts - took my name off my kids' RESP, opened up an account for my husband where we will deposit any "unusual" sums of money (draws from our line of credit, proceeds from a house sale, gifts to him etc... things that are none of the IRS's business). Closed some dormant accounts. We looked at my husband's business papers and saw my name was incorrectly listed as a director of the company, which I'm not. That error could have been significant if FATCA-like reporting was in place.

So I might suggest those of you with Canadian spouses who are fretting the way I have been, might want to do something similar. If you have RESPs, its worth putting them in the Canadian parent's name, or a grandparent's name.


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## Vangrrl

northof60 said:


> One thing that was said on the Globe and Mail chat was that the Canadian government's reaction to this will likely depend on the outrage expressed by those affected. So GET ON IT, people! Contact the PM, the Minister of Foreign Affairs, and your MP, toot sweet! I have and will continue to do so. Jump up and down and scream loudly! Get everyone you know to write on your behalf. I would hope that, with enough pressure, the Canadian government will say to the IRS "sorry, guys, this is absurd. We won't cooperate. Leave us out of this".


I agree. Its also important for Canadians to know that its not good for Canada's bottom line for the IRS to be bankrupting/threatening the retirement savings of Canadian citizens. Its the same pool of tax dollars - if Canada wants them, it need to fight back against the IRS.


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## Nursiegirl

northof60 said:


> One thing that was said on the Globe and Mail chat was that the Canadian government's reaction to this will likely depend on the outrage expressed by those affected. So GET ON IT, people! Contact the PM, the Minister of Foreign Affairs, and your MP, toot sweet! I have and will continue to do so. Jump up and down and scream loudly! Get everyone you know to write on your behalf. I would hope that, with enough pressure, the Canadian government will say to the IRS "sorry, guys, this is absurd. We won't cooperate. Leave us out of this".


DONE!!!!! I just sent my area MP and to the Prime Minister a nice long letter asking for HELP!!! 

Lets all get on board guys


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## northof60

Nursiegirl said:


> DONE!!!!! I just sent my area MP and to the Prime Minister a nice long letter asking for HELP!!!
> 
> Lets all get on board guys


Thanks!
Further to my last post, the Minister of Finance would be a good one to contact as well.


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## winnipegexpat

A couple of replies to various things that are noted above:

1) I filed for 2006-2008 taxes in early 2009. The accountant made an error, so I got 3 letter from the IRS indicating I owed, in total, $50k. I called them and let them know I thought this was incorrect, so they put a hold on the collections while my accountant reviewed and found his error. Once I filed the fixed forms I got letters indicating that I was up to date and no taxes were owing. At the time I had never heard of an FBAR and the accountant said nothing to me. I also filed 2009 shortly thereafter and heard nothing back, so I called the IRS and they basically said "no news is good news". Am now up to speed on 2010, so may be over the hump on tax filing delinquency. I have no idea what the accountant did with Schedule B (which apparently requires you to check the box if you have over $10k abroad and notifies you of the need to file an FBAR - I have to check this when I get home tonight...!)
2) Once I found out about the FBAR this summer, I promptly filed 4 years (all the data I could possibly find) with a letter telling them it was the first I heard of it and if they want more years just let me know. I have heard nothing back, and it has been about a month. I am very surprised that no one here has heard anything - please post ASAP as soon as you do. I will do the same. I am hoping that if they do come knocking, the fact that the IRS people told me I was compliant a few years ago is worth something.


On citizenship, lots of people here have pieces of the information but maybe not all, but having been through it, let me tell you what I have learned:

1) First, it is really complicated and you need to refer to or know the laws that applied at the relevant period in time. Everything I note below applied for me (late 60s) and my kids (2000s) but the rules change, particularly a change in 2000.
2) I was born in Canada but my dad was an American who had lived there the requisite time (5 years, at least 2 of which were after 14, I think it is) so I received US citizenship at birth even though I didn't know it. 
3) We heard all sorts of incorrect information growing up including crap about having to choose at 18 and stuff like that. But when I was about 17 and thinking about going to school in the US, we called the consulate in Calgary to ask how to apply for citizenship. We explained the situation, and they said that we likely already were citizens and should apply for a passport instead, so we did that. We got a letter back asking for some more data (like my dad's records showing his US residency and that he had never became a Canadian) and we filed that and just like that were sent a passport. I cross into the US to apply for an SSN (and Selective Service) and it was painless. There is no need for my parent's to have reported our births to anybody for this citizenship to kick in.
4) For my children who were born in Canada, although I lived in the US, I did not live there long enough for them to get US citizenship automatically. Instead, we had to apply based on my dad's (their grandfather's) residency. It takes a bit of paperwork, and you have to actually go to the US for an interview (fascinating watching a Citizenship Agent interview a 2 year old) and they waive the Oath of Alligence, and then they give you a Certificate of Citizenship and voila, they become a citizen as of that date. We have done this 4 times now. Technically I am told this is not a naturalization process, that they are a citizen by birth, but I really don't know the difference. Canada does not see this as them giving up their Canadian citizenship. 

In short, for a lot of the posts listed above, the kids referenced are almost definitely US citizens, whether they know it or not. This is how a lot of accidental Americans arise, and I have found among friends and coworkers and acquaintances at least a dozen who are US citizens and didn't know it until I told them.

Hope this is helpful to someone...


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## Nursiegirl

This is what my tax "professional" has came back with in regards to my Municipal Pension, anyone know if this is right?

What I have input is the “Total Contributions and Interest” for each year.

This means that you *do* have a requirement to file the FBARs form for 2010 and I will need to know the maximum $ in your joint account with your husband as you are over the $10,000 aggregate value bar. (Your RPP was worth $12, 865.68 CDN based on your contributions to the plan since 2006.)

I have your returns in our Quality Review right now, but will need the 2010 bank account information before I can print them off.

Thanks,


(((Furthermore, its not an RPP, its a defined pension plan)


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## Arlington

I don't understand why you would be required to file FBAR information on a municipal pension. Pensions paid in Canada are taxable in Canada. They have nothing to do with the US. 

Oh! I just figured it out! - Apparently EVERYTHING is the business of the United States. That explains it. . . .

I did not report my husband's pension income on our joint 1040 and I did not mention it on the FBAR. His last contribution to the plan was nine years ago.


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## Nursiegirl

Arlington said:


> I don't understand why you would be required to file FBAR information on a municipal pension. Pensions paid in Canada are taxable in Canada. They have nothing to do with the US.
> 
> Oh! I just figured it out! - Apparently EVERYTHING is the business of the United States. That explains it. . . .
> 
> I did not report my husband's pension income on our joint 1040 and I did not mention it on the FBAR. His last contribution to the plan was nine years ago.


I do not understand it either, I am so upset by this stuff. It seems like if it isn't one thing it's another they are after. Its not like I can take the money out and go spend it. The thought of them now penalizing me for this is just going absurd. Apparently us canadians can't live or breath without them needing to know. GRRRR


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## Nursiegirl

Nursiegirl said:


> This is what my tax "professional" has came back with in regards to my Municipal Pension, anyone know if this is right?
> 
> What I have input is the “Total Contributions and Interest” for each year.
> 
> This means that you *do* have a requirement to file the FBARs form for 2010 and I will need to know the maximum $ in your joint account with your husband as you are over the $10,000 aggregate value bar. (Your RPP was worth $12, 865.68 CDN based on your contributions to the plan since 2006.)
> 
> I have your returns in our Quality Review right now, but will need the 2010 bank account information before I can print them off.
> 
> Thanks,
> 
> 
> (((Furthermore, its not an RPP, its a defined pension plan)



I complained that I didnt think this was right, and now accountant has come back with this:

Sorry, I should have been more specific for you. I am gathering up this information for the F3520 form, they are generally prepared with the FBARs form so to simplify it, I only refered to the FBARs.


I still do not think this is right....  Im so scared this is not right and I'll land up owing FBAR penalties and losing what small retirement I have.


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## Vangrrl

I guess it makes sense - the pension plan contribution comes out pre-tax, right? So its like an RRSP.

I'm going to let my accountant come to me about that one. If he doesn't say anything, I'm going to feign ignorance.


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## Nursiegirl

I'm still not so sure. She is probably frustrated with me questioning her but, it isn't clear to me and especially after reading some of the things I have read. Here is a paragraph from a website I found and the link. 

i. US Reporting. FBARs are required for all personal pensions; employer controlled defined benefit plans do not require reporting. It appears that foreign retirement schemes are exempt from Form 3520 foreign trust reporting but that exemption is tied to IRC Sec. 402(b) plans which are nonqualified employment related retirement plans and not personal pensions schemes which have become the dominant form of retirement plan in recent years. As stated above, these plans are covered by FBAR reporting and at present it does not appear likely that the IRS would impose Form 3520 penalties for failure to report on that form.

Guide to Cross-Border Retirement and 
Estate Planning Issues © 
February 2011 Edition

http://www.google.ca/url?sa=t&sourc...OnsccC&usg=AFQjCNGc5M-bx0QgOZu-xnYC_8jy-JGPeA


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## Nononymous

Nursiegirl said:


> I still do not think this is right....  Im so scared this is not right and I'll land up owing FBAR penalties and losing what small retirement I have.


Just remember, they have no way of collecting FBAR penalties in Canada. So screw 'em.


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## Bevdeforges

Basically, winnipegexpat has the right idea. 

The US requirements for reporting - both income and financial assets - are pretty outrageous and AFAIK the US is the only country that expects anything like this from its citizen (accidental or not).

OTOH, after filing these things for years (and yes, I AM an accountant by trade, so I do my own), I've found that a good faith effort is all that is required as long as you don't actually owe any taxes. They are after people who are HIDING income (or sources of income). 

As far as pensions or retirement funds are concerned, most tax treaties give the source country first dibs at taxing the pension proceeds anyhow, so by rights your Canadian pension funds will be taxed by Canada and there is some mechanism by which you avoid paying a second round of taxes to the US. (It may take you a little while to find said mechanism.)

But even if you make a huge mistake, the first step is going to be that the IRS contacts you and asks about it. Like winnipegexpat did, you reply and either explain your situation or request time to look into the situation and rectify it. They aren't going to bother you about the FBAR forms unless it looks like you have some huge income-generating investment or asset out there that you haven't been declaring the income on.
Cheers,
Bev


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## Chris72

US/Canadian Tax Lawyer Filing In Toronto Where to Find?!
Does anyone know a reasonably priced US/Canadian taxation lawyer in Toronto that can help file US 1040's and FBARS???

It's extremely hard to find or contact anyone! Not sure if I should just use a Ca/CPA for backfilling. Living in Canada since 73, Canadian citizen since 2004. Help!!
Share


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## justbrowsing

Nononymous said:


> Just remember, they have no way of collecting FBAR penalties in Canada. So screw 'em.


Well you would be likely giving up the ability to ever visit or fly over the US. The way it was explained to me is that by flying over the US you take the risk of having the plane land due to weather or mechanical issues and you get dragged off the plane and detained until the penalties are paid.


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## justbrowsing

Chris72 said:


> US/Canadian Tax Lawyer Filing In Toronto Where to Find?!
> Does anyone know a reasonably priced US/Canadian taxation lawyer in Toronto that can help file US 1040's and FBARS???
> 
> It's extremely hard to find or contact anyone! Not sure if I should just use a Ca/CPA for backfilling. Living in Canada since 73, Canadian citizen since 2004. Help!!
> Share


It might pay you to look a bit outside Toronto. The guys I have spoken to in TO were quoting $2000-$2500 per return per year and $500 per fbar per return per year. Yeah, right. 

My taxes are so simple we do the Canadian return ourself with the $20 software program in about 10-15 minutes.


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## AmTaker

Vangrrl said:


> As I've mentioned before, coming from an immigrant family, everyone I know in the US has an account back in the "homeland" usually for benign reasons of being able to transfer money to family back home or manage their elderly parents affairs but also to collect an inheritance etc... I don't see any of these people jumping on OVDI or any other type of disclosure. Its not even on their radar. We Canadians, law-abiding as we are, shouldn't lose our heads over this issue.


Immigrants to the US are being hit by this also (and they are actually worse off than expats, since they have US income and residence and have been filling US tax returns). For instance, I was looking at all foreign account US news on IRS and DoJ sites and elsewhere and I saw that the US has focused on India and criminally charged a number of US resident Indian immigrants with accounts in India (these likely had big accounts), and even asked HSBC to deliver data on all accounts held in India by US persons irrespective of balance size for the last 8 or so years. And I also read an article somewhere that US Indian organizations were meeting the IRS to request changes to the OVDI process. So yes, more collateral damage, but the main target was US residents.


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## AmTaker

justbrowsing said:


> Well you would be likely giving up the ability to ever visit or fly over the US. The way it was explained to me is that by flying over the US you take the risk of having the plane land due to weather or mechanical issues and you get dragged off the plane and detained until the penalties are paid.


You should probably be far more worried about a bird strike on the plane


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## AmTaker

winnipegexpat said:


> A couple of replies to various things that are noted above:
> 
> 1) I filed for 2006-2008 taxes in early 2009. The accountant made an error, so I got 3 letter from the IRS indicating I owed, in total, $50k. I called them and let them know I thought this was incorrect, so they put a hold on the collections while my accountant reviewed and found his error. Once I filed the fixed forms I got letters indicating that I was up to date and no taxes were owing. At the time I had never heard of an FBAR and the accountant said nothing to me. I also filed 2009 shortly thereafter and heard nothing back, so I called the IRS and they basically said "no news is good news". Am now up to speed on 2010, so may be over the hump on tax filing delinquency. I have no idea what the accountant did with Schedule B (which apparently requires you to check the box if you have over $10k abroad and notifies you of the need to file an FBAR - I have to check this when I get home tonight...!)
> 2) Once I found out about the FBAR this summer, I promptly filed 4 years (all the data I could possibly find) with a letter telling them it was the first I heard of it and if they want more years just let me know. I have heard nothing back, and it has been about a month. I am very surprised that no one here has heard anything - please post ASAP as soon as you do. I will do the same. I am hoping that if they do come knocking, the fact that the IRS people told me I was compliant a few years ago is worth something.
> 
> 
> 
> Hope this is helpful to someone...


 It takes them months to get an FBAR entered (probably more this year because of larger intake), so unless they have flagged an entry for 'special' handling (really large sums etc.), you shouldn't expect to hear back from them.


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## Vangrrl

AmTaker said:


> Immigrants to the US are being hit by this also (and they are actually worse off than expats, since they have US income and residence and have been filling US tax returns). For instance, I was looking at the news on this and I saw that that the US has focused on India and criminally charged a number of US resident Indian immigrants with accounts in India (these likely had big accounts), and even asked HSBC to deliver data on all accounts held in India by US persons irrespective of balance size for the last 8 or so years. And I also read an article somewhere that US Indian organizations were meeting the IRS to request changes to the OVDI process. So yes, more collateral damage, but the main target was US residents.


I totally agree. I guess my point is that we in Canada feel targeted (partly due to our nature, partly due to our proximity to the US and not in small part because of the media reporting of the issue) but there are even lower hanging fruit than us within the IRS's easy grasp. The IRS doesn't have unlimited resources to pursue these issues. 

I really feel that those who don't have to out themselves (those with no US identifying data) should steer clear of this whole issue regardless of their Canadian-minded desire to "do right".


----------



## Ladyhawk

Bevdeforges said:


> But even if you make a huge mistake, the first step is going to be that the IRS contacts you and asks about it. Like winnipegexpat did, you reply and either explain your situation or request time to look into the situation and rectify it. They aren't going to bother you about the FBAR forms unless it looks like you have some huge income-generating investment or asset out there that you haven't been declaring the income on.
> Cheers,
> Bev


Bev, could you elaborate on what you mean by "they aren't going to bother you about the FBAR forms " - do you mean they aren't going to question what you report on them, or do you mean they aren't going to insist you file them? I think you meant the former).

Any idea what they'd do about a farm? My Canadian husband and I own a farm and we rent the workable land to a local farmer. The rental income amounts to very little and comes to me, and it's part of my taxable Cdn income. Someone (I think it may have been you) said we do not report real estate on the FBAR, only financial accounts. So far, the farm is merely our residence.

Now we are contemplating being part of the business itself through a crop-sharing relationship. That will only affect reporting going forward, but since I have gotten some income from the land rental, does the real estate come into it re: the FBARS?

Tx in advance


----------



## Chris72

I was quoted $1000 per year. But 4 returns for $3k. Still it's steep!! I just confirmed I don't owe anything on my questionable 2009... So I'll see if I canget the price down.




justbrowsing said:


> It might pay you to look a bit outside Toronto. The guys I have spoken to in TO were quoting $2000-$2500 per return per year and $500 per fbar per return per year. Yeah, right.
> 
> My taxes are so simple we do the Canadian return ourself with the $20 software program in about 10-15 minutes.


----------



## Nursiegirl

Chris72 said:


> I was quoted $1000 per year. But 4 returns for $3k. Still it's steep!! I just confirmed I don't owe anything on my questionable 2009... So I'll see if I canget the price down.


That is absolutely outrageous! I have H&R block doing my past three returns and FBAR's and the charge is 1200.00. (I thought that was bad)
My returns are very simple as well, I don't have big accounts/assets/trusts etc.


----------



## Arlington

Chris72 said:


> I was quoted $1000 per year. But 4 returns for $3k. Still it's steep!! I just confirmed I don't owe anything on my questionable 2009... So I'll see if I canget the price down.


Chris72 . .Have you thought about doing your taxes yourself? I did ours. It was daunting at first. But the only information I needed was in my Canadian tax returns and my TFSA income. 

First I completed 2010, then it was easy to complete the prior five years. I got a lot of good information from this site on things to include. It was a nuisance converting everything to US $ with a different rate each year. I set up a small spreadsheet for each line item, then converted it there before entering. It probably took me 12 hours to get the bulk of it done on Labour Day weekend. It probably took me 40 hours of research here and other places before starting. Then another 5 hours of tiddling everything up before sending it off.

Forms used:

1040 - joint filing
1040 Schedule B - joint (this is the form where you check off that you have foreign assets - in Part III)
Schedule 1 was used in 2008 and prior but I just changed the date on Schedule B. I read something that indicated Schedule 1 was not appropriate for my situation.
2555EZ - one for me, one for spouse 
8891 - This is the form that defers taxes on RRSP's until conributions are withdrawn. I used one for every RRSP account held by me and separate ones for my spouse.

I included TFSA income earned with income on the 1040 and itemized on Schedule B. 

I did not declare pension income earned in Canada nor declare it as an asset on FBAR since it is a defined benefits plan.

Did the same with FBARs 99-22.1 - gathered all the information into a spreadhsheet and converted the currency for each year. The fillable .pdfs could be saved as another year, so all of the address and account numbers did not have to be re-entered. Then just changed the dollar amounts.

Tax forms were sent to Austin, TX, the FBAR statements to Detroit, MI. I sit here with fingers crossed.

There is a common tax programme online that does consider foreign accounts and the 2555-EZ form. You can use it free to try it out . .take one step up from the basic programme. If you run through your 2010 taxes there, you could probably figure out how to do the prior years. I found the programme a bit tedious and it was actually far easier to use the IRS fillable .pdf's.


----------



## Chris72

I originally went to H&R Block and they forgot to include deductions from property taxes and mortgage interest! Said I owed for 2009. So I got a 2nd opinion for free... And i appenerently am to get money back! Though they are super expensive! 4 returns for $3k. I'm going to try and half that.




Nursiegirl said:


> That is absolutely outrageous! I have H&R block doing my past three returns and FBAR's and the charge is 1200.00. (I thought that was bad)
> My returns are very simple as well, I don't have big accounts/assets/trusts etc.


----------



## AmTaker

Preparers often charge a lot to file FBAR forms because the penalties are so high, their insurance goes up dramatically if they say they fill FBAR forms for clients. Those you can do yourself.


----------



## Arlington

AmTaker said:


> Preparers often charge a lot to file FBAR forms because the penalties are so high, their insurance goes up dramatically if they say they fill FBAR forms for clients. Those you can do yourself.


Good idea . .you have to accumulate all the information for them preparers anyway. The FBAR is definitely not difficult to fill out.


----------



## Saskslam

Arlington said:


> Good idea . .you have to accumulate all the information for them preparers anyway. The FBAR is definitely not difficult to fill out.


Just to give people an idea of what I paid in Ottawa - to a large accountant firm. $2500 for 6 years of taxes and FBARs. Hopefully going foward now - I'll do it myself based on the examples I have from the firm.

Still - a fair sum of money for an expense that 2 months ago didn't exist in my mind. (Perhaps I can claim it as a business expense on my Canadian taxes next year???)


----------



## Vangrrl

I'm using an online expat accountant that someone else is using here (Greenback expat). I've submitted all my info for 4 years of back returns and he's working on it. Should cost me $300ish a return. 

I'll be perfectly honest - I've been very jaded by the information floating out there from tax lawyers. I don't really care what they think is "the right thing" to do because I think they are trying to cover their own asses and pad their wallets at our expense. I'm going to do what I think is right.

I like my accountant ta Greenback, he has responded quickly to "hypothetical" issues have posed to him (regarding my husband's business and my involvement therein and how it pertains to reporting now and going forward if we make changes) but at the end of the day I am giving HIM the information I want included in my tax return and I want him to process it. And I take responsibility for that. I'm not doing anything illegal, but I'm also using common sense and using information that I can realistically get a hold of. 

Going forward, if all stays the same, I'll do my own taxes.

At a later date, I will consult with a tax lawyer in consultation with our Canadian accountant in order to plan our estate going forward.


----------



## Bevdeforges

Vangrrl said:


> I like my accountant ta Greenback, he has responded quickly to "hypothetical" issues have posed to him (regarding my husband's business and my involvement therein and how it pertains to reporting now and going forward if we make changes) but at the end of the day I am giving HIM the information I want included in my tax return and I want him to process it. And I take responsibility for that. I'm not doing anything illegal, but I'm also using common sense and using information that I can realistically get a hold of.


Bravo! At the end of the day, it's the taxpayer who is responsible for the tax return and all supplementary filings. Sure, your tax "advisor"/ preparer is primarily looking to cover his or her own butt. (Can you blame them?)

Report and disclose what you can live with and can justify. As long as you're not concealing anything, and you can demonstrate that you don't owe much or any tax to the IRS (and in most cases you won't), you can go forward with a clear conscience. If the IRS has questions, they'll ask them - and you'll have a chance to explain yourself. 
Cheers,
Bev


----------



## technopal

*Gifts To A Canadian Spouse*

How much money can a dual citizen give a Canadian spouse and Canadian children each year legally?
Thanks in advance


----------



## Bevdeforges

technopal said:


> How much money can a dual citizen give a Canadian spouse and Canadian children each year legally?
> Thanks in advance


For a US citizen, gifts of over $13,000 in a given year (that's per recipient) must be reported, but you don't actually pay the "gift tax" until after death when the estate is being settled up and the gifts have to be evaluated alongside any potential estate tax. 

Instructions for Form 709 (2010) are the instructions for the gift tax reporting form (form 709)

Publication 950 gives the overview of how gift and estate taxes work.
Cheers,
Bev


----------



## AmTaker

Bevdeforges said:


> For a US citizen, gifts of over $13,000 in a given year (that's per recipient) must be reported, but you don't actually pay the "gift tax" until after death when the estate is being settled up and the gifts have to be evaluated alongside any potential estate tax.
> 
> Instructions for Form 709 (2010) are the instructions for the gift tax reporting form (form 709)
> 
> Publication 950 gives the overview of how gift and estate taxes work.
> Cheers,
> Bev


For non US citizen spouses, the limit is $133K per year.


----------



## Bevdeforges

AmTaker said:


> For non US citizen spouses, the limit is $133K per year.


Be careful about that, too, because a non-US citizen spouse gets a much lower limit on how much they can get in the final settlement of the estate before estate taxes kick in. Details should be in publication 950.
Cheers,
Bev


----------



## justbrowsing

Interesting Sept 15 article at theatlantic wire dot com:

"The rich pay taxes differently, apparently, than you and me. Today the IRS said that a total of 30,000 individuals have come forward in a voluntary disclosure program for tax cheats that already has yielded the IRS $2.7 billion from offshore bank accounts in places like Switzerland and Bermuda, according to reports from the AP and Bloomberg. And yet, as one tax attorney told Bloomberg, it's "still only a fraction of the people who have these accounts." The word "voluntarily" in the paragraph above maybe deserved some quotation marks, because the alternative to coming clean for a lot of these tax evaders is prosecution. The IRS has been cracking down on the wealthy who funnel money to offshore accounts as of late. "The results we’re seeing today were unthinkable just a few short years ago," IRS head honcho Douglas Shulman told the press today. "The world has clearly changed." But this may be it for the well-to-do willing to disclose. There had been two rounds of the program so far, and another tax attorney interviewed by Bloomberg doubts there will be a third one, given the moral hazard further rounds create. "It would be like catching a bus. You miss one and you wait for the next one," he said. Time to draw up the indictments."

According to my calculations, that's $90,000 each on average.


----------



## DualCitizeninCanada

justbrowsing said:


> According to my calculations, that's $90,000 each on average.


Thanks for sharing this. That estimate leads me to believe the amount I owe - $0 - makes me less of a target, and it reinforces the general opinion I've read here and elsewhere that it's people who are actively hiding money that the IRS is after. 

However, that article linked to a Bloomberg article that says:

"Sharp said U.S. authorities are poised to take enforcement action against as many as 10 banks, which he estimated could yield tens of thousands of previously undisclosed accounts held by U.S. citizens."

I'm thinking it only takes that one person - whose only transgression is that they haven't reported their income to the USA - for the IRS to make an example of them. 

But the Bloomberg article quotes an IRS Commissioner as saying:

“You’d have to be living in a hole not to know that the U.S. government is really focused on offshore tax evasion, getting better at it,” Shulman said.

Fair enough, I think I'm aware now, but just to clarify, not reporting income earned in Canada, while living only in Canada, and paying taxes in Canada - that's not tax evasion, is it? Just failure to report, which is something different, if I understand correctly. Can anyone clarify this?


----------



## AmTaker

justbrowsing said:


> Interesting Sept 15 article at theatlantic wire dot com:
> 
> 
> According to my calculations, that's $90,000 each on average.


Thats both the FBAR penalty (which is quite often very large) and the tax penalty. I think they mentioned that in the new OVDI, they had collected $500M from 12K people purely in tax, interest and tax penalties. Thats 40K per person. Some of that is the 20% tax penalty and interest, so I the actual tax due is oh, likely around 28K (rough back of the envelope calculation). Sounds like a lot, but for 8 years, thats 3.5K per year, which is not that much. Given that this is probably highly skewed up by a few large accounts (as its a mean, not a median), it seems like there may have been a large number of smaller account holders too. There may well be a number of US residents with smaller foreign accounts (immigrants or the like) who decided to come forward, although it seems unfair to brand everyone who came forward as tax cheats.


----------



## Ladyhawk

DualCitizeninCanada said:


> Thanks for sharing this. That estimate leads me to believe the amount I owe - $0 - makes me less of a target, and it reinforces the general opinion I've read here and elsewhere that it's people who are actively hiding money that the IRS is after.
> 
> Fair enough, I think I'm aware now, but just to clarify, not reporting income earned in Canada, while living only in Canada, and paying taxes in Canada - that's not tax evasion, is it? Just failure to report, which is something different, if I understand correctly. Can anyone clarify this?


Failure to report is not, as I understand it, usually a target of big criminal investigations. Lots of US residents neglect to file sometimes for years at a time. The penalty is paying interest on tax owed.

But realistically, who knows what any given IRS agent will decide? That is the real outrage about all of this - the arbitrary power of the IRS to determine who is criminally liable. And what does it take to draw their attention? And how small a fish will a given agent decide to go after? Furthermore, if you comply as best you can, and you hear nothing back, maybe "no news is good news", but the IRS may still rear its head and point at you, as long as you are within the statute of limitations of whatever deficiency you have committed. So when is it really all over?


----------



## Arlington

This just in: "Flaherty takes on IRS over tax crackdowns in Canada" in today's Financial Post. Our email and letter writing to him has helped.


----------



## Bevdeforges

Ladyhawk said:


> Failure to report is not, as I understand it, usually a target of big criminal investigations. Lots of US residents neglect to file sometimes for years at a time. The penalty is paying interest on tax owed.
> 
> But realistically, who knows what any given IRS agent will decide? That is the real outrage about all of this - the arbitrary power of the IRS to determine who is criminally liable. And what does it take to draw their attention? And how small a fish will a given agent decide to go after? Furthermore, if you comply as best you can, and you hear nothing back, maybe "no news is good news", but the IRS may still rear its head and point at you, as long as you are within the statute of limitations of whatever deficiency you have committed. So when is it really all over?


It's not the individual IRS agents who decide these things. There is policy within the IRS, and part of that policy is that IRS agents must average a certain level of recovery on each audit or prosecution. Going after someone who owes $0 in back taxes (or heaven forbid, winds up getting a refund after audit) really screws up an agent's averages - so if you don't owe anything, you should make a point of filing the forms to show them this so they'll leave you alone.

And when it comes to filing, failure to file, or even just failure to report income leaves the statute of limitations open ended. If you file (or report, in the case of the FBAR stuff) and you don't hear anything back within the time period of the statute of limitations, you're off the hook. Last I knew the statute on income tax filings was 4 years. The FBAR stuff may be as long as 6 years, but in either case, once you file the clock starts ticking. If you don't file at all, they can always come back after you, even 20 years later.
Cheers,
Bev


----------



## AmTaker

Bevdeforges said:


> And when it comes to filing, failure to file, or even just failure to report income leaves the statute of limitations open ended. If you file (or report, in the case of the FBAR stuff) and you don't hear anything back within the time period of the statute of limitations, you're off the hook. Last I knew the statute on income tax filings was 4 years. The FBAR stuff may be as long as 6 years, but in either case, once you file the clock starts ticking. If you don't file at all, they can always come back after you, even 20 years later.
> Cheers,
> Bev


In the case of FBAR, I think the SoL starts the day the return was due. Since its not a tax return, its not the case that it doesn't start till you file. And the civil FBAR SoL is 6 years from due date (no extensions).


----------



## Nursiegirl

What a great letter!!!

Read Jim Flaherty’s letter on Americans in Canada | News | Financial Post


----------



## AmTaker

Ladyhawk said:


> But realistically, who knows what any given IRS agent will decide? That is the real outrage about all of this - the arbitrary power of the IRS to determine who is criminally liable. And what does it take to draw their attention? And how small a fish will a given agent decide to go after? Furthermore, if you comply as best you can, and you hear nothing back, maybe "no news is good news", but the IRS may still rear its head and point at you, as long as you are within the statute of limitations of whatever deficiency you have committed. So when is it really all over?


Criminal liability is really determined by the DoJ and of course they have to persuade a judge and jury. Unless someone is a big time tax evader, criminal pursuit is almost unthinkable. So I wouldn't worry about that. Civil penalties -- the standard is lower, but unless there is at least some tax due and some indication of willfulness (the person filed a US tax return, but did not include Canadian income), there is almost no change that the IRS would pursue someone, especially a non US resident. 

Basically, I think pretty much anyone in the little to no tax due, long term Canadian resident category has NOTHING to worry about. The situation is different for a US resident with undeclared foreign accounts (even if little to no tax is due).


----------



## AmTaker

Nursiegirl said:


> What a great letter!!!
> 
> Read Jim Flaherty’s letter on Americans in Canada | News | Financial Post


The semantics freak in me objects to this sentence 

'We support efforts to crack down on legitimate tax evasion'

It should be

'We support legitimate efforts to crack down on tax evasion'.


----------



## Nursiegirl

True!


----------



## Ladyhawk

AmTaker said:


> The semantics freak in me objects to this sentence
> 
> 'We support efforts to crack down on legitimate tax evasion'
> 
> It should be
> 
> 'We support legitimate efforts to crack down on tax evasion'.


Let's hear it for ILLEGITIMATE tax evasion! YEAH!!


----------



## Vangrrl

AmTaker said:


> The semantics freak in me objects to this sentence
> 
> 'We support efforts to crack down on legitimate tax evasion'
> 
> It should be
> 
> 'We support legitimate efforts to crack down on tax evasion'.


Haha at "legitimate tax evasion" 

Very happy with the letter. I'm rather offended at the comments from the peanut gallery calling us "fools" for not knowing about our citizenship/tax filing status. I was perfectly aware of the Swiss bank fiasco but genuinely thought the reporting issue applied to US residents and not all US citizens.


----------



## Vangrrl

I knew you had to report cash gifts received, but didn't know you had to report gifts given. 

All the more reason for those of us with non-US spouses and children to maintain some separation of finances going forward. If my Canadian husband wants to give our Canadian kid (or any other Canadian relative) out of HIS income, that's not something I have any intention of reporting.


----------



## CanadianHoosier

When is it over? I dunno. 

However I did receive my "Renouncing US citizenship" 
package from the US Embassy today.

Arrived via Canada Post, isn't that ironic?


----------



## Vangrrl

I have an FBAR question for you guys that are back-filing:

Are you reporting bank accounts that have since been closed? 

For example I closed one RRSP account and moved it to another bank mid-year. Would you report both accounts or just the one that was there at the end of the year (and still exists today)? What are the chances that the IRS is going to delve that deeply into my 2007 bank accounts?


----------



## Arlington

Vangrrl said:


> I have an FBAR question for you guys that are back-filing:
> 
> Are you reporting bank accounts that have since been closed?
> 
> For example I closed one RRSP account and moved it to another bank mid-year. Would you report both accounts or just the one that was there at the end of the year (and still exists today)? What are the chances that the IRS is going to delve that deeply into my 2007 bank accounts?


I doubt if they'd find it and it would be an easy "oversight" on your part.


Look at them FBAR readers
Ain’t they mean?
Readin’ our assets with a gleam
Readin’ our pensions
Readin’ our accounts
Readin’ our balances
And all the amounts

How to be an FBAR reader?
Don’t be defeated
Just gitchyseff a FBAR
Go on an’ read it


With thanks to Mason Williams


----------



## Nursiegirl

Vangrrl said:


> Haha at "legitimate tax evasion"
> 
> Very happy with the letter. I'm rather offended at the comments from the peanut gallery calling us "fools" for not knowing about our citizenship/tax filing status. I was perfectly aware of the Swiss bank fiasco but genuinely thought the reporting issue applied to US residents and not all US citizens.


Yha, I just seen that comment. How rude! But, on the other hand, we all know we WERE NOT aware of this and we are now doing the right thing so who cares what people like him think. KARMA has a way of getting back at people like that. Ha Ha


----------



## Nursiegirl

CanadianHoosier said:


> When is it over? I dunno.
> 
> However I did receive my "Renouncing US citizenship"
> package from the US Embassy today.
> 
> Arrived via Canada Post, isn't that ironic?


How did you go about that? Did you have to first meet at an Embassy in person?


----------



## AmTaker

Vangrrl said:


> I have an FBAR question for you guys that are back-filing:
> 
> Are you reporting bank accounts that have since been closed?
> 
> For example I closed one RRSP account and moved it to another bank mid-year. Would you report both accounts or just the one that was there at the end of the year (and still exists today)? What are the chances that the IRS is going to delve that deeply into my 2007 bank accounts?


You are supposed to report closed bank accounts if you're filing in an FBAR for 2007. Presumably you would want to make your back filing complete, otherwise why back file at all ?


----------



## Pathologic1

Read Jim Flaherty’s letter on Americans in Canada

Read Jim Flaherty’s letter on Americans in Canada | News | Financial Post


----------



## Bevdeforges

AmTaker said:


> The semantics freak in me objects to this sentence
> 
> 'We support efforts to crack down on legitimate tax evasion'
> 
> It should be
> 
> 'We support legitimate efforts to crack down on tax evasion'.


Agreed, but it reminds me a bit of one thing they taught me in b-school. There is nothing wrong with "tax avoidance" - i.e. doing what you can to minimize your tax obligation under the law. What's illegal is "tax evasion."
Cheers,
Bev


----------



## CanadianHoosier

*Follow the guidance on the Embassy website*



Nursiegirl said:


> How did you go about that? Did you have to first meet at an Embassy in person?


I went to the US Embassy website, read thru the FAQ's and such.

Submitted an email to the requested website and indicated that I wanted to renounce my US citizenship. I got a form letter response and then a follow up email requesting my home address and a phone number. 

Received a call back and the Embassy contact reviewed my intention to renounce. 

A pleasant conversation regarding the reason for this request and then was told that I would be sent a questionaire. 

I have to wait til mid october to schedule, they are backlogged.


----------



## Pathologic1

I would just like to add that should they assess an FBAR fine against you within the six year SoL they then have only two more years to take the civil case to court and have it levied against you. And that court has no jurisdiction in Canada...



AmTaker said:


> In the case of FBAR, I think the SoL starts the day the return was due. Since its not a tax return, its not the case that it doesn't start till you file. And the civil FBAR SoL is 6 years from due date (no extensions).


----------



## Chris72

Where did you get this information from?


I was told today by a first year tax lawyer that the $10,000 FBAR penalty applies to every account entered on the FBAR. So if you have say 5 accounts X 6 years thats $300,000 penalty?? I thought it was $10,000 for every FBAR not filed!



Pathologic1 said:


> I would just like to add that should they assess an FBAR fine against you within the six year SoL they then have only two more years to take the civil case to court and have it levied against you. And that court has no jurisdiction in Canada...


----------



## Arlington

Chris72 said:


> Where did you get this information from?
> 
> 
> I was told today by a first year tax lawyer that the $10,000 FBAR penalty applies to every account entered on the FBAR. So if you have say 5 accounts X 6 years thats $300,000 penalty?? I thought it was $10,000 for every FBAR not filed!


That's the draconian part . . .absolutely ludicrous.


----------



## Pathologic1

Multiple places. It's similar to Canada in that there is a much shorter SoL on civil cases.

For instance look here
FBar Enforcement Article

_"The Secretary has six years to assess a FBAR civil penalty(25), and once assessed, a limitation period of two years from the date of assessment to bring an action to recover an unpaid penalty.(26)"_




Chris72 said:


> Where did you get this information from?
> 
> 
> I was told today by a first year tax lawyer that the $10,000 FBAR penalty applies to every account entered on the FBAR. So if you have say 5 accounts X 6 years thats $300,000 penalty?? I thought it was $10,000 for every FBAR not filed!


----------



## Vangrrl

AmTaker said:


> You are supposed to report closed bank accounts if you're filing in an FBAR for 2007. Presumably you would want to make your back filing complete, otherwise why back file at all ?


My reason for back filing is to get on the IRS radar as someone who owes no back taxes and is not worth pursuing further. I'm not especially looking to volunteer every detail of my financial existence (and that of my Canadian family) especially if they have no reasonable means of getting that information otherwise. 

While I do want to be completely honest, its those draconian penalty threats that are per account and % of the balance that giving me pause. I feel like I'm inviting a $10,000 fine (of 25% of the balance) for every account I "voluntarily disclose" on my FBAR.


----------



## Chris72

Has anybody heard of anyone getting penalties for quiet disclosure going back 3 to 6 years if you've never filed before? The penalties are absurd!!


----------



## Vangrrl

Chris72 said:


> Has anybody heard of anyone getting penalties for quiet disclosure going back 3 to 6 years if you've never filed before? The penalties are absurd!!


No, in fact it sounds like this has been a pretty common practice in the past, as US citizens living abroad belatedly realize their filing responsibilities. But I guess the fear is the IRS has now stated that its a priority of theirs to track down "off-shore assets" and bring non-resident citizens into tax compliance and now they might not be so lenient anymore about late filings and quiet disclosures any more. 

Now that the kids are back in school, I ran into 3 different parents who I knew were US citizens (moved to Canada within the last 10 years) and asked them if they were still filing tax returns. None of them were. They all knew they were supposed to be but never did. All 3 of them were also completely unaware of OVDI and the FBAR penalties and any of the publicity that caught our attention.  

So its seems like this issue is going to be going on long after we on this forum have managed to get ourselves tax compliant.


----------



## Arlington

Now that the kids are back in school, I ran into 3 different parents who I knew were US citizens (moved to Canada within the last 10 years) and asked them if they were still filing tax returns. None of them were. They all knew they were supposed to be but never did. All 3 of them were also completely unaware of OVDI and the FBAR penalties and any of the publicity that caught our attention. 



Interesting. I heard about it in early summer from my investment advisor. Since then I never stumbled upon any information about the current situation . .but I had Google alerts going and learned a lot on my own. Finally, on September 8th I heard something on CBC, talking about the OVDI deadline on the 9th. 

I met with an accountant from a large worldwide firm in early August. He advised me (as was his duty) to become compliant but said, "40 to 60 percent of Americans in Canada are doing nothing." He repeated that sentence, prefacing it with "Listen carefully . .40 to 60 percent are doing nothing." I asked, "But what about the being able to sleep at night?" He said, yeah, there's that . .and that's why the other percent are filing. He did advise against the OVDI and said no matter what, do NOT send in any money with your tax returns. He said I would never get it back.


----------



## Ladyhawk

Arlington said:


> I met with an accountant from a large worldwide firm in early August. He advised me (as was his duty) to become compliant but said, "40 to 60 percent of Americans in Canada are doing nothing." He repeated that sentence, prefacing it with "Listen carefully . .40 to 60 percent are doing nothing." I asked, "But what about the being able to sleep at night?" He said, yeah, there's that . .and that's why the other percent are filing. He did advise against the OVDI and said no matter what, do NOT send in any money with your tax returns. He said I would never get it back.


Wow. I suppose I might have guessed that, but for the accountant to say it, and even emphasize it as he did, makes me stop for a second and think, "What if I did nothing?" 
I suppose what makes me want to comply is to avoid the, perhaps faint, possibility of being stopped at the border and hassled about it. 
And even if I have a good chance of never being on their radar unless I DO something about it, I still want to keep the option of going back to live there (my siblings and families are there), or perhaps become a snowbird, and not wonder if my past failure to file (even though I owe nothing and have no big assets) would cause me any grief. I still want both passports, and I still want the option of voting in both countries.
My family is a cross-border family, like many others. I was born in the US to Canadian parents who stayed and became US citizens, so I have many relatives up here and I love that. I strongly feel that I wish to be able to cross over and live in either country as I see fit, because my ancestors have contributed in no small way to both countries. It's part of my heritage. So if the price for that is to comply with the tax laws of both countries, well that is my duty as a dual citizen.


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## Pathologic1

I don't think that many Americans really are filing. I have read elsewhere that it is 20-30%. Personally I know at least 6 American families and none file. I was another until recently. 

I responded because I think things might get ugly when FATCA comes in. Then if you wait until the IRS comes looking for you, it might not be pretty. The statute of limitations has also started ticking on the filings I made.

And so far quiet disclosure from honest Canadian taxpayers has been universally successful as far as I am aware.

Another reason for me is that I will likely renounce my citizenship and not filing would prevent me from doing that.


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## Arlington

Pathologic1 said:


> I don't think that many Americans really are filing. I have read elsewhere that it is 20-30%. Personally I know at least 6 American families and none file. I was another until recently.
> 
> I responded because I think things might get ugly when FATCA comes in. Then if you wait until the IRS comes looking for you, it might not be pretty. The statute of limitations has also started ticking on the filings I made.
> 
> And so far quiet disclosure from honest Canadian taxpayers has been universally successful as far as I am aware.
> 
> Another reason for me is that I will likely renounce my citizenship and not filing would prevent me from doing that.


Ladyhawk and Pathologic1.... I think you both make very good points for filing. Peace of mind. Being able to cross the border. Being able to renounce. I think NOW is the time to become compliant without penalties. FATCAT is law but may or may not be able to be enforced. I'd rather not take the chance. If things get really ugly, we'll be compliant and we can renounce. Even my oldest and most reluctant son agreed today that he would like to become compliant.


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## Ladyhawk

Arlington said:


> Ladyhawk and Pathologic1.... I think you both make very good points for filing. Peace of mind. Being able to cross the border. Being able to renounce. I think NOW is the time to become compliant without penalties. FATCAT is law but may or may not be able to be enforced. I'd rather not take the chance. If things get really ugly, we'll be compliant and we can renounce. Even my oldest and most reluctant son agreed today that he would like to become compliant.


And I agree with Pathologic1 that FatCat is another reason to file. In a year or so, the Cdn banks will be forced to make citizenship queries of their clients so they can report their US client accounts to the IRS, and any account holders who refuse to answer may have their accounts closed or the banks may be required to charge penalties, because the banks themselves will be heavily fined by the IRS on any of their US holdings or transactions if they withhold the information. In some European countries, already there are banks that are summarily closing the accounts of US citizens, because they do not want to get into this mess.

This demand by the IRS violates Canadian privacy laws, and our politicians should object vehemently. But an accountant I talked to said he thought that Canada would eventually comply and change their privacy legislation. I would hope that the Canadian public would be outraged by this, but the Cdn government always seems willing to placate the US. Yes, it could get ugly.


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## TO_andrew

Ladyhawk said:


> And I agree with Pathologic1 that FatCat is another reason to file. In a year or so, the Cdn banks will be forced to make citizenship queries of their clients so they can report their US client accounts to the IRS, and any account holders who refuse to answer may have their accounts closed or the banks may be required to charge penalties, because the banks themselves will be heavily fined by the IRS on any of their US holdings or transactions if they withhold the information. In some European countries, already there are banks that are summarily closing the accounts of US citizens, because they do not want to get into this mess.
> 
> This demand by the IRS violates Canadian privacy laws, and our politicians should object vehemently. But an accountant I talked to said he thought that Canada would eventually comply and change their privacy legislation. I would hope that the Canadian public would be outraged by this, but the Cdn government always seems willing to placate the US. Yes, it could get ugly.


Banks going around asking for citizenship will be a paperwork, resource intensive cost to the individual banks. A duel citizen would only have to say, I'm Canadian and the case would be closed.


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## Vangrrl

TO_andrew said:


> Banks going around asking for citizenship will be a paperwork, resource intensive cost to the individual banks. A duel citizen would only have to say, I'm Canadian and the case would be closed.


I believe the requirements will be more than just a matter of ticking off "Canadian" or "American" on a citizenship box. That's too easy - the IRS isn't going to go to all this trouble to enact a law just for that. Maybe banks will require a copy of our passport? birth certificate? 

I'm reporting now because hubby and I are in our mid-thirties - we have our whole careers ahead of us and the bulk of our investing, retirement saving years are still to come. I think its better for me to come into compliance now while my assets/investments are still low. And I agree, its not going to be easy to hide once FATCA and passport renewal rules come into play, especially as someone who travel frequently to the US.


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## Vangrrl

A silly question for all of you: now that I'm coming out of the closet as a US citizen, I feel like I should get my money's worth, so to speak. What can I do as an American citizen that I can't do as a Canadian? 

Obviously I can vote. And I will, if I could find someone who speaks to my issues as an expat. 

Is there anything else? Its seems to me like most of the advantages of being an American are tied to being an American resident. Being a non-resident American just gives you the IRS headaches with no benefits.


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## technopal

*Desire To Be Honest*

After filing because I am honest I am looking at my options. I have zero ties to the US and being retired I cannot see how I could live there without government support. My health care would not be supported in the US and since I have never worked there I cannot collect SS. I am asking myself how can I be part of a country that I cannot afford to move to. Will consider renouncing as I cannot see any advantage for me to be an Accidental American


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## Bevdeforges

Vangrrl said:


> A silly question for all of you: now that I'm coming out of the closet as a US citizen, I feel like I should get my money's worth, so to speak. What can I do as an American citizen that I can't do as a Canadian?
> 
> Obviously I can vote. And I will, if I could find someone who speaks to my issues as an expat.
> 
> Is there anything else? Its seems to me like most of the advantages of being an American are tied to being an American resident. Being a non-resident American just gives you the IRS headaches with no benefits.


Basically the only advantages to being a US citizen while living overseas are that you have a US passport and will be admitted to the US any time you please, with none of the visa nonsense. You also have access to the US Consulate and any services they offer - like being evacuated out of the country should Canada be taken over by some unsavory insurgents or something . 

Whether you can vote or not kind of depends. Officially you vote in the state you last lived in before you left the US. This makes life difficult for accidental Americans born overseas. Some states have passed laws allowing overseas residents to register to vote based on their parent's last US address, or where close family members are currently living, but this doesn't apply to all states by any means.

And no, there do not appear to be any Federal level elected officials who represent the interests of Americans living overseas. Most Congressional Representatives and Senators don't have a clue that overseas residents can vote and they certainly don't have any idea how many of them are included in their state or district.
Cheers,
Bev


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## CanadianHoosier

Vangrrl said:


> A silly question for all of you: now that I'm coming out of the closet as a US citizen, I feel like I should get my money's worth, so to speak. What can I do as an American citizen that I can't do as a Canadian?
> 
> Obviously I can vote. And I will, if I could find someone who speaks to my issues as an expat.
> 
> Is there anything else? Its seems to me like most of the advantages of being an American are tied to being an American resident. Being a non-resident American just gives you the IRS headaches with no benefits.


*Ya don't get much*. 

Here is an excerpt from the US Consulate Toronto website:

U.S. Citizen Services 

Destitution: Destitute Americans outside of the U.S. are generally unable to receive U.S. welfare benefits. We refer inquirers to low- or no-cost help from local authorities, and contact U.S. relatives or friends to get funds transferred for subsistence and repatriation.


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## Ladyhawk

Sometimes when you travel into or through the US, you can save time if you have a US passport to get you through the "US citizens only " line.

As citizens we are also technically subject to other US laws, like restrictions on travelling to Cuba. You can go on your Cdn passport, and perhaps the US would not know about it except by accident, ie a border guard might be looking at both passports and see you'd been there. I have no idea whether this even matters, it is just something that occurred to me just now.


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## Bevdeforges

There is no reason why, on entering the US on your US passport, you should bother mentioning to the nice immigration person that you even HAVE another passport, much less let them see it. 

It's a time honored tradition that dual nationals wishing to travel to places on the "off limits" list for US citizens just use their other passport. Fortunately, however, the list of places off limits to Americans is considerably reduced from what it used to be.
Cheers,
Bev


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## AmTaker

Vangrrl said:


> My reason for back filing is to get on the IRS radar as someone who owes no back taxes and is not worth pursuing further. I'm not especially looking to volunteer every detail of my financial existence (and that of my Canadian family) especially if they have no reasonable means of getting that information otherwise.
> 
> While I do want to be completely honest, its those draconian penalty threats that are per account and % of the balance that giving me pause. I feel like I'm inviting a $10,000 fine (of 25% of the balance) for every account I "voluntarily disclose" on my FBAR.


I can sympathize with that, but I think it would be considerably worse to file an incomplete form than not to file at all. At that point, the violation becomes 'willful'. No one can be expected to file if they don't know about this stupid form, but filing a form and not including an account indicates that one does know about the filing requirement and intentionally ignored it.


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## AmTaker

Arlington said:


> I met with an accountant from a large worldwide firm in early August. He advised me (as was his duty) to become compliant but said, "40 to 60 percent of Americans in Canada are doing nothing." He repeated that sentence, prefacing it with "Listen carefully . .40 to 60 percent are doing nothing." I asked, "But what about the being able to sleep at night?" He said, yeah, there's that . .and that's why the other percent are filing. He did advise against the OVDI and said no matter what, do NOT send in any money with your tax returns. He said I would never get it back.


You know what they say "42 % of statistics are made up on the spot"  I don't know how you could really derive such a number. And 'Americans in Canada' covers a very broad term from essentially accidental Americans to people who've been living in Canada for 30 years to the US multinational executive on a temporary assignment. Rates of compliance would be vastly different for these subgroups.


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## Pathologic1

AmTaker is absolutely right. Either file a complete correct return or not at all. An incorrect filing may be interpreted as knowingly filing an incorrect return or FBAR, criminal offences. Either don't file or correctly file. Half way is dangerous as hell.



AmTaker said:


> I can sympathize with that, but I think it would be considerably worse to file an incomplete form than not to file at all. At that point, the violation becomes 'willful'. No one can be expected to file if they don't know about this stupid form, but filing a form and not including an account indicates that one does know about the filing requirement and intentionally ignored it.


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## Guest

*Sure is complicated....*

Hi, I'm new to posting here, but have been reading for the past several weeks. I am grateful to this thread for helping me to wade through the mess that being a U.S. citizen abroad has generated. I brought myself up to date with tax reporting and Fbar reporting. 

I am now wondering, though, if I did the income tax reporting wrong and now will become an unwitting target. I had been searching for help and, even though I had IRS Pub 54, I filed on a 1040 and used a Form 1116 to show that I paid taxes and declared that on Form 1040. I have never had much income, always well below the exclusion, some years zero. However, now it looks like I should have been using Form 2555 and just excluding income. I was so stressed and bewildered that at the time, I thought the Form 1116 was correct. Yikes!! 

Now, I'm wondering if I need to file amendments to the back years I reported or if I will be okay because I did show on the Form 1116 & Form 1040 that either I paid enough tax or that I showed I had no income at all. I included copies of my Canadian Notice of Assessment to demonstrate this as well. Like many of you, I just couldn't afford the thousands of dollars to seek professional assistance in filing. Any thoughts on whether I need to amend or just wait to see if they ask for additional information? 

In the meanwhile, I am doing something that I have wanted to do (but life and laziness intervened) and should have done many, many years ago - applying for Canadian citizenship and subsequently renouncing my U.S. citizenship. This is not for tax reasons, but simply because Canada has been good to me and deserves my respect and full participation as a citizen. 

Thanks to all on this wonderful forum!


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## Ladyhawk

CanadianAtHeart said:


> Hi, I'm new to posting here, but have been reading for the past several weeks. I am grateful to this thread for helping me to wade through the mess that being a U.S. citizen abroad has generated. I brought myself up to date with tax reporting and Fbar reporting.
> 
> I am now wondering, though, if I did the income tax reporting wrong and now will become an unwitting target. I had been searching for help and, even though I had IRS Pub 54, I filed on a 1040 and used a Form 1116 to show that I paid taxes and declared that on Form 1040. I have never had much income, always well below the exclusion, some years zero. However, now it looks like I should have been using Form 2555 and just excluding income. I was so stressed and bewildered that at the time, I thought the Form 1116 was correct. Yikes!!
> 
> Now, I'm wondering if I need to file amendments to the back years I reported or if I will be okay because I did show on the Form 1116 & Form 1040 that either I paid enough tax or that I showed I had no income at all. I included copies of my Canadian Notice of Assessment to demonstrate this as well. Like many of you, I just couldn't afford the thousands of dollars to seek professional assistance in filing. Any thoughts on whether I need to amend or just wait to see if they ask for additional information?
> 
> In the meanwhile, I am doing something that I have wanted to do (but life and laziness intervened) and should have done many, many years ago - applying for Canadian citizenship and subsequently renouncing my U.S. citizenship. This is not for tax reasons, but simply because Canada has been good to me and deserves my respect and full participation as a citizen.
> 
> Thanks to all on this wonderful forum!


Hi, I did the same thing you did - in my haste to comply, I filed a 1040 and a 1116. However, Bev (one of the moderators here) said that either 1116 or 2555 will supply the same information, so don't get too worried. Have a look at both forms and see if one would make any difference over the other for your situation. You can always file an amended form 1040x which is perfectly acceptable. Or if there is no difference in the information you gave, don't bother.
If you do not owe any US taxes because your Canadian income is too low, which is also my case, probably they won't bother following up, because there is no US tax owing.


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## Guest

Ladyhawk said:


> Hi, I did the same thing you did - in my haste to comply, I filed a 1040 and a 1116. However, Bev (one of the moderators here) said that either 1116 or 2555 will supply the same information, so don't get too worried. Have a look at both forms and see if one would make any difference over the other for your situation. You can always file an amended form 1040x which is perfectly acceptable. Or if there is no difference in the information you gave, don't bother.
> If you do not owe any US taxes because your Canadian income is too low, which is also my case, probably they won't bother following up, because there is no US tax owing.


Thanks for the reassurance! I did a little more searching and found that it may even be preferential to file the 1116 in certain circumstances. Yes, I don't owe anything and have far less than $100,000 in RRSP's, etc., so I'm hopeful that late filing is satisfactory and that life will assume some normalcy. I will continue to read this forum and post any developments that might come my way that may be helpful to others. I appreciate all your efforts (and like you, have found Bev an incredible "voice of reason" in all this).


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## Bevdeforges

If you filled out the income tax return using form 1116 instead of 2555 and the calculations still showed that you owned no taxes, then that's fine. The 2555 is an option you elect. Once you've elected it, you're pretty much expected to use it going forward.

But no problem - you can use either the tax credit or the earned income exclusion. (And in some cases, both - but be careful if you go that route...)
Cheers,
Bev


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## rwats

*Form 1040 Instructions*

Hi I'm new to the forum and have a question. While reading the form 1040 instructions there is a section on 'Who Should File'. There are three charts A, B & C starting on page #8. There are minimum income levels for different individuals but as an example a married person filing separately could earn $3650.00 before having to file. Can someone shed some light on this? There is a lot of information on the net suggesting that a citizen has to file regardless of income level. Thanks!


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## Arlington

From the Globe and Mail, late today:

A global amnesty program for people afoul of their U.S. tax obligations has so far netted only 12,000 people and $500-million (U.S.). 

The amnesty, which expired earlier this month, allowed individuals with offshore bank accounts to come clean with the U.S. Internal Revenue Service as long as they paid their back taxes plus penalties

So, that's about $40,000 in penalties per return. I imagine there were penalties LOTS higher than that. 

The article continues on with the fear mongering of huge penalties for the little guys like me.

I sent mine in . . .and now I wait.


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## TO_andrew

Arlington said:


> From the Globe and Mail, late today:
> 
> A global amnesty program for people afoul of their U.S. tax obligations has so far netted only 12,000 people and $500-million (U.S.).
> 
> The amnesty, which expired earlier this month, allowed individuals with offshore bank accounts to come clean with the U.S. Internal Revenue Service as long as they paid their back taxes plus penalties
> 
> So, that's about $40,000 in penalties per return. I imagine there were penalties LOTS higher than that.
> 
> The article continues on with the fear mongering of huge penalties for the little guys like me.
> 
> I sent mine in . . .and now I wait.


The operative statement in the Globe and Mail is "afoul of their tax obligations".


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## Bevdeforges

rwats said:


> Hi I'm new to the forum and have a question. While reading the form 1040 instructions there is a section on 'Who Should File'. There are three charts A, B & C starting on page #8. There are minimum income levels for different individuals but as an example a married person filing separately could earn $3650.00 before having to file. Can someone shed some light on this? There is a lot of information on the net suggesting that a citizen has to file regardless of income level. Thanks!


Basically a US citizen must file a tax return for any year in which their worldwide income exceeds the threshold figures given in those charts A, B and C. 

Chart A are the thresholds by filing category. 

Chart B are the rules for children and dependents. Basically it applies to those who are taken as dependents on another person's income tax forms but who have income in their own names that should be reported.

Chart C are special situations where you are expected to file even when your income is less than the Chart A threshold levels. Most of the conditions are unusual for taxpayers residing overseas. Normally, if any of those conditions apply, your income would be clearly above the Chart A thresholds.

In the case of self-employment overseas, there is a clear exemption from paying US social security if you are already paying "social insurances" to your home government as part of your taxes and it is often possible to report your "self-employment" income as salary, so that it is eligible for the earned income exclusion.
Cheers,
Bev


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## AmTaker

Note that FBARs have to be filed irrespective of income levels.


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## Bevdeforges

AmTaker said:


> Note that FBARs have to be filed irrespective of income levels.


Irrespective of income level, but if you don't file FBAR forms unless your financial holdings overseas exceed the threshold amounts for the FBAR forms. (Basically, $10,000 for all overseas accounts in the case of the standard Treasury form TD F 90-22.1).
Cheers,
Bev


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## DualCitizeninCanada

TO_andrew said:


> The operative statement in the Globe and Mail is "afoul of their tax obligations".


Yes, I think this is a reference to the OVDI amnesty, not the general filing requirements - especially considering FATCA doesn't come into force for another 2-3 years. That's what adds to the confusion and fear - there are a few different programs the IRS has going on here for foreign Americans, so it can be difficult to figure out the best course of action based on one's own circumstances. 

For myself, filing the 1040, 1116 (I think) and FBAR will show I'm tax compliant in Canada, and owe the USA nothing, so my plan is to just do that. However, based on further reading, I'm more worried now I could be penalized for failing to file previously, which would mean that by reporting my Canadian income and accounts to the IRS, I'd be making a target of myself for having not reported in the past. Still, who knows what risk you _really _bring on yourself by just ignoring it?


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## Bevdeforges

DualCitizeninCanada said:


> Yes, I think this is a reference to the OVDI amnesty, not the general filing requirements - especially considering FATCA doesn't come into force for another 2-3 years. That's what adds to the confusion and fear - there are a few different programs the IRS has going on here for foreign Americans, so it can be difficult to figure out the best course of action based on one's own circumstances.
> 
> For myself, filing the 1040, 1116 (I think) and FBAR will show I'm tax compliant in Canada, and owe the USA nothing, so my plan is to just do that. However, based on further reading, I'm more worried now I could be penalized for failing to file previously, which would mean that by reporting my Canadian income and accounts to the IRS, I'd be making a target of myself for having not reported in the past. Still, who knows what risk you _really _bring on yourself by just ignoring it?


Be a little bit careful here. The IRS doesn't give a rat's backside whether or not you're tax compliant in Canada or anywhere else. You have a US filing obligation (and payment, if that's what the return shows).

If you're going the 1116 route, the only interest the IRS takes in what you've filed in Canada is how much tax you actually paid during the year on your income. If they have questions, they'll check with the Canadian tax people to see if you actually paid what you said you did - and if you actually paid it during the tax year in which you're trying to use it as a credit. (US taxes are strictly cash basis for individuals.)

If you go the 2555 route, your Canadian tax status is almost irrelevant. I say almost, because if you do the exclusion based on being a "bona fide resident" then it's sort of implied that you're saying you do pay taxes in Canada. But don't bother sending in copies of any of your Canadian returns. It's just giving the IRS far more information than you have to.
Cheers,
Bev


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## DualCitizeninCanada

Bevdeforges said:


> Be a little bit careful here. The IRS doesn't give a rat's backside whether or not you're tax compliant in Canada or anywhere else. You have a US filing obligation (and payment, if that's what the return shows).


Thanks, Bev. I wasn't trying to be dismissive - I'm just not sure if there is a difference of degree in seriousness between not filing, and actually not paying taxes owed (which, from what I understand, is what OVDI is all about). Of course, I'm not about to take a chance and find out....


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## Pathologic1

*No news really is good news*

I thought I would share a couple of email responses from my accountant as to whether any of his clients from Canada had heard anything

_After all of that I think you are probably ready for a vacation.

I will certainly let you know if I hear anything. I have prepared well over 1,000 FBAR’s in the past six months and there has been absolutely no communication from the IRS. This is well inside their processing window, so if anything were going to come up I would have heard about anything older than 90 days. I am pretty sure that nothing will come of it all.

There has been a number of comments published about how bad this entire concept is. One of them came from Jim Flaherty, your Finance Minister. I attached it just in case you have not seen it. The only cases that I am seeing right now involve US citizens living in the US with foreign accounts. These are people that are purposely trying to hide money outside of the US. I have not seen one case yet that involves a US expat that was simply not in compliance with the IRS rules.

I was speaking with a Revenue Agent the other day and they were in a group meeting where the FBAR topic was being discussed. The IRS is recognizing that they may have over reached a bit and are instructing the agents to err on the side of caution. There will never be a public announcement of this, but it was good to hear. They also told me that they plan to keep the heat on because it is actually getting US expats to get into compliance with their tax return filing better than anything else they have done.

I am certain that the entire issue will be resolved in tax court soon. There is way too much opposition to the heavy handed and draconian efforts being undertaken by the US right now and the push back is increasing in its intensity. All of the people that are worrying should just go on with their lives and try not to let the IRS ruin everything. I do not think that the vast majority of people will ever hear anything.

I will keep you up to date if I see any movement by the IRS. Let me know if you need anything or if you have any questions. Thanks!

David L. Hillary, Jr., CPA, CITP, MBA_

and one more tidbit worth noting from him (and a mention this forum)

_I looked through some of the messages in the forum and it is apparent that people are very unsettled. It really is not that bad. The real trick is to get the filing completed so that the IRS has no reason to come looking for you. If there is one thing I have learned in my 25+ years of dealing with the IRS is that if you are ahead of them, they rarely come looking for you and any potential problems are much easier to deal with._


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## Yerdouj

*How do we know what to do?*

I've read every post on this thread and while I appreciate the great advice, I'm still not sure what to do! We have our Canadian citizenship and would like to renounce our U.S. citizenship but understand that we need to be up-to-date on our "tax obligations" to do so. Like everyone else on this forum, we file and pay our taxes in Canada and don't owe anything in the U.S. We stopped filing U.S. taxes a few years after we got here when we wrapped up our business dealings there (sold the house, closed bank accounts, etc.) because we were under the impression that you didn't need to file if you didn't owe any taxes. 

I see that many people on this forum are choosing to "quietly disclose" by filing their tax returns and FBARs for the last 3 or 4 years. For those of us who are planning to renounce our U.S. citizenship, will this be enough? Or do we have to file for all the missing years? 

Sorry for the long post and thanks for any information anyone can give us!


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## AmTaker

What is the normal processing window for an FBAR anyway ? Normally, its supposed to be 90 days, but this time I wouldn't be surprised if its much longer. But yes, I wouldn't expect any attention to be given to expats who owe little to no taxes and have no US assets/income to boot.


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## 416

Yerdouj said:


> I see that many people on this forum are choosing to "quietly disclose" by filing their tax returns and FBARs for the last 3 or 4 years. For those of us who are planning to renounce our U.S. citizenship, will this be enough? Or do we have to file for all the missing years?


You need five years to renounce.


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## Ladyhawk

Pathologic1, thanks so much for the information from your accountant. It is reassuring to hear that his clients have not been troubled. I have read of people who have been fined, but it is always hard to know exactly what their situation is.

In the past few days I have read more articles (eg Margaret Wendte in the G&M), and seen and heard interviews from Canadians with US citizenship about this, and mostly these have been short on the sort of details discussed here, so the message in much of the media is that the IRS have gone nuts and are rounding up innocent Canadians and leveling fines that impoverish them. I think sometimes the media is playing up the sensationalism to make the big bad Americans look like monsters. It plays into the paranoia and cynicism many Canadians feel toward the US. It is hard to know what will actually happen, but I put more trust in what I read here, and on other similar forums.


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## Yerdouj

416 said:


> You need five years to renounce.


Thanks. 5 years shouldn't be too difficult since we have all our Canadian tax stuff. 

Many thanks to all of you who have so generously provided information on this thread. Before I found this forum we were seriously wondering whether we would have to liquidate our few assets and move to Cuba to avoid losing everything. I'm getting the impression that the people who made these rules to go after tax cheats never even considered the traumatic effect it would have on people like us. But after all is said and done, maybe this was just the kick-in-the-pants we needed to do what we should have done a long time ago.


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## nbhms

*administrative type question on filing.*

I've finally managed to gather together as much info as I can for backfiling forms 8891 and FBAR etc. FBAR I'm sending as a bundle with a cover letter explaining the late filing, as it's instructions specify.

My question is on backfiling multiple years of 1040 and 1040x. I've seen (might have even been this thread somewhere) people say when backfiling multiple years of 1040 to send in each year in a seperate envelope, for tracking and to make sure it doesn't get overlooked when bundled in with other years. This makes sense to me, but I'm wondering where each of my backfilings contains 2555 and 8891 forms, each which reference a previous year, could that cause problems if they arrive at or get processed at the IRS out of order? Does anyone know if they check that previuos year filing automatically when processing to see if it's there, and if it will cause problems if the year they are checking is in their "inbox" but hasn't been processed yet, or if that's just something that gets recorded for later reference? 

Can't decide if I should send in all 1040s and 1040x's seperate, or bundle them all together and add a cover letter similar to the FBAR stating I was unaware of the 8891 requirement, all these backfiles are to simply cover that requirement, and no values changed, no amounts were ever owed.

Am I overthinking this? 

nbhms


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## Guest

nbhms said:


> I've finally managed to gather together as much info as I can for backfiling forms 8891 and FBAR etc. FBAR I'm sending as a bundle with a cover letter explaining the late filing, as it's instructions specify.
> 
> My question is on backfiling multiple years of 1040 and 1040x. I've seen (might have even been this thread somewhere) people say when backfiling multiple years of 1040 to send in each year in a seperate envelope, for tracking and to make sure it doesn't get overlooked when bundled in with other years. This makes sense to me, but I'm wondering where each of my backfilings contains 2555 and 8891 forms, each which reference a previous year, could that cause problems if they arrive at or get processed at the IRS out of order? Does anyone know if they check that previuos year filing automatically when processing to see if it's there, and if it will cause problems if the year they are checking is in their "inbox" but hasn't been processed yet, or if that's just something that gets recorded for later reference?
> 
> Can't decide if I should send in all 1040s and 1040x's seperate, or bundle them all together and add a cover letter similar to the FBAR stating I was unaware of the 8891 requirement, all these backfiles are to simply cover that requirement, and no values changed, no amounts were ever owed.
> 
> Am I overthinking this?
> 
> nbhms


Hi nbhms,

I chuckled to myself when you wrote about "overthinking" things. I'm not sure if we can even begin to think too much when dealing with these kinds of issues since these are notoriously heartless agencies who have admitted they thrive on scare tactics and bullying. 

If it helps, here's what I did when I sent in my package. I put all my income tax filings together in one couriered envelope, making sure I stapled a cover letter to the front of each separate filing explaining what year the filing was for, why I was sending them now, that I didn't owe taxes, had filed in Canada, had filed F-bars, etc. I did the same with the F-bars, sent them in the same couriered package, stapling an explanatory cover letter (again, indicating I owed no taxes, that my income tax filings were up-to-date, etc.). 

I don't think it will cause any problems, as long as the package is organized and each separate year is clearly stapled or somehow attached together. Keep a list of everything you included in each couriered envelope. I really believe this would be sufficient.

Don't forget to write to your MP and to Jim Flaherty, the Minister of Finance, to encourage them to do what is necessary to stop this madness!


----------



## Bevdeforges

nbhms said:


> I've finally managed to gather together as much info as I can for backfiling forms 8891 and FBAR etc. FBAR I'm sending as a bundle with a cover letter explaining the late filing, as it's instructions specify.
> 
> My question is on backfiling multiple years of 1040 and 1040x. I've seen (might have even been this thread somewhere) people say when backfiling multiple years of 1040 to send in each year in a seperate envelope, for tracking and to make sure it doesn't get overlooked when bundled in with other years. This makes sense to me, but I'm wondering where each of my backfilings contains 2555 and 8891 forms, each which reference a previous year, could that cause problems if they arrive at or get processed at the IRS out of order? Does anyone know if they check that previuos year filing automatically when processing to see if it's there, and if it will cause problems if the year they are checking is in their "inbox" but hasn't been processed yet, or if that's just something that gets recorded for later reference?
> 
> Can't decide if I should send in all 1040s and 1040x's seperate, or bundle them all together and add a cover letter similar to the FBAR stating I was unaware of the 8891 requirement, all these backfiles are to simply cover that requirement, and no values changed, no amounts were ever owed.
> 
> Am I overthinking this?
> 
> nbhms


You're overthinking this. And you're giving the IRS credit for being far more organized than they are.

Send in the 1040's separately as they request. Basically, they log them in and then enter them in their computer system. That takes a while - and they won't bother to do any cross checking until well after the fact, if at all. As long as you owe nothing, and have nothing "peculiar" on your filing, they really have no need to invest much time on your forms.
Cheers,
Bev


----------



## Guest

Bevdeforges said:


> You're overthinking this. And you're giving the IRS credit for being far more organized than they are.
> 
> Send in the 1040's separately as they request. Basically, they log them in and then enter them in their computer system. That takes a while - and they won't bother to do any cross checking until well after the fact, if at all. As long as you owe nothing, and have nothing "peculiar" on your filing, they really have no need to invest much time on your forms.
> Cheers,
> Bev


Hi Bev,

I'm overthinking, too, but do you think I made a mistake sending everything in one package even though each separate filing was clearly organized and put together? I guess I'm very paranoid about this, and should just get over it, but I have so little to begin with and am scared of losing it to this money grab.


----------



## Bevdeforges

CanadianAtHeart said:


> Hi Bev,
> 
> I'm overthinking, too, but do you think I made a mistake sending everything in one package even though each separate filing was clearly organized and put together? I guess I'm very paranoid about this, and should just get over it, but I have so little to begin with and am scared of losing it to this money grab.


I admit I'm a little rushed this afternoon, so haven't looked up what the instructions say to do. Then again, if it said to send each year's return separately and you sent them all in a bunch, you're hardly the first person to ever have done that. They'll live.

Chances are, you'll hear nothing from them, which means everything is just fine. If they have questions on what you filed, they'll be in touch. 

But just to calm everyone down, they WILL contact you first with questions, if they have any, long before they come knocking down your door in the middle of the night to haul you away!
Cheers,
Bev


----------



## Guest

Bevdeforges said:


> I admit I'm a little rushed this afternoon, so haven't looked up what the instructions say to do. Then again, if it said to send each year's return separately and you sent them all in a bunch, you're hardly the first person to ever have done that. They'll live.
> 
> Chances are, you'll hear nothing from them, which means everything is just fine. If they have questions on what you filed, they'll be in touch.
> 
> But just to calm everyone down, they WILL contact you first with questions, if they have any, long before they come knocking down your door in the middle of the night to haul you away!
> Cheers,
> Bev


Hey Bev,

I think you could write a book on this and include a chapter on how to keep your wits about you when things seem so bleak!! I would certainly buy a ton of them, one for myself and several for a bunch of people I know who are in the same circumstances as me! Many thanks to you!


----------



## Pathologic1

I've read many places that the IRS doesn't want staples on anything.

I sent in 24 returns and 33 FBARS. I was advised to put each individual FBAR and rReturn in a separate envelope. I put all the envelopes in a larger mailer and off it went.

I was also told that I shouldn't attach any explanation to the tax returns and that it seemed to make little difference if one is attached to the FBARs but I did anyway. It merely said I was unaware of this obligation until recently.

But as Bevdeforges said it probably doesn't matter. 



nbhms said:


> I've finally managed to gather together as much info as I can for backfiling forms 8891 and FBAR etc. FBAR I'm sending as a bundle with a cover letter explaining the late filing, as it's instructions specify.
> 
> My question is on backfiling multiple years of 1040 and 1040x. I've seen (might have even been this thread somewhere) people say when backfiling multiple years of 1040 to send in each year in a seperate envelope, for tracking and to make sure it doesn't get overlooked when bundled in with other years. This makes sense to me, but I'm wondering where each of my backfilings contains 2555 and 8891 forms, each which reference a previous year, could that cause problems if they arrive at or get processed at the IRS out of order? Does anyone know if they check that previuos year filing automatically when processing to see if it's there, and if it will cause problems if the year they are checking is in their "inbox" but hasn't been processed yet, or if that's just something that gets recorded for later reference?
> 
> Can't decide if I should send in all 1040s and 1040x's seperate, or bundle them all together and add a cover letter similar to the FBAR stating I was unaware of the 8891 requirement, all these backfiles are to simply cover that requirement, and no values changed, no amounts were ever owed.
> 
> Am I overthinking this?
> 
> nbhms


----------



## TO_andrew

*In the end...*

In the end, I would be impossible to for the IRS to collect any fines or levies if the person does not have assets in the US.

IRS agents have a collection quota. Chasing after someone with little chance of paying will hurt their collection numbers.

If the CRA won't help the IRS collect, not much chance of it happening. 

Plus, I think someone could go to the press and do "the little guy being stomped on by big government gone awry" angel.


----------



## AmTaker

Pathologic1 said:


> I've read many places that the IRS doesn't want staples on anything.
> 
> I sent in 24 returns and 33 FBARS. I was advised to put each individual FBAR and rReturn in a separate envelope. I put all the envelopes in a larger mailer and off it went.
> 
> I was also told that I shouldn't attach any explanation to the tax returns and that it seemed to make little difference if one is attached to the FBARs but I did anyway. It merely said I was unaware of this obligation until recently.
> 
> But as Bevdeforges said it probably doesn't matter.


I read a tax preparer (based in the UK, I think) saying on a forum that she had some sort of magic 20 point letter that she attached to all FBARs and that ensured that no penalties would be assessed by the IRS. Snake Oil salesmen and women everywhere !! I don't think anything should be required other than a brief note attached to the FBARs explaining expat status, that little or no tax is due, you were unaware of filing reqs.


----------



## Nursiegirl

CanadianAtHeart said:


> Hi Bev,
> 
> I'm overthinking, too, but do you think I made a mistake sending everything in one package even though each separate filing was clearly organized and put together? I guess I'm very paranoid about this, and should just get over it, but I have so little to begin with and am scared of losing it to this money grab.


I am just as paranoid about all this as you. It's so nice to hear everyone and their opinions on this. I am terrified of losing all the "little" things I have aquired in my lifespan due to the fact I havent filed a few papers to the IRS even though I owe them nothing.

We should all keep each other posted on what we hear back and the outcomes. Perhaps we can then all load up a plane and move to Cuba  lane:

Just a side note: My letters I have made to the IRS to go with my FBARs and 1040's are a page in length explaining how I didnt owe, never knew I had to file and pretty much begging for forgiveness in a professional manner. I know its probably overboard, but who knows, it may help.
I have wrote letters to my local MP and Minister of Finance.


----------



## Ladyhawk

*Cuba?*



Nursiegirl said:


> We should all keep each other posted on what we hear back and the outcomes. Perhaps we can then all load up a plane and move to Cuba  lane:


Yeah, no tax problems in Cuba - no one's allowed to own anything!:tongue1:


----------



## Bevdeforges

Ladyhawk said:


> Yeah, no tax problems in Cuba - no one's allowed to own anything!:tongue1:


Careful - that's changing. Was just reading an article saying that Raoul is allowing certain "private businesses" and that the first thing mentioned after that was establishing a tax system so the government can benefit.

There's a reason they say the only sure things in this life are death and taxes.
Cheers,
Bev


----------



## AmTaker

Nursiegirl said:


> I am just as paranoid about all this as you. It's so nice to hear everyone and their opinions on this. I am terrified of losing all the "little" things I have aquired in my lifespan due to the fact I havent filed a few papers to the IRS even though I owe them nothing.
> 
> We should all keep each other posted on what we hear back and the outcomes. Perhaps we can then all load up a plane and move to Cuba  lane:
> 
> Just a side note: My letters I have made to the IRS to go with my FBARs and 1040's are a page in length explaining how I didnt owe, never knew I had to file and pretty much begging for forgiveness in a professional manner. I know its probably overboard, but who knows, it may help.
> I have wrote letters to my local MP and Minister of Finance.


I would be astonished if any Canadian expat who was not a genuine tax evader (accounts in third countries) or had some large amount of tax due (should not happen) faced any problem at all. I've come to conclusion that the panic is being overdone (maybe by cross border preparers who are seeing one of the biggest booms in years).


----------



## Guest

AmTaker said:


> I would be astonished if any Canadian expat who was not a genuine tax evader (accounts in third countries) or had some large amount of tax due (should not happen) faced any problem at all. I've come to conclusion that the panic is being overdone (maybe by cross border preparers who are seeing one of the biggest booms in years).


Hi Nursiegirl & Amtaker & all,

I will definitely continue to read the posts here and to post any significant info that might come my way. This forum is a HUGE place of comfort (and not just because 'misery loves company' ) and a lot of relevant information. I've sent the link out to many, many people and all have been grateful that such a site exists.

We have definitely been helped along in the panic department by tax pros, accountants, and lawyers. While we head into the 'wait and see' mode, we still need to stay vigilant! I'm not a psychic, but I see happier and calmer days ahead.


----------



## Nursiegirl

Ladyhawk said:


> Yeah, no tax problems in Cuba - no one's allowed to own anything!:tongue1:


LOL...Yha, we can discouver our own island around there with no US connections and call it Expat Island.:clap2:


----------



## Nursiegirl

CanadianAtHeart said:


> Hi Nursiegirl & Amtaker & all,
> 
> I will definitely continue to read the posts here and to post any significant info that might come my way. This forum is a HUGE place of comfort (and not just because 'misery loves company' ) and a lot of relevant information. I've sent the link out to many, many people and all have been grateful that such a site exists.
> 
> We have definitely been helped along in the panic department by tax pros, accountants, and lawyers. While we head into the 'wait and see' mode, we still need to stay vigilant! I'm not a psychic, but I see happier and calmer days ahead.


**GULP**** I officially sent my packages off today to the IRS. Its a scary feeling, like theres no turning back now. I hope everything goes well for all of us, lets keep our fingers crossed. It will be hard to know when a true sigh of relief can be breathed. Is it 1 month, 6 months or 6 years........sigh


----------



## Nursiegirl

Bevdeforges said:


> Careful - that's changing. Was just reading an article saying that Raoul is allowing certain "private businesses" and that the first thing mentioned after that was establishing a tax system so the government can benefit.
> 
> There's a reason they say the only sure things in this life are death and taxes.
> Cheers,
> Bev


HA HA....Well LadyHawk, so much for that idea. Guess it's on to the discovery of a new remote island for all us unwillful tax evaders.


----------



## Peg

Thank you to all of the posters here for the amazing information! It is the first time in the past month that I feel comfortable with the situation.

Would appreciate input on my situation. I would like to formally renounce as I thought I had 20 years ago and want to do the paperwork needed. I filed under OVDI in a panic but think I should opt out - have always paid all of my taxes in Canada. In the past 8 years I have total income always under $35k; two years it included RRSP withdrawals under $25k and a few years with self-employed earnings under $3k (it was a hobby that got some income). Don't have investment income as it is all within RRSPs. I lost track of how to record the RESP - it is about $11k.

I would do the FBARs as well. Under quiet disclosure, I would do 5 years of each form to then be able to renounce being "clean with the IRS". With the RRSP income and self-employed earnings do I still complete the same 1040 plus either a 1116 or 2555? And the 8891? 

The simplest question hopefully: where do I find the forms? I've not had success finding the old ones.

On a side note, has anyone else dreamt of the IRS guys knocking at your door??


----------



## Nononymous

Peg said:


> Thank you to all of the posters here for the amazing information! It is the first time in the past month that I feel comfortable with the situation.
> 
> Would appreciate input on my situation. I would like to formally renounce as I thought I had 20 years ago and want to do the paperwork needed. I filed under OVDI in a panic but think I should opt out - have always paid all of my taxes in Canada. In the past 8 years I have total income always under $35k; two years it included RRSP withdrawals under $25k and a few years with self-employed earnings under $3k (it was a hobby that got some income). Don't have investment income as it is all within RRSPs. I lost track of how to record the RESP - it is about $11k.
> 
> I would do the FBARs as well. Under quiet disclosure, I would do 5 years of each form to then be able to renounce being "clean with the IRS". With the RRSP income and self-employed earnings do I still complete the same 1040 plus either a 1116 or 2555? And the 8891?
> 
> The simplest question hopefully: where do I find the forms? I've not had success finding the old ones.
> 
> On a side note, has anyone else dreamt of the IRS guys knocking at your door??


I would think you are absolutely NOT a candidate for OVDI, and would get back out of that.

Just to keep people posted, I rather impulsively decided to renounce* so contacted the US consulate (in Calgary) and have an appointment set up in three weeks' time. I haven't done a thing on the taxes - I want to hear from them whether I need all the tax forms completed first or if things can proceed in parallel. I'm planning a quick-and-dirty DIY on the tax forms, might even include copies of those nice confirmation statements we get up here in civilized Canada - the key I figure isn't to get the numbers right down to the cent, but to prove I don't owe. Since my net worth is under $2 million (no surprise there) I don't have an "exit tax" issue.

* Big issue for me, other than risks to future inheritance, is simply the principle of having to report bank balances (joint with my non-US spouse no less) for the rest of my days. But I'm willing to reconsider renouncing if FBAR/FATCA are modified in reaction to international pressure - unlikely but possible.


----------



## AmTaker

Peg said:


> Thank you to all of the posters here for the amazing information! It is the first time in the past month that I feel comfortable with the situation.
> 
> Would appreciate input on my situation. I would like to formally renounce as I thought I had 20 years ago and want to do the paperwork needed. I filed under OVDI in a panic but think I should opt out - have always paid all of my taxes in Canada. In the past 8 years I have total income always under $35k; two years it included RRSP withdrawals under $25k and a few years with self-employed earnings under $3k (it was a hobby that got some income). Don't have investment income as it is all within RRSPs. I lost track of how to record the RESP - it is about $11k.
> 
> I would do the FBARs as well. Under quiet disclosure, I would do 5 years of each form to then be able to renounce being "clean with the IRS". With the RRSP income and self-employed earnings do I still complete the same 1040 plus either a 1116 or 2555? And the 8891?
> 
> The simplest question hopefully: where do I find the forms? I've not had success finding the old ones.
> 
> On a side note, has anyone else dreamt of the IRS guys knocking at your door??


Yes, you should opt out. I'm not sure the process for that is clear yet, but you should do that. At this point your disclosure isn't really quiet, so you just have to file (not sure if you have to file at the special OVDI place or the regular place). OVDI is largely meant for US residents, who haven't reported Canadian (or other foreign) income. Nothing to be worried about or dream about. 

Old forms should be available on the web. The old FBAR form is not available, but you are supposed to use the newest version anyway.


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## Peg

Nononymous - since I didn't become a Canadian citizen until I was an adult and do have a Social Security # I think I will have to file all the returns and want to get them done. I also won't have Exit Tax.

How long did it take you to get an appointment in Calgary? That is our nearest Consulate but don't know if that is the one that I have to use (from Winnipeg) but since any Consular appointment will be a plane ride I want to have everything in order.


----------



## Peg

Did anyone here file under the OVDI this year and then opt out? Will start searching on how to opt out...


----------



## Nononymous

Peg said:


> Nononymous - since I didn't become a Canadian citizen until I was an adult and do have a Social Security # I think I will have to file all the returns and want to get them done. I also won't have Exit Tax.
> 
> How long did it take you to get an appointment in Calgary? That is our nearest Consulate but don't know if that is the one that I have to use (from Winnipeg) but since any Consular appointment will be a plane ride I want to have everything in order.


First appointment I was offered was 13 October. They only do these for an hour on Thursday afternoons (might change if they get busier). In your case I would ask for some advice - maybe they can do a quick phone call, or help you sort it out with e-mail.


----------



## Nononymous

Peg said:


> Did anyone here file under the OVDI this year and then opt out? Will start searching on how to opt out...


There was a blog post on hodgen dot com, which might be useful.


----------



## Peg

Nononymous said:


> There was a blog post on hodgen dot com, which might be useful.


Thank you - quick check I couldn't find anything there but will read more later. 

Hoping this will copy for anyone else who needs the exchange rates, I took these from the US Federal Reserve - they have daily rates and I just narrowed it down to quarterly:

31-Mar-03	1.4695
30-Jun-03	1.3558
30-Sep-03	1.3507
31-Dec-03	1.2923
31-Mar-04	1.31
30-Jun-04	1.3407
30-Sep-04	1.2648
31-Dec-04	1.2034
31-Mar-05	1.2094
30-Jun-05	1.2256
30-Sep-05	1.1607
30-Dec-05	1.1656
31-Mar-06	1.167
30-Jun-06	1.115
29-Sep-06	1.1151
29-Dec-06	1.1652
30-Mar-07	1.153
29-Jun-07	1.0634
28-Sep-07	0.9959
31-Dec-07	0.9881
31-Mar-08	1.0275
30-Jun-08	1.0185
30-Sep-08	1.0597
31-Dec-08	1.224
31-Mar-09	1.2606
30-Jun-09	1.1626
30-Sep-09	1.0719
31-Dec-09	1.0461
31-Mar-10	1.0156
30-Jun-10	1.0606
30-Sep-10	1.0293
30-Dec-10	1.0009


----------



## Ladyhawk

AmTaker said:


> Old forms should be available on the web. The old FBAR form is not available, but you are supposed to use the newest version anyway.


I can't find any old forms either, but at least for the FBAR,( and this would apply to any of the forms, ) what's important are the old _instructions, _ because the laws change on these things. If the law has changed to be less favorable now than in previous years, you'd want to be sure to file previous years under previous requirements.
If all else fails, use the current forms and the current instructions when filing previous years, and let them tell you if you got it wrong. Maybe a cover letter explaining what you did and why, would show then you are doing your best to comply.


----------



## Arlington

Nursiegirl said:


> **GULP**** I officially sent my packages off today to the IRS. Its a scary feeling, like theres no turning back now. I hope everything goes well for all of us, lets keep our fingers crossed. It will be hard to know when a true sigh of relief can be breathed. Is it 1 month, 6 months or 6 years........sigh


I wasn't scared when I sent it off . . just relieved. I continue to read this site and have had a few twinges (oh . .I didn't send each year separately, oh . . I think I used staples, oh . . I didn't attach my dog ate my homework letter to each year, oh . . .well). I did the best I could.

My biggest issue now is trying to get social security numbers for our three sons. It doesn't look easy . . .plus it's going to cost a lot of money for certified documents, notarized documents and travel. Hardly fair to make our children Americans, require them to file taxes and then make it expensive and difficult to get a social security number. Argghh . .


----------



## Arlington

Ladyhawk said:


> I can't find any old forms either, but at least for the FBAR,( and this would apply to any of the forms, ) what's important are the old _instructions, _ because the laws change on these things. If the law has changed to be less favorable now than in previous years, you'd want to be sure to file previous years under previous requirements.
> If all else fails, use the current forms and the current instructions when filing previous years, and let them tell you if you got it wrong. Maybe a cover letter explaining what you did and why, would show then you are doing your best to comply.


As Bev has pointed out before, the IRS has prior year forms on its site. Google "IRS previous year forms" or "IRS prior year forms". It matters because the exemption amount on 2555 changes each year.


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## Saskslam

*As if I didn't have enough to worry about...*

So I mailed both my tax forms and FBARs on the same day from Canada Post in Saskatchewan (August 31). I sent everything by Registered Mail as I wanted some assurance that it gets there (tracking online) - and signature required.

The tax forms arrived in the US on Sept 6 and were delivered (signed for) on Sept 12 (that was in Austin Texas).

The FBARs (going to Detroit) entered the US on the same day Sept 6 - and thats the last tracking info I have - there is no indication they have been delivered. They are in limbo. Are they in a giant bag of FBARs in Detroit - or are they lost on some sorting room floor???

How long do I wait?


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## Arlington

Ignorance no longer an excuse: Americans in Canada must file taxes to Uncle Sam

Read it on Global News: Global News | Ignorance no longer an excuse: Americans in Canada must file taxes to Uncle Sam 


Be sure to read to the end for this quote:


But Americans who were honestly unaware of the rules stand a chance of being granted leniency — as long as they make a written plea of their ignorance. 

There is a risk the IRS could assess penalties, but it is remote.

"In my professional experience, they have been lenient. I've never seen a situation where they have imposed a penalty for people who willingly come forward," Ritchie said.


----------



## Vangrrl

I hope your Calgary consulate is friendlier than the folks here in Vancouver. A bunch of cranky-pants run that place. I keep thinking "You are a diplomat in _Vancouver_ - that's about as cushy a posting as you could get!" :confused2: One of those ladies definitely needs to be sent to the newly re-opened US consulate in Libya....

My accountant just sent back my draft returns. He used the old FBAR for 2007 (which just requires you to check off a range for your bank account value) and then the new form for the subsequent years. 

There's no reason to claim any additional deductions if you are at "$0 taxes owing", correct? I had noticed he didn't claim my mortgage interest although I had given him the amount. I'll check with him in any case.


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## Ladyhawk

Arlington said:


> Ignorance no longer an excuse: Americans in Canada must file taxes to Uncle Sam
> 
> Read it on Global News: Global News | Ignorance no longer an excuse: Americans in Canada must file taxes to Uncle Sam
> 
> 
> Be sure to read to the end for this quote:
> 
> 
> But Americans who were honestly unaware of the rules stand a chance of being granted leniency — as long as they make a written plea of their ignorance.
> 
> There is a risk the IRS could assess penalties, but it is remote.
> 
> "In my professional experience, they have been lenient. I've never seen a situation where they have imposed a penalty for people who willingly come forward," Ritchie said.


Can you give the URL? Can't find it


----------



## Nursiegirl

Arlington said:


> I wasn't scared when I sent it off . . just relieved. I continue to read this site and have had a few twinges (oh . .I didn't send each year separately, oh . . I think I used staples, oh . . I didn't attach my dog ate my homework letter to each year, oh . . .well). I did the best I could.
> 
> My biggest issue now is trying to get social security numbers for our three sons. It doesn't look easy . . .plus it's going to cost a lot of money for certified documents, notarized documents and travel. Hardly fair to make our children Americans, require them to file taxes and then make it expensive and difficult to get a social security number. Argghh . .


That is frustrating for sure. I need to look into my children next and find out if they are in fact Dual as well and work on getting them straightened out. Thankfully my kids are 12 and 8 so they have had no obligations to report yet. I do not want them going through this same nonsense later on in life.
I cannot help but worry of what will come, I find myself just like you and many others, second guessing....Did I mail them in the right envelopes to the right addresses, I didnt use staples, but i mailed them all in one envelope, one to FBAR palace and one to the tax return address with only one plea letter for the whole bunch. Who knows, its just scary!
I will be working on renouncing my citizenship within the next two years after I have 5 years filed. To me, paying for tax returns to the US yearly for no reason is a waste of my time and money. I dont want to watch every penny for the rest of my life, worried the IRS will take 50% of it, or at least want a piece of it. I'm OK with flying all around them if I have to, Mexico and Carribean climates are much nicer anyway! ha

If anyone is going through the Vancouver,BC embassy to renounce, can they please post what they have found to be the waiting times and days of week etc. I am from way Northern BC, so I would have to fly there. Just wondering if its a one day thing, done deal or they need to see us more then once to get same response, BYE!


----------



## Arlington

Ladyhawk said:


> Can you give the URL? Can't find it


Global BC | Ignorance no longer an excuse: Americans in Canada must file taxes to Uncle Sam


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## Bevdeforges

AmTaker said:


> Yes, you should opt out. I'm not sure the process for that is clear yet, but you should do that. At this point your disclosure isn't really quiet, so you just have to file (not sure if you have to file at the special OVDI place or the regular place). OVDI is largely meant for US residents, who haven't reported Canadian (or other foreign) income. Nothing to be worried about or dream about.
> 
> Old forms should be available on the web. The old FBAR form is not available, but you are supposed to use the newest version anyway.


All IRS forms (including the back year forms) are on the IRS website (Internal Revenue Service) under the heading "Forms and Publications" - including the FBAR form TD F 90-22.1. The FBAR form is an "open date" form where you just fill in the year you're filing. The other income tax forms vary year to year, so be sure to get the correct year's form.
Cheers,
Bev


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## Pathologic1

I like to think they are just tired of the overwhelming number of calls from people wanting to renounce...

But again since we are on this topic again this is THE spot for all you renunciation information Site Overview | Renunciation of U.S. Citizenship: A Web Guide




Vangrrl said:


> I hope your Calgary consulate is friendlier than the folks here in Vancouver. A bunch of cranky-pants run that place. I keep thinking "You are a diplomat in _Vancouver_ - that's about as cushy a posting as you could get!" :confused2: One of those ladies definitely needs to be sent to the newly re-opened US consulate in Libya.....


----------



## justbrowsing

Pathologic1 said:


> I like to think they are just tired of the overwhelming number of calls from people wanting to renounce...
> 
> But again since we are on this topic again this is THE spot for all you renunciation information Site Overview | Renunciation of U.S. Citizenship: A Web Guide


I've just started the process through the Toronto consulate. I phone call answered a few questions. When I asked about what to do I had to send an email to their office and they promptly sent back a link to a pdf to complete form 97025. Took about 10 minutes to do and I emailed it back.

When I asked how long the whole process takes I was told it was 'not a priority' for them. I then asked if it would be done by year end and was told it certainly would.

I came across another perspective on this whole renunciation process at http://www.caseyresearch.com/pdfs/20100517_AmericanExpatriationGuide.pdf

Worth reading. If the link is gone just google > american expatriation guide casey < and they will email it to you.


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## Nursiegirl

Pathologic1 said:


> I like to think they are just tired of the overwhelming number of calls from people wanting to renounce...
> 
> But again since we are on this topic again this is THE spot for all you renunciation information Site Overview | Renunciation of U.S. Citizenship: A Web Guide


Wow...Mabey Ill travel to Calgary if they are nicer there. Who needs a crabby pants.


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## Nursiegirl

Saskslam said:


> So I mailed both my tax forms and FBARs on the same day from Canada Post in Saskatchewan (August 31). I sent everything by Registered Mail as I wanted some assurance that it gets there (tracking online) - and signature required.
> 
> The tax forms arrived in the US on Sept 6 and were delivered (signed for) on Sept 12 (that was in Austin Texas).
> 
> The FBARs (going to Detroit) entered the US on the same day Sept 6 - and thats the last tracking info I have - there is no indication they have been delivered. They are in limbo. Are they in a giant bag of FBARs in Detroit - or are they lost on some sorting room floor???
> 
> How long do I wait?


Good question. Mine are on route to Detroit, they will be waiting patiently with yours in that big pile 
Gives us more time to work on those ulcers


----------



## Vangrrl

Pathologic1 said:


> I like to think they are just tired of the overwhelming number of calls from people wanting to renounce...
> 
> But again since we are on this topic again this is THE spot for all you renunciation information Site Overview | Renunciation of U.S. Citizenship: A Web Guide


Nah, this was a few years ago. I can only imagine how much crabbier they've gotten in the mean time. But really, they were perfectly professional, no one should feel they need to avoid the Vancouver consulate.


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## Nursiegirl

This is from the website:
US State Department Services Dual Nationality

Does anyone know what to make of this and what they mean by voluntarily apply? I was born in US, my mom happened to be US and Canadian. We moved together to Canada in 1996 when I was 16, I applied for my birth right of Canadian Citizenship and got it in 1997. DOes that mean I voluntarily gave up citizenship? Kinda sounds like it, but I know its probably wishful thinking.


A U.S. citizen may acquire foreign citizenship by marriage, or a person naturalized as a U.S. citizen may not lose the citizenship of the country of birth.U.S. law does not mention dual nationality or require a person to choose one citizenship or another. Also, a person who is automatically granted another citizenship does not risk losing U.S. citizenship. However, a person who acquires a foreign citizenship by applying for it may lose U.S. citizenship. In order to lose U.S. citizenship, the law requires that the person must apply for the foreign citizenship voluntarily, by free choice, and with the intention to give up U.S. citizenship.


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## Bevdeforges

Nursiegirl said:


> This is from the website:
> US State Department Services Dual Nationality
> 
> Does anyone know what to make of this and what they mean by voluntarily apply? I was born in US, my mom happened to be US and Canadian. We moved together to Canada in 1996 when I was 16, I applied for my birth right of Canadian Citizenship and got it in 1997. DOes that mean I voluntarily gave up citizenship? Kinda sounds like it, but I know its probably wishful thinking.
> 
> 
> A U.S. citizen may acquire foreign citizenship by marriage, or a person naturalized as a U.S. citizen may not lose the citizenship of the country of birth.U.S. law does not mention dual nationality or require a person to choose one citizenship or another. Also, a person who is automatically granted another citizenship does not risk losing U.S. citizenship. However, a person who acquires a foreign citizenship by applying for it may lose U.S. citizenship. In order to lose U.S. citizenship, the law requires that the person must apply for the foreign citizenship voluntarily, by free choice, and with the intention to give up U.S. citizenship.


This is an old law which is still on the books, but is no longer enforced thanks to a Supreme Court ruling in about 1990. The Supreme Court focused on that provision that you can only give up US citizenship if you express the intention to do so - no more taking it away because you applied for another nationality or served in a foreign army or stuff like that. 

They do keep the law on the books and drag it out now and again to kind of "warn" people, but unless there is a big changeover in government and the Supremes get another case to rule on, the only way to lose your US citizenship these days is to make a formal renunciation in front of a Consular official.
Cheers,
Bev


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## Mona Lisa76

AmTaker said:


> I read a tax preparer (based in the UK, I think) saying on a forum that she had some sort of magic 20 point letter that she attached to all FBARs and that ensured that no penalties would be assessed by the IRS. Snake Oil salesmen and women everywhere !! I don't think anything should be required other than a brief note attached to the FBARs explaining expat status, that little or no tax is due, you were unaware of filing reqs.


She's genuine and legit. I'm using her and am confident that she has prepared my amended returns correctly. I'm a US citizen who's been living over 23 years in the UK who was scared into compliance by the recent IRS 'witch hunt'. Sheis quite expensive but had to use someone with her expertise because I had over45 holdings in UK mutual-typefunds which required complicated accounting due to requiring a complex 8621 form for each individual investment holding. I'm an anomoly but wound up having to pay over $11,000 in US taxes due to punitive taxation treatment on pfic 'passive foreign investment companies' (which most Canadian mutual funds probably are).

It's been a terrifying situation and onerous but should have been keeping better abreast of my continuing US tax obligations so have to grit my teeth and deal with it. As I had already been filing but not correctly (only declaring US investments) had to amend declaring my worldwide income. I had mistakingly believed that tax treaties saved me from double taxation but because of my anomalous investing wound up being double taxed. Because I hadn't done anything wrong intentionally, she recommended quiet disclosure and is optimistic I won't be clobbered.

My investments and personal pension were worth in the lower six figure sums so though I am not a minnow am still relatively a small fish since my earned income is well below the foreign earned income exclusion. Foreign tax credits reduced my tax liability but had to still pay US taxes on unrealised gains in the funds which especially sucked because ISAs are tax free over here in UK. C'est la vie :'(


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## Mona Lisa76

Also wanted to point out that she warned me that she couldn't guarantee that I won't be heavily fined but that it's been her experience that IRS aren't clobbering expats filing delinquent fbars (or tax returns) when negligence has been innocent; however, still had to pay all taxes with interest and penalties (not to be confused with fbar fines). She did warn me though that they could well be getting much toughergoing forward though, especially after the 8938 form has to be filed directly with the 1040 from the 2011 tax year (to be filed in 2012 for 2011) Not worth the risks with fatca on its way...


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## Bevdeforges

Mona Lisa76 said:


> Also wanted to point out that she warned me that she couldn't guarantee that I won't be heavily fined but that it's been her experience that IRS aren't clobbering expats filing delinquent fbars (or tax returns) when negligence has been innocent; however, still had to pay all taxes with interest and penalties (not to be confused with fbar fines). She did warn me though that they could well be getting much toughergoing forward though, especially after the 8938 form has to be filed directly with the 1040 from the 2011 tax year (to be filed in 2012 for 2011) Not worth the risks with fatca on its way...


I think your accountant is absolutely right on this one. They haven't ever really gone after American expats ("accidental Americans" or no) for innocent lack of filing unless there is back tax to be collected. And that, in substantial amounts.

The FBAR and FATCA stuff is all designed to sniff out the types of financial accounts and investments that are most likely to be used to actively hide taxable income.
Cheers,
Bev


----------



## Nursiegirl

Bevdeforges said:


> I think your accountant is absolutely right on this one. They haven't ever really gone after American expats ("accidental Americans" or no) for innocent lack of filing unless there is back tax to be collected. And that, in substantial amounts.
> 
> The FBAR and FATCA stuff is all designed to sniff out the types of financial accounts and investments that are most likely to be used to actively hide taxable income.
> Cheers,
> Bev


When you state (Not to be confused with FBAR fines), has anyone heard they are going after the small "accounts" and investments yet?


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## Pathologic1

This 20 point letter thing is nonsense.
The accounting firm I dealt with said that in the thousands of FBARs they have filed, it made no difference if there was any explanation letter attached or not. I think a simple statement like I was unaware is fine. 
There simply is no evidence that the letter makes any difference, especially a magic 20 point letter.


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## TO_andrew

*Tax Simplification*

After filling out all the forms to get "caught up" with my taxes. It is high time that both the US and Canada move to a policy of tax simplification. The tax credit and tax deductions. Specialized forms and addendum or statements or schedules is ridiculous.


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## Mona Lisa76

Pathologic1 said:


> This 20 point letter thing is nonsense.
> The accounting firm I dealt with said that in the thousands of FBARs they have filed, it made no difference if there was any explanation letter attached or not. I think a simple statement like I was unaware is fine.
> There simply is no evidence that the letter makes any difference, especially a magic 20 point letter.


I agree for simple cases but because I had invested in close to 50 different UK-based funds, she had to use the complicated 8621 forms to determine how much US taxes I owed. Because she had to go back six years she was able to decide just to amend three back years (along with 2010). However, she had to explain to the IRS that 2003 through 2006 also resulted in taxes owed, though very small amounts, she was thus able to request if it was sufficient just to amend the threepast years. If I had owed a very large amount, especially over all the years, she would have had to forward me onto a tax attorney who would have probably had to put me through a 'loud' voluntary disclosure even if not the full-fledged ovdi which would have cost me over half my lifetime savings after also taking into account professional accounting and legal fees, the 5% or even 25% penalty on my highest aggregate balance since 2003, all the attending taxes, interest and relatednegligence penalties, etc.

My guess is that they will be merciful with quiet disclosures now but will be much more draconian if expats fail to report all their foreign assets on the upcoming 'son of fbar' 8938 form, which willbe coming out in November and due on 1040s from the 2011 tax year onwards...thus any failure to overtly list out one's accounts and assets could be deemed willful....it will thus be far easier for the IRS to then subsequently directly enforce civilian penalties against filers who withhold this information on their tax returns. 

So while the fbar is the bark, the upcoming 8938 will be the bite. (but only will need to be filed if you have assets over $50,000.) 

I also think it looks worse to have filed incomplete us returns like i unwittingly did then not to have filed at all, especially those of you who have been based in Canada since childhood.

One concillation was that because I had over 25 accounts, I was able to file a simplified fbar just listing the number of accounts. However, I'd imagine this could increase my risk of being audited. My four years' of returns totalled over 580 pages due to all the obscure forms attached!!!


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## Mona Lisa76

Nursiegirl said:


> When you state (Not to be confused with FBAR fines), has anyone heard they are going after the small "accounts" and investments yet?


An insider at the IRS told my adviser that they are currently only really after the big fish (guessing at least $500,000 in assets)i and actual tax cheats rather then genuine expats. They are using fear tactics to get people like us so frightened that we will comply. I actually think they'dbe dusmayed with all the people who want to renounce over this....the us has a tendency to talk really tough but are usually quite undestanding when someone honestly made a mistake.

I may be angry about the stress I've been through but if I had gotten decent tax advice when I moved to England in my early 20s, I could have avoided the mess I created; because I've spent all my adulthood here in the UK, I understand its systems better than America's. However, I should still have made the effort to learn my US obligations, as I chose to move to the UK. 

So while I don't feel I should face onerous fines, I nonethless have to bear up and pay my taxes I unwittingky accrued. It is harsh though in that the US is the only major Western country that taxes uts citizens regardless of where the live. 

On the other hand, if you have spent your whole life in Canada, they have to understand why you might be completely unaware.

All I can say is that I hope that fatca will be repealed or at least heavily modified, especially for countries like the UK and Canada which are not tax havens.

I feel extremely angry with all the attorneys who essentially duped terrified immigrants (of modest means)into the ovdi who will in many cases be disproprotionally penalized. Hope they can live with all the havoc they will have caused these desperate souls


----------



## AmTaker

Mona Lisa76 said:


> She's genuine and legit. I'm using her and am confident that she has prepared my amended returns correctly. I'm a US citizen who's been living over 23 years in the UK who was scared into compliance by the recent IRS 'witch hunt'. Sheis quite expensive but had to use someone with her expertise because I had over45 holdings in UK mutual-typefunds which required complicated accounting due to requiring a complex 8621 form for each individual investment holding. I'm an anomoly but wound up having to pay over $11,000 in US taxes due to punitive taxation treatment on pfic 'passive foreign investment companies' (which most Canadian mutual funds probably are).
> 
> It's been a terrifying situation and onerous but should have been keeping better abreast of my continuing US tax obligations so have to grit my teeth and deal with it. As I had already been filing but not correctly (only declaring US investments) had to amend declaring my worldwide income. I had mistakingly believed that tax treaties saved me from double taxation but because of my anomalous investing wound up being double taxed. Because I hadn't done anything wrong intentionally, she recommended quiet disclosure and is optimistic I won't be clobbered.
> 
> My investments and personal pension were worth in the lower six figure sums so though I am not a minnow am still relatively a small fish since my earned income is well below the foreign earned income exclusion. Foreign tax credits reduced my tax liability but had to still pay US taxes on unrealised gains in the funds which especially sucked because ISAs are tax free over here in UK. C'est la vie :'(


Pretty much any non US based mutual fund is a 'PFIC'. Never invest in a 'foreign' mutual fund or anything that could be considered a mutual fund (with a few exceptions tailored specifically for Americans). 

I'm not very familiar with UK pensions/retirement accounts, but only 'personal' accounts have to be reported, and are generally taxed. A conventional pension may not be taxed in the US at all if you're UK resident (depends on tax treaty). 

I wasn't commenting on the expertise of the tax professional in concern, just expressing my disdain that some sort of magical 20 point letter guarantees no FBAR penalties. In the past, even a big time tax evader could likely have got off with no penalties through tax disclosure. Even today, if someone is a long term expat in a non tax haven country with little to no US source income (although I suppose you had some since you said you filed US taxes), the possibility of a penalty is remote.


----------



## AmTaker

Mona Lisa said:


> My guess is that they will be merciful with quiet disclosures now but will be much more draconian if expats fail to report all their foreign assets on the upcoming 'son of fbar' 8938 form, which willbe coming out in November and due on 1040s from the 2011 tax year onwards...thus any failure to overtly list out one's accounts and assets could be deemed willful....it will thus be far easier for the IRS to then subsequently directly enforce civilian penalties against filers who withhold this information on their tax returns.
> 
> So while the fbar is the bark, the upcoming 8938 will be the bite. (but only will need to be filed if you have assets over $50,000.)
> 
> I also think it looks worse to have filed incomplete us returns like i unwittingly did then not to have filed at all, especially those of you who have been based in Canada since childhood.


 
I've heard too that its worse to have filed incomplete US returns (although if you didn't fill in a Schedule B question about foreign accounts incorrectly, its probably the same). Plus, I gather your only taxes due were on the phantom income in PFICs, and on retirement accounts, so likely not a big deal.


----------



## AmTaker

Pathologic1 said:


> This 20 point letter thing is nonsense.
> The accounting firm I dealt with said that in the thousands of FBARs they have filed, it made no difference if there was any explanation letter attached or not. I think a simple statement like I was unaware is fine.
> There simply is no evidence that the letter makes any difference, especially a magic 20 point letter.


I agree completely. [Especially in the past, pretty much any late FBAR would be taken since this law was not really enforced -- in which case, it would make no difference whether you attached no letter, attached a 20 point letter, or a 1000 point letter. How can anyone tell what points in an n-point letter work, if essentially no penalties were ever assessed ?]. That reminds me of all the awful ads I used to see on American TV years ago promising they could get the IRS to back off, negotiate away tax debts etc etc. 

Basically I think an honest expat with little to no tax due, and little to no US source income has nothing to worry about.


----------



## Mona Lisa76

AmTaker said:


> I've heard too that its worse to have filed incomplete US returns (although if you didn't fill in a Schedule B question about foreign accounts incorrectly, its probably the same). Plus, I gather your only taxes due were on the phantom income in PFICs, and on retirement accounts, so likely not a big deal.


 Reassuring to hear but it still feels as though I'm getting harshly taxed by the US when I legitimately live and work in the uK (and even have dual citizenship) but can't take advantage of tax free investments such as ISAs, plus PFIC taxation is onerous. Even without being clobbered, I will have had to pay close to $15,000 in US taxes plus another $15,000 to my accountant (due to having to file several years of amended returns & the large number of pfic s) and another $4,000 to a US finsncial advisor to switch into dual US/UK compliant investments. 

I will also have had to shell out approx. another $10,000 to pay for complex UK tax returns and UK taxes on my US mutual funds....This whole ordeal will have set me back about $50,000 - $60,000 in total merely due to inadvertent lack of tax planning...had naively thought that tax treaties would protect me from all this double jeapordy nonsense. It seems as though I'm really being screwed, especially as I am not rich by any means.


----------



## Mona Lisa76

AmTaker said:


> I agree completely. [Especially in the past, pretty much any late FBAR would be taken since this law was not really enforced -- in which case, it would make no difference whether you attached no letter, attached a 20 point letter, or a 1000 point letter. How can anyone tell what points in an n-point letter work, if essentially no penalties were ever assessed ?]. That reminds me of all the awful ads I used to see on American TV years ago promising they could get the IRS to back off, negotiate away tax debts etc etc.
> 
> Basically I think an honest expat with little to no tax due, and little to no US source income has nothing to worry about.


Perhaps I've been over charged but as all the accoutants acted as though time was of the essence due to the looming deadlines for the amnesty, I felt rushed into using my present accountant (enrolled agent) especiallybecause a couple others weren't willing to do the large volume of 8621s for the pfics I'd stupidly picked up, plus the others would have been even more expensive...I felt desperate. The whole situation stinks, especially as the phantom gains from the UK funds will extend my statute of limitstions to six years (as these phantom gains meant I unintentionally underreported my total UK and thus foreign income by over 25%) which thus forces me to stick with her till I'm in the clear. My tax returns for each year were over 140 pages long!!! The four years of returns totalled 580 pages. . Talk about onerous :'(....the ongoing compliance will force to use professional tax preparation for life, me thinks. Bummer. At least she kept me away from the harsh penalties other accountants might havecaused me had they pushedme into ovdi.


----------



## Peg

Mona Lisa76 said:


> My tax returns for each year were over 140 pages long!!! The four years of returns totalled 580 pages. . Talk about onerous :'(


 That is absolutely insane. I've been sharing info with many friends in the USA and they are appalled and embarassed.


----------



## Mona Lisa76

Peg said:


> That is absolutely insane. I've been sharing info with many friends in the USA and they are appalled and embarassed.


Especially when my UK return was only 8 pages :O

At least I doubt if the IRS will want to bother with a full-fledged audit, ploughing through all that,  *lol* It's truly insane


----------



## Guest

*Form 3520 & Form 3520A Nightmare*

Well, I thought that I had made some peace for myself with all the reporting until I read an article over the weekend about the Tax-Free Savings Accounts. Despite all the good info on this site and some others, I failed to file this horrible form with my 2009 and 2010 returns (though I did send in F-Bars for it). The interest income earned would not make a difference in whether or not I owe, however, that doesn't seem to matter. So, I thought I would get the forms and file them as amendments to my 2009 & 2010 taxes and send copies (as they may or may not request - the IRS isn't clear on that) to the International Accounts reporting centre in Philadelphia, PA. I started this morning to fill them out and almost immediately hit a wall with these forms. I am fairly well-educated and patient, however these forms and their instructions would boggle a Philadelphia lawyer (so-to-speak). I had no choice but to call the IRS international call centre to ask for help. After being passed around for approximately 30 minutes with no one able to help me and one agent telling me (I am quoting this) "this is a form we don't get involved with because it is too complicated" I gave up literally in tears. 

I have a TFSA that I opened in late December 2009, made no interest for 2009, and minimal for 2010. How in the world do I report this on these forms? Is there anyway to fill them in so that I do minimal damage to myself? I know the penalties for no filing are once again incredibly stiff, probably at least half of the value. 

Here are some questions, if anyone has any insights:
1) What am I on this form? An U.S. transferor? I didn't receive anything from the TFSA in 2009. But, then in 2010 am I both a U.S. transferor and a U.S.person who received a distribution? 
2) Part I - I didn't receive anything from the TFSA during 2009, but it seems like they want us to fill this part out anyway.
3) I have no idea what "Schedule" (A, B, or C) to fill out.

Any opinions or comments or experience would be so appreciated. I wish I could afford a good tax lawyer or accountant, but even these people seem to be confused on this issue. And I can't afford one anyway.

Is it a good idea to just fill this form out to the best of my knowledge, given their instructions and hope for the best? I see a lot of comments about forms not filled out correctly being a huge "no-no". But, if the IRS "doesn't get involved because this form is too complicated", what chance do I have?

Thank you all again for your patience, wisdom, and companionship on this site.


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## Ladyhawk

This whole thing is getting ridiculous. If the IRS wants these forms filled out properly and they want compliance, it's their responsibility to make it clear to the tax filers. Yes, I know they are powerful and scary. But when tax lawyers and accountants can't agree on what is correct, we have no chance.

There are surely thousands of people IN the US who file their forms incorrectly. I don't believe the IRS goes after every one. I suspect I've made mistakes on some of my forms, but if it's worse to file incorrectly than not at all, this means that any mistake will get you in trouble. I don't believe this.

I will file my back tax forms and Fbars as best I can. If the IRS says I did it wrong or asks for more info, I'll give it to them and explain that I made a mistake. They cannot possibly prosecute everyone who incorrectly files.

If the IRS itself says they don't get involved with the 3520, report your TFSA on some other form and be done with it.


----------



## Mona Lisa76

CanadianAtHeart said:


> Well, I thought that I had made some peace for myself with all the reporting until I read an article over the weekend about the Tax-Free Savings Accounts. Despite all the good info on this site and some others, I failed to file this horrible form with my 2009 and 2010 returns (though I did send in F-Bars for it). The interest income earned would not make a difference in whether or not I owe, however, that doesn't seem to matter. So, I thought I would get the forms and file them as amendments to my 2009 & 2010 taxes and send copies (as they may or may not request - the IRS isn't clear on that) to the International Accounts reporting centre in Philadelphia, PA. I started this morning to fill them out and almost immediately hit a wall with these forms. I am fairly well-educated and patient, however these forms and their instructions would boggle a Philadelphia lawyer (so-to-speak). I had no choice but to call the IRS international call centre to ask for help. After being passed around for approximately 30 minutes with no one able to help me and one agent telling me (I am quoting this) "this is a form we don't get involved with because it is too complicated" I gave up literally in tears.
> 
> I have a TFSA that I opened in late December 2009, made no interest for 2009, and minimal for 2010. How in the world do I report this on these forms? Is there anyway to fill them in so that I do minimal damage to myself? I know the penalties for no filing are once again incredibly stiff, probably at least half of the value.
> 
> Here are some questions, if anyone has any insights:
> 1) What am I on this form? An U.S. transferor? I didn't receive anything from the TFSA in 2009. But, then in 2010 am I both a U.S. transferor and a U.S.person who received a distribution?
> 2) Part I - I didn't receive anything from the TFSA during 2009, but it seems like they want us to fill this part out anyway.
> 3) I have no idea what "Schedule" (A, B, or C) to fill out.
> 
> Any opinions or comments or experience would be so appreciated. I wish I could afford a good tax lawyer or accountant, but even these people seem to be confused on this issue. And I can't afford one anyway.
> 
> Is it a good idea to just fill this form out to the best of my knowledge, given their instructions and hope for the best? I see a lot of comments about forms not filled out correctly being a huge "no-no". But, if the IRS "doesn't get involved because this form is too complicated", what chance do I have?
> 
> Thank you all again for your patience, wisdom, and companionship on this site.


I share your fears because my personal uk stakeholder pension plan may well also require the dreaded 3520 and 3520a forms as it's probably deemed a foreign grantor trust. My accountant charges over 1500 pounds per form and these are the forms she charges the highest fees for. In a worse case scenario I supose I will have to cough up and pay although I would have thought that you could plead a waiver on the set fines due to how onerous they are. I doubt

that the Canadian taxmen woulf enforce such draconian penalties from the iRS since they are metely reporting forms. If all your assets are in Canada, I really doubt if the us would pursue you in a Canadian court; it would cost them too much and would probably cause a diplimatic incident. It would backfire badly on the IRS so doubt if they'd bother you over it. My accountant is also making a treaty claim which should help get me off the hook. Might have been different if yoy had millions in that account, etc.

We really need to make our voices heard against our onerous situation as expats abroad...it's terrifying.


----------



## Guest

Ladyhawk said:


> This whole thing is getting ridiculous. If the IRS wants these forms filled out properly and they want compliance, it's their responsibility to make it clear to the tax filers. Yes, I know they are powerful and scary. But when tax lawyers and accountants can't agree on what is correct, we have no chance.
> 
> There are surely thousands of people IN the US who file their forms incorrectly. I don't believe the IRS goes after every one. I suspect I've made mistakes on some of my forms, but if it's worse to file incorrectly than not at all, this means that any mistake will get you in trouble. I don't believe this.
> 
> I will file my back tax forms and Fbars as best I can. If the IRS says I did it wrong or asks for more info, I'll give it to them and explain that I made a mistake. They cannot possibly prosecute everyone who incorrectly files.
> 
> If the IRS itself says they don't get involved with the 3520, report your TFSA on some other form and be done with it.


Hi Ladyhawk,
I think I've finally come to the same conclusion as you. I've done as much as I can as an individual. I have reported the interest on the TFSA, filed returns, filed 8891's, F-bars, etc. If they have questions, or if something is missing, they will ask (Bev has also kindly pointed this out many times!). I found several information sites that conclude that the TSFA should not be reported any differently than any other savings accounts and that it is not, in fact, a trust of any kind.
At least if they ask me questions, that would indicate to me that the person asking has some appropriate knowledge and then I might be able to get MY questions answered!! I'll make them work for their pay, that's for sure.


----------



## Ladyhawk

CanadianAtHeart said:


> Well, I thought that I had made some peace for myself with all the reporting until I read an article over the weekend about the Tax-Free Savings Accounts. Despite all the good info on this site and some others, I failed to file this horrible form with my 2009 and 2010 returns (though I did send in F-Bars for it). ..... After being passed around for approximately 30 minutes with no one able to help me and one agent telling me (I am quoting this) "this is a form we don't get involved with because it is too complicated" I gave up literally in tears.


By the way, CanadianAtHeart, this form 3520 is becoming notorious for its stupid complexity. It takes several days of continuing education even for accountants to learn how to fill them in, so it's hopeless for the ordinary taxpayer. It is fairly new I think, and it is not a tax collection form, it is a reporting form, so its newness and complexity is making many people just say "Form 3520? Never heard of it." By failing to report on this form, you are not evading taxes, and if you report the existence of your TFSA on another form, and you report any income from it on a tax return, you cannot be accused of hiding anything.


----------



## Guest

Ladyhawk said:


> By the way, CanadianAtHeart, this form 3520 is becoming notorious for its stupid complexity. It takes several days of continuing education even for accountants to learn how to fill them in, so it's hopeless for the ordinary taxpayer. It is fairly new I think, and it is not a tax collection form, it is a reporting form, so its newness and complexity is making many people just say "Form 3520? Never heard of it." By failing to report on this form, you are not evading taxes, and if you report the existence of your TFSA on another form, and you report any income from it on a tax return, you cannot be accused of hiding anything.


I'm in complete agreement with you. I am definitely not hiding anything. Of course, we'll have to wait until the next media blitz to see what else the U.S. may come up with to harass people once they have exhausted the tax topic (this time around). I know renunication will be big on their hit list to make more complicated and frustrating because they will be faced with thousands in the next couple of years. I also know of many Canadian citizens and Canadian Permanent Residents, i.e. snowbirds, ex-Resident Aliens, salespeople who have to visit the U.S. for their companies, entertainers, athletes, who are facing hugely complicated tax filings simply because they had the misfortune to be in the U.S. at some point in their lives.

How about this for future harassment: The U.S. will restart the draft and expats will be required to serve the U.S. military in the country where they are living........

Incredible!


----------



## Fuller1212

CanadianHoosier said:


> I read the article in the National Post in August, "Americans among US" This prompted me to send an email to to the editor, Diane Francis. She is also a US citizen
> 
> I provided my summary:
> 
> Moved to Canada from the US in 1982 to marry a Canadian.
> Lived and worked in Canada for 30 years. Acquired Canadian citizenship in 2003.
> 
> NO source of US income. Have not submitted a US tax return since 1981.
> 
> Submit CDN tax returns every year. I have RRSP's, RESP's and TFSA's.


Glad to hear of a very similar situation. I'm a Canadian, married to a US citizen in 1990 (who became a Canadian citizen in 2003 also), living in Toronto. However, I've been filing my wife's 1040 and form 2555 each year.
However, I have never filed any FBAR, and so I'm worried about income earned within RRSP's and RESP's (some single, some joint); I've only ever reported earned income on the 1040's. Not sure if I should file this now....

To make matters worse, we could be moving back to US in a year, for perhaps the next 10 years!! Pretty hard to keep off the IRS radar once we move there....

Any advice? Close RRSP's and pay tax on them before we move? Do nothing?


----------



## Pathologic1

My advice is like virtually every other expat and accountant I've spoken with, forget that form. I did. And I do not have a simple portfolio. If your net worth is more than 10 million then maybe you should, but if the IRS was going to chase you over that form they are nuts. I can't exactly remember but I think the penalties are about 5% of the account or something and that's usually way cheaper than actually preparing the form. Again they really are looking for wealthy people with large tax haven accounts, not a Canadian with Canadian investments. My accountant didn't even mention the form so as far as I'm concerned I have never heard of that form. Thats my story and I'm sticking to it.

Another ridiculous requirement for 99% of expats from the out of control USA. *This form on its own make renunciation worth while.*




CanadianAtHeart said:


> Well, I thought that I had made some peace for myself with all the reporting until I read an article over the weekend about the Tax-Free Savings Accounts. Despite all the good info on this site and some others, I failed to file this horrible form with my 2009 and 2010 returns (though I did send in F-Bars for it). The interest income earned would not make a difference in whether or not I owe, however, that doesn't seem to matter. So, I thought I would get the forms and file them as amendments to my 2009 & 2010 taxes and send copies (as they may or may not request - the IRS isn't clear on that) to the International Accounts reporting centre in Philadelphia, PA. I started this morning to fill them out and almost immediately hit a wall with these forms. I am fairly well-educated and patient, however these forms and their instructions would boggle a Philadelphia lawyer (so-to-speak). I had no choice but to call the IRS international call centre to ask for help. After being passed around for approximately 30 minutes with no one able to help me and one agent telling me (I am quoting this) "this is a form we don't get involved with because it is too complicated" I gave up literally in tears.
> 
> I have a TFSA that I opened in late December 2009, made no interest for 2009, and minimal for 2010. How in the world do I report this on these forms? Is there anyway to fill them in so that I do minimal damage to myself? I know the penalties for no filing are once again incredibly stiff, probably at least half of the value.
> 
> Here are some questions, if anyone has any insights:
> 1) What am I on this form? An U.S. transferor? I didn't receive anything from the TFSA in 2009. But, then in 2010 am I both a U.S. transferor and a U.S.person who received a distribution?
> 2) Part I - I didn't receive anything from the TFSA during 2009, but it seems like they want us to fill this part out anyway.
> 3) I have no idea what "Schedule" (A, B, or C) to fill out.
> 
> Any opinions or comments or experience would be so appreciated. I wish I could afford a good tax lawyer or accountant, but even these people seem to be confused on this issue. And I can't afford one anyway.
> 
> Is it a good idea to just fill this form out to the best of my knowledge, given their instructions and hope for the best? I see a lot of comments about forms not filled out correctly being a huge "no-no". But, if the IRS "doesn't get involved because this form is too complicated", what chance do I have?
> 
> Thank you all again for your patience, wisdom, and companionship on this site.


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## Pathologic1

Your situation is specifically addressed in FAQ from the IRS (#17). It says if you have been filing and simply didn't know about the FBARs then just submit them and there is no penalty.
I think filing the last 6 years is good. Do NOT amend any tax returns though or alarm bells will ring and you will have problems.
Remember that if you did file the statute of limitations is 3 years for returns so they can't look back any further than that (unless they can prove fraud).



Fuller1212 said:


> Glad to hear of a very similar situation. I'm a Canadian, married to a US citizen in 1990 (who became a Canadian citizen in 2003 also), living in Toronto. However, I've been filing my wife's 1040 and form 2555 each year.
> However, I have never filed any FBAR, and so I'm worried about income earned within RRSP's and RESP's (some single, some joint); I've only ever reported earned income on the 1040's. Not sure if I should file this now....
> 
> To make matters worse, we could be moving back to US in a year, for perhaps the next 10 years!! Pretty hard to keep off the IRS radar once we move there....
> 
> Any advice? Close RRSP's and pay tax on them before we move? Do nothing?


----------



## Pathologic1

And just make sure you file form 8891 to protect your RRSPs. THe RESPs are a different problem and don't do you any good under the US system. Maybe you could transfer it to a grandparent?


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## Fuller1212

Do you feel the same way about the T8891? I have a fair number of RRSP's, RESP's, and have never recorded any accrued income from these accounts.....
Thanks



Pathologic1 said:


> My advice is like virtually every other expat and accountant I've spoken with, forget that form. I did. And I do not have a simple portfolio. If your net worth is more than 10 million then maybe you should, but if the IRS was going to chase you over that form they are nuts. I can't exactly remember but I think the penalties are about 5% of the account or something and that's usually way cheaper than actually preparing the form. Again they really are looking for wealthy people with large tax haven accounts, not a Canadian with Canadian investments. My accountant didn't even mention the form so as far as I'm concerned I have never heard of that form. Thats my story and I'm sticking to it.
> 
> Another ridiculous requirement for 99% of expats from the out of control USA. *This form on its own make renunciation worth while.*


----------



## AmTaker

Pathologic1 said:


> Your situation is specifically addressed in FAQ from the IRS (#17). It says if you have been filing and simply didn't know about the FBARs then just submit them and there is no penalty.
> I think filing the last 6 years is good. Do NOT amend any tax returns though or alarm bells will ring and you will have problems.
> Remember that if you did file the statute of limitations is 3 years for returns so they can't look back any further than that (unless they can prove fraud).


Wait -- shouldn't you fix the question on your Schedule B if you had not originally said that you had a foreign financial account ?


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## AmTaker

Most of the trust reporting requirements were meant to catch people who used complex quasi-legal offshore trusts to avoid estate taxes or to somehow cash out US assets without paying capital gains. Or even (worst case) to hide illegal income offshore. If you have reported all income properly, I see no reason to comply with these onerous rules unless really large sums are involved.


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## Pathologic1

*comforting quote*

_"John Williamson, MP for New Brunswick Southwest, a large riding that hugs the state of Maine, estimates there are "potentially thousands" of his constituents affected.....He described the law as a "bureaucratic needless crackdown" by the U.S. government that will inevitably have a "chilling impact on relations" between the two countries."We don't agree with it, we're not going to help the Americans enforce it and we're going to be working very hard to minimize the impact on Canadians," he said._

telegraphjournal.com - New U.S. tax law threatens savings | Jennifer Pritchett - Breaking News, New Brunswick, Canada


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## Pathologic1

Technically yes but I wouldn't. I'd file the FBARs and be done with it. 

If you owe nothing they aren't going to care about a tic box. Really. 



AmTaker said:


> Wait -- shouldn't you fix the question on your Schedule B if you had not originally said that you had a foreign financial account ?


----------



## Vangrrl

I think that between a 1040 and FBARs, all of my income and assets would be disclosed in one form or another. There is no big discrepancy between one and the other (ie. the amount of money in my accounts is totally reasonable for someone of my age, making my income). If they want more forms from me, they can ask. I'm not going to volunteer to fill out forms that the IRS itself estimates will take "40 hours".

I really think this entire reporting process is going to be scaled down. The IRS doesn't have the resources to process the info its asking for right now, much less provide any guidance on these crazy forms coming down the pipeline. Many tax lawyers/accountans who previously delved in cross-border returns are getting out of the business because they are not getting sufficient guidance from the IRS to do their job properly.


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## AmTaker

Vangrrl said:


> Many tax lawyers/accountans who previously delved in cross-border returns are getting out of the business because they are not getting sufficient guidance from the IRS to do their job properly.


I would have thought its bonanza city for them (at least with filing out returns for people who are not long term expats and do not intend to renounce)


----------



## AmTaker

Mona Lisa76 said:


> Reassuring to hear but it still feels as though I'm getting harshly taxed by the US when I legitimately live and work in the uK (and even have dual citizenship) but can't take advantage of tax free investments such as ISAs, plus PFIC taxation is onerous. Even without being clobbered, I will have had to pay close to $15,000 in US taxes plus another $15,000 to my accountant (due to having to file several years of amended returns & the large number of pfic s) and another $4,000 to a US finsncial advisor to switch into dual US/UK compliant investments.
> 
> I will also have had to shell out approx. another $10,000 to pay for complex UK tax returns and UK taxes on my US mutual funds....This whole ordeal will have set me back about $50,000 - $60,000 in total merely due to inadvertent lack of tax planning...had naively thought that tax treaties would protect me from all this double jeapordy nonsense. It seems as though I'm really being screwed, especially as I am not rich by any means.


15K for 4 years sounds very high, but the PFIC forms are pretty complicated (although if she had proper software and you had good historical data, it should not have been so terribly onerous). And she's charging another 10K for UK returns ? 

I don't know that much about UK taxes on US mutual funds, but I think those are only at sale (unlike the US which taxes PFICs yearly). I hope you're selling off or at least consolidating all the UK mutual funds, so you only have one more year of pain. You may also be able to get some tax credits if you're redoing both sets of returns.


----------



## Mona Lisa76

AmTaker said:


> 15K for 4 years sounds very high, but the PFIC forms are pretty complicated (although if she had proper software and you had good historical data, it should not have been so terribly onerous). And she's charging another 10K for UK returns ?
> 
> I don't know that much about UK taxes on US mutual funds, but I think those are only at sale (unlike the US which taxes PFICs yearly). I hope you're selling off or at least consolidating all the UK mutual funds, so you only have one more year of pain. You may also be able to get some tax credits if you're redoing both sets of returns.


She probably is on the expensive side but I had close to 50 separate PFICs which you'd have to agree is a lot. She looked back to 2005 and amended three years plus did 2010 so I actually think what she charged was reasonably fair given the amount of stuff. I also had some missing records but she was still willing to file for me using some estimates.

She has a solid reputation plus she is based in the city in which I live. 

When I say it will probably wind up costing me another $10,000 in total for my UK returns, I mean that I will have to file three years of somewhat complicated returns since I want to sell off my US mutual funds and get the income gains taxation over and done with; She will probably charge me around $1500 per return since she will have to work out all the numerous dividend reinvestments and capital gains distribution reinvestments on eight different US funds, etc. 

I will probably face total UK taxation of around $5000 on what will have been about $25,000 worth of realized capital gains. Hopefully, she'll be able to offset some of the US taxation credits against this effectively double taxation on my US holdings.

The whole thing is ghastly but I just want to get it over and done with so I can get on with the rest of my life. I blame myself in many ways because it was naive of me to have assumed I could do things like the British do. I had mistakingly believed that I could live by the 'law of the land' and hadn't realized that my unearned UK income from dividends, interest and phantom gains would be taxed so heavily by the US, especially as I'd assumed that tax treaties would protect me from this double taxation...obviously, I hadn't realized that there are get out clauses for the US so they can continue to tax their citizens worldwide.

What pisses me off is how none of this was explained to me when I took out the investments and even the US didn't exactly parade this information around until recently. It's as though I was set up into a de facto tax trap. You have to have your wits about you, that's for sure to avoid falling into unwitting traps like I did.

I'm just grateful that the damage wasn't any worse than it was. At one point, I really feared that I was going to lose virtually everything, especially as I assumed I'd have to go into OVDI and face the draconian penalties in that programme.

When they came out with the new 5% penalty for innocent expats I assumed it was definitely a money grab by Obama to help reduce the deficit; at least my accountant had the decency to insist on my sticking to a quiet disclosure instead of rubbing her hands with glee to think she'd be able to get a further four years of amended returns out of me going back to 2003 plus all the even more in-depth accounting she'd have to do to prepare all the disclosures, etc.

So I don't think she completely took advantage of my vulnerability but agree that the media blitz forced an artificial sense of urgency to get everything completed.

But I still believe that with the new 8938 form coming out for 2011 that will essentially require FBAR-like reporting directly attached to the 1040 would make continued non-compliance far too risky, especially with FATCA coming in fairly soon.

I genuinely hope the IRS will see how onerous and scary all this is for ordinary lower middle class filers like myself and modify their requirements to perhaps having a million dollars in assets before requireing such detailed disclosure for standard filing.

It's simply going to alienate the US from other countries. I'm proud of Canada for pushing back and for the Indian Americans for petitioning the US government too. I'm actually increasingly optimistic that things will gradually work themselves out.


----------



## Mona Lisa76

AmTaker said:


> 15K for 4 years sounds very high, but the PFIC forms are pretty complicated (although if she had proper software and you had good historical data, it should not have been so terribly onerous). And she's charging another 10K for UK returns ?
> 
> I don't know that much about UK taxes on US mutual funds, but I think those are only at sale (unlike the US which taxes PFICs yearly). I hope you're selling off or at least consolidating all the UK mutual funds, so you only have one more year of pain. You may also be able to get some tax credits if you're redoing both sets of returns.


Was advised to sell off the (UK) tax free PFICs and transfer my ordinary pfic holdings to my NRA spouse; I am also moving and reinvesting my remaining assets into a dual US/UK compliant portfolio run by a specialized investment house who deal with UK domiciled US expats like myself. Should hopefully get sorted out.


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## Vangrrl

AmTaker said:


> I would have thought its bonanza city for them (at least with filing out returns for people who are not long term expats and do not intend to renounce)


Do I see a career change in your future? 

I get the impression that there used to be a lot more cross-border accountants. A local accountant told me that there was a time when it was common for every accouting firm (in border towns and big cities) to employ one cross-border specialist to take care of these issues for clients. Not so anymore. Now there are relatively few "cross-border specialists" that all the accounting firms consult with or refer to. They are very expensive and very busy.


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## mickie44

Since my Canadian husband and I (a dual citizen living in Canada since 1979) have always had joint bank accounts and property ownership but filed separate Canadian returns, how will the IRS separate what's his and mine?


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## Vangrrl

mickie44 said:


> Since my Canadian husband and I (a dual citizen living in Canada since 1979) have always had joint bank accounts and property ownership but filed separate Canadian returns, how will the IRS separate what's his and mine?


You would file your tax returns as "married filing separately" and report your income as you would on the Canadian return. You would split any joint investment income (ie. sale of a business property) the way you would have done on your Cdn return.

On the FBAR form you enter in separate sections your accounts held solo (which for me were only my RRSP), and then your accounts held jointly (which were all the rest of our accounts). So you would include them all in the proper category.

If it has your name on it, its "yours" for IRS disclosure purposes. But disclosing an account isn't the same as being taxed on it. They just want to know that the account exists. If they decide to apply penalties based on the value of the account, then I assume there would be some sort of legal discussion as to how much of that account belongs to you. Hopefully it won't come to that and simply filing the forms is enough.

I mentioned up-thread somewhere, that hubby and I opted to separate our accounts somewhat in light of this FBAR issue.


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## mickie44

Thanks Vangrrl. We will be filing tomorrow and will try to maintain our famously calm attitudes toward the American government. When that's done, we will begin to help our son who was two years old when we brought him to Canada. It's been great to talk with others who are in similar situations. More helpful than any other websites I've visited.


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## Peg

mickie44 said:


> It's been great to talk with others who are in similar situations. More helpful than any other websites I've visited.


I completely agree about that. Reading the comments after newspaper articles was stressful. This site has given me the information to actually do the paperwork needed and more importantly, keep me calm doing it! Thank you very much to all who have shared their expertise and/or stories.


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## Vangrrl

I went through my returns for 2007-2010 prepared by my accountant last night. Found a few errors, but otherwise they look reasonable. He first applied 2555 to my salary income and then the foreign tax credit for the other stuff (I was on mat leave one year, I get the childcare tax benefit etc...).

The only thing I realized as I looked back through this thread, is that he didn't include an 8891. I listed my RRSP on my list of bank accounts for him to prepare my fbar but I never reported any RRSP income to him (since my pathetic little RRSP made about $50 total over the last 3 years that I've had it). 

Do you include a 8891 even if there is no interest income? Its a one-time only form, right? So I might as well just file it and have it there going forward if and when my investment actually starts making some money?


----------



## Arlington

Vangrrl said:


> I went through my returns for 2007-2010 prepared by my accountant last night. Found a few errors, but otherwise they look reasonable. He first applied 2555 to my salary income and then the foreign tax credit for the other stuff (I was on mat leave one year, I get the childcare tax benefit etc...).
> 
> The only thing I realized as I looked back through this thread, is that he didn't include an 8891. I listed my RRSP on my list of bank accounts for him to prepare my fbar but I never reported any RRSP income to him (since my pathetic little RRSP made about $50 total over the last 3 years that I've had it).
> 
> Do you include a 8891 even if there is no interest income? Its a one-time only form, right? So I might as well just file it and have it there going forward if and when my investment actually starts making some money?


No, it's not a one time form. It needs to be filed every year with your 1040 to defer the RRSP income until it is withdrawn. Check 6C to start the process of deferring the income. I filed a 8891 for every RRSP account my spouse and I have . .for every year going back to 2005. Good times.


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## TO_andrew

*Form 8891 to Declare your RRSP an IRA*

The Form 8891 and all the other forms seem to be a waste of time as you end up negating everything else, and if you have a RRSP and no assets in the US, how will they charge you with not reporting RRIF income?


----------



## Vangrrl

Arlington said:


> No, it's not a one time form. It needs to be filed every year with your 1040 to defer the RRSP income until it is withdrawn. Check 6C to start the process of deferring the income. I filed a 8891 for every RRSP account my spouse and I have . .for every year going back to 2005. Good times.


Ok, I misunderstood the form. I thought when I read 6a which was something about "have you made an irrevocable declaration of blah blah blah" that it meant once you've declared that RRSP account as being a tax deferred retirement account, then it will be considered so forever more. If its "irrevocable" then why would you have to keep making the same declaration over and over again?  

Anyways, so if I haven't declared any interest then I don't need an 8891? I would just file that form along side any return that actually includes an income declaration from that RRSP?

Obviously I'll ask my accountant about this. I'm just trying to put all my questions together rather than send him a blitz of emails.


----------



## Vangrrl

TO_andrew said:


> The Form 8891 and all the other forms seem to be a waste of time as you end up negating everything else, and if you have a RRSP and no assets in the US, how will they charge you with not reporting RRIF income?


I agree right now, I have no RRSP interest income, so there's nothing to "defer". At this point I can only dream of a day where my investments actually make money and I might have need for this form 8891

The fact that this IRS issue has actually made me look more closely at my pathetic investments is just adding insult to injury.


----------



## AmTaker

Check out the comment by the IRS official:

IRS strikes a conciliatory tone toward Canadians | Taxes | Personal Finance | Financial Post

What that translates to for me is : 'We're not going after expats in Canada except in very special circumstances" (I speculate that could be people who have a lot of tax due, have been filing bogus tax returns in the US, have undeclared accounts outside Canada etc.)


----------



## Vangrrl

Arlington said:


> No, it's not a one time form. It needs to be filed every year with your 1040 to defer the RRSP income until it is withdrawn. Check 6C to start the process of deferring the income. I filed a 8891 for every RRSP account my spouse and I have . .for every year going back to 2005. Good times.


I talked to my accountant and indeed I should be filing this form for every year I made a contribution to the RRSP even if there was no interest "income". 

Incidentally, some people mentioned the 2007 tax rebate ($300 per person). My accountant says we won't get that because we didn't file in time. Too bad - that would have offset of the accounting fees for filing back!


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## Richard1948

*Unanswered questions*

This forum is very helpful for those people wanting to become compliant with IRS regs. But there are some obvious questions that have not been asked, or answered.

1. What exactly can the IRS do to a dual citizen that does not file in the US? I understand that US law requires US citizens to enter and exit the US using a US passport (although this was not enforced in the past). A dual citizen's Canadian passport states the place of birth and this can trigger questions and hassles when going to the US. In order to get a US passport through the US consulate or embassy, one needs to be IRS compliant. So, ultimately non-filers might be denied entry to the US. So what happens if one simply does not go to the US?

2. A second issue is the introduction by the US of the Foreign Account Tax Compliance Act (FACTA). My understanding is that foreign financial institutions doing business in the US will be forced to disclose account information to the IRS about their clients who qualify as "US persons." But how will they identify US persons? And if they do identify an account held by a dual citizen that has not been disclosed to the IRS, what can the IRS do? My understanding is that the financial institution can be forced to withold tax on income generated from US securities. But what if the account holder has no income from US securities (or any other US assets).


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## Nursiegirl

AmTaker said:


> Check out the comment by the IRS official:
> 
> IRS strikes a conciliatory tone toward Canadians | Taxes | Personal Finance | Financial Post
> 
> What that translates to for me is : 'We're not going after expats in Canada except in very special circumstances" (I speculate that could be people who have a lot of tax due, have been filing bogus tax returns in the US, have undeclared accounts outside Canada etc.)


I hope your translation is right.  
I'm so paranoid it just translates to me they are after everyone they can for money.


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## rwats

Very good questions. If we did not have to provide citizenship information to the bank when we opened an account how will the IRS find the information? (Well I guess that if we fill out the FBAR's we will be giving them all of our personal financial information on a silver platter)


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## justbrowsing

AmTaker said:


> Check out the comment by the IRS official:
> 
> IRS strikes a conciliatory tone toward Canadians | Taxes | Personal Finance | Financial Post
> 
> What that translates to for me is : 'We're not going after expats in Canada except in very special circumstances" (I speculate that could be people who have a lot of tax due, have been filing bogus tax returns in the US, have undeclared accounts outside Canada etc.)


Thanks for posting the link. It looks like some of the diplomatic push back is working.:clap2:


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## AmTaker

Nursiegirl said:


> I hope your translation is right.
> I'm so paranoid it just translates to me they are after everyone they can for money.


No, they're just after your first born


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## Richard1948

*More considerations*

Here are some more considerations with respect to asset disclosure.

1. The US has an estate tax (death tax). Canada does not. For 2011 and 2012 the deduction is $5 million (i.e., the estate has to be greater than this to attract the 35% tax). However, no one knows what will happen in 2013. President Obama is already on record as supporting a reduction in the limit to $3.5 million. It could of course go much lower.

2. The US has a gift tax. The most you can give away tax free is $13,000 per year to any person. The exception is a gift to your spouse. If the spouse is a US person there is no limit on the gift. If the spouse is not a US person, the limit is $134,000 per year.

3. The US has a capital gain tax on the sale of a primary residence. There is a $250,000 exemption. However, if you bought a bungalow in Vancouver in the 1980s you are probably looking at a $1 million capital gain.


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## TO_andrew

Richard1948 said:


> Here are some more considerations with respect to asset disclosure.
> 
> 1. The US has an estate tax (death tax). Canada does not. For 2011 and 2012 the deduction is $5 million (i.e., the estate has to be greater than this to attract the 35% tax). However, no one knows what will happen in 2013. President Obama is already on record as supporting a reduction in the limit to $3.5 million. It could of course go much lower.
> 
> 2. The US has a gift tax. The most you can give away tax free is $13,000 per year to any person. The exception is a gift to your spouse. If the spouse is a US person there is no limit on the gift. If the spouse is not a US person, the limit is $134,000 per year.
> 
> 3. The US has a capital gain tax on the sale of a primary residence. There is a $250,000 exemption. However, if you bought a bungalow in Vancouver in the 1980s you are probably looking at a $1 million capital gain.



And specifically, how would the IRS know if you sold your house and for how much? The IRS doesn't have the man power or the means to go into everyone's lives to that detail.


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## Arlington

Richard1948 said:


> Here are some more considerations with respect to asset disclosure.
> 
> 1. The US has an estate tax (death tax). Canada does not. For 2011 and 2012 the deduction is $5 million (i.e., the estate has to be greater than this to attract the 35% tax). However, no one knows what will happen in 2013. President Obama is already on record as supporting a reduction in the limit to $3.5 million. It could of course go much lower.
> 
> 2. The US has a gift tax. The most you can give away tax free is $13,000 per year to any person. The exception is a gift to your spouse. If the spouse is a US person there is no limit on the gift. If the spouse is not a US person, the limit is $134,000 per year.
> 
> 3. The US has a capital gain tax on the sale of a primary residence. There is a $250,000 exemption. However, if you bought a bungalow in Vancouver in the 1980s you are probably looking at a $1 million capital gain.


My sister told me that there is no capital gain tax when you sell your home after age 65. I would assume that would be true for your estate if you were still living in it when you died. 

From the IRS website on topics for 65 year olds: Gains arising on the disposal of your principal private residence, including gardens or grounds up to one acre in extent, are generally exempt from Capital Gains Tax.

It makes sense that an older couple should be able to use the gains on their principal residence to fund their retirement including funding for assisted living facilities. Very unusal for US tax laws to make sense.

Do you think they'll know I live on 5 acres? Ha ha.


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## technopal

*Exit Tax for Accidental Americans*

I really am having trouble understanding the exit tax. From what I have read I think Canadian born Americans should be exempt if they have never lived or worked in the US. If they are tax compliant they should be able to expatriate without penalty. Would like anyone with expertise to please give me advice. Thanks in advance.


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## Nononymous

Richard1948 said:


> This forum is very helpful for those people wanting to become compliant with IRS regs. But there are some obvious questions that have not been asked, or answered.
> 
> 1. What exactly can the IRS do to a dual citizen that does not file in the US? I understand that US law requires US citizens to enter and exit the US using a US passport (although this was not enforced in the past). A dual citizen's Canadian passport states the place of birth and this can trigger questions and hassles when going to the US. In order to get a US passport through the US consulate or embassy, one needs to be IRS compliant. So, ultimately non-filers might be denied entry to the US. So what happens if one simply does not go to the US?
> 
> 2. A second issue is the introduction by the US of the Foreign Account Tax Compliance Act (FACTA). My understanding is that foreign financial institutions doing business in the US will be forced to disclose account information to the IRS about their clients who qualify as "US persons." But how will they identify US persons? And if they do identify an account held by a dual citizen that has not been disclosed to the IRS, what can the IRS do? My understanding is that the financial institution can be forced to withold tax on income generated from US securities. But what if the account holder has no income from US securities (or any other US assets).


1) You have identified the only possible consequence for dual citizens: problems entering the US. What has emerged from these discussions is that under the current tax treaty, the IRS has zero ability to collect fines or penalties from dual citizens in Canada, and they will not be assisted by CCRA (Canada will only help collect taxes owing from an individual prior to their having acquired Canadian citizenship; furthermore, FBAR penalties are not considered taxes per se). So your savings are quite safe, you just won't be able to renew your US passport. It is a legal requirement that a US citizen show a US passport upon entry, but from personal experience I know this to have been regularly ignored; who knows if it will be more strictly enforced in the future. (Also, unlike land borders, when you do US customs pre-clearance at a Canadian airport, I don't think you can be detained and rendered, as you are still on Canadian soil.) 

2) FATCA is a big mystery. I'd be willing to bet someone a case of beer that it will basically go away - i.e. it will be modified so that the threshold balance is much higher, or that it doesn't apply to US non-residents, or be endlessly postponed (it's already slipped one year to 2014). The merde is only beginning to hit the fan on this.

Perhaps foolishly, I made an appointment to renounce citizenship with the consulate in Calgary, in October. I haven't done a thing on the taxes yet - and I've told them this by e-mail - and intend to be completely forthcoming and ask as many questions as I can about how to proceed. Also perhaps foolishly, when I do file the five years of returns, I am not going to worry about the details, just a simple DIY job on the 1040s with the Canadian confirmation letters attached, plus one FBAR. The point, as I've said before, isn't to be correct right down to the penny, just to show that I don't owe so much as penny. After that, no news is good news, presumably.

I do of course wonder if I'm not opening a huge can of worms and causing all kinds of problems for myself, but I'm annoyed enough by the stupidity of these requirements that I want to take a stand and make my views known. And when you really think about it, the consequences can't be that grave: I have no US assets and the IRS has no way of collecting against me in Canada. Presumably I can't be arrested at the border unless there is some sort of criminal charge, which is incredibly unlikely given my net worth - pretty poor ROI for the US treasury.


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## Fuller1212

Good points, and I'm in agreement with most of them. I'm Canadian and my wife is American, and I post all our interest and gains on US stocks (held in a CIBC brokerage account) on my tax return, so I can't see how the IRS can locate them. I file the US returns for my wife only, and she is close to the exemption amount. 

However, I have no interest in filing FBAR, which then gives the IRS the information that the Canadian banks are hesitant (or unable) to provide to the IRS. I consider this a matter of banking privacy.

Finally, and this is from my wife - there is no way that the US govt can prevent a US born citizen from returning to her country. She can always enter on her Canadian passport, if they don't renew the US one. But I think the US would be hard pressed to refuse the entry of its citizens....



Nononymous said:


> 1) You have identified the only possible consequence for dual citizens: problems entering the US. What has emerged from these discussions is that under the current tax treaty, the IRS has zero ability to collect fines or penalties from dual citizens in Canada, and they will not be assisted by CCRA (Canada will only help collect taxes owing from an individual prior to their having acquired Canadian citizenship; furthermore, FBAR penalties are not considered taxes per se). So your savings are quite safe, you just won't be able to renew your US passport. It is a legal requirement that a US citizen show a US passport upon entry, but from personal experience I know this to have been regularly ignored; who knows if it will be more strictly enforced in the future. (Also, unlike land borders, when you do US customs pre-clearance at a Canadian airport, I don't think you can be detained and rendered, as you are still on Canadian soil.)
> 
> 2) FATCA is a big mystery. I'd be willing to bet someone a case of beer that it will basically go away - i.e. it will be modified so that the threshold balance is much higher, or that it doesn't apply to US non-residents, or be endlessly postponed (it's already slipped one year to 2014). The merde is only beginning to hit the fan on this.
> 
> Perhaps foolishly, I made an appointment to renounce citizenship with the consulate in Calgary, in October. I haven't done a thing on the taxes yet - and I've told them this by e-mail - and intend to be completely forthcoming and ask as many questions as I can about how to proceed. Also perhaps foolishly, when I do file the five years of returns, I am not going to worry about the details, just a simple DIY job on the 1040s with the Canadian confirmation letters attached, plus one FBAR. The point, as I've said before, isn't to be correct right down to the penny, just to show that I don't owe so much as penny. After that, no news is good news, presumably.
> 
> I do of course wonder if I'm not opening a huge can of worms and causing all kinds of problems for myself, but I'm annoyed enough by the stupidity of these requirements that I want to take a stand and make my views known. And when you really think about it, the consequences can't be that grave: I have no US assets and the IRS has no way of collecting against me in Canada. Presumably I can't be arrested at the border unless there is some sort of criminal charge, which is incredibly unlikely given my net worth - pretty poor ROI for the US treasury.


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## technopal

*Anonymous interested in your Adventure*

Please keep us updated on your plans to expatriate. I really am interested in the details. How long did it take to get an appointment in Calgary? Thanks for all the information.


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## Nononymous

Fuller1212 said:


> Finally, and this is from my wife - there is no way that the US govt can prevent a US born citizen from returning to her country. She can always enter on her Canadian passport, if they don't renew the US one. But I think the US would be hard pressed to refuse the entry of its citizens....


There's a clear legal requirement to use a US passport when entering the US as a US citizen.

However, I don't know what the consequences are for not doing so - can they not let you in, are you on the next plane to Gitmo, or do you simply get a lecture? I will go research this...


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## Nononymous

technopal said:


> Please keep us updated on your plans to expatriate. I really am interested in the details. How long did it take to get an appointment in Calgary? Thanks for all the information.


First available appointment was only three weeks away. They only do one appointment a week, on Thursday afternoons, but that might have to change! It's with the consul himself apparently. I'll report back on the 13th.

There's a chance I may have to postpone on account of upcoming travel, but there were appointments available most weeks after that. Clearly I'm still getting in ahead of the rush.

I did tell them I hadn't yet begun to file taxes, but it didn't seem to matter for the first appointment. I doubt they'll give me any advice, but I do plan to ask questions, and give frank (but polite) opinions.


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## Fuller1212

Nononymous said:


> There's a clear legal requirement to use a US passport when entering the US as a US citizen.
> 
> However, I don't know what the consequences are for not doing so - can they not let you in, are you on the next plane to Gitmo, or do you simply get a lecture? I will go research this...


Actually, from my wife again, the passport can be expired, and still provide evidence that you were born in the US, and that you have a right to return to the US; you cannot be refused (they have told her this at the border). If you plan on traveling to other countries, however, you would need to make sure your passport is up to date.....)


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## 416

It doesn't apply to everybody, but it seems that if you may (at some hopefully distant point in the future) inherit money from a US citizen, it would be wise to have your own US tax situation sorted out, either as a compliant US taxpayer or a well-organized renunciant. 

My own plan is to file 2007-10 this fall, and file 2011 and renounce next spring.


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## 416

Fuller1212 said:


> Actually, from my wife again, the passport can be expired, and still provide evidence that you were born in the US, and that you have a right to return to the US; you cannot be refused (they have told her this at the border). If you plan on traveling to other countries, however, you would need to make sure your passport is up to date.....)


I've entered the US on a seriously expired passport - they didn't seem to mind.


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## Nononymous

Nononymous said:


> There's a clear legal requirement to use a US passport when entering the US as a US citizen.
> 
> However, I don't know what the consequences are for not doing so - can they not let you in, are you on the next plane to Gitmo, or do you simply get a lecture? I will go research this...


According to United States Code, Title 8, Chapter 12, Subchapter II, Part II, § 1185 Travel control of citizens and aliens

(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. 

Nowhere can I find the penalty, however - it's simply unlawful.


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## Ladyhawk

Fuller1212 said:


> Good points, and I'm in agreement with most of them. I'm Canadian and my wife is American, and I post all our interest and gains on US stocks (held in a CIBC brokerage account) on my tax return, so I can't see how the IRS can locate them. I file the US returns for my wife only, and she is close to the exemption amount.
> 
> However, I have no interest in filing FBAR, which then gives the IRS the information that the Canadian banks are hesitant (or unable) to provide to the IRS. I consider this a matter of banking privacy.
> 
> Finally, and this is from my wife - there is no way that the US govt can prevent a US born citizen from returning to her country. She can always enter on her Canadian passport, if they don't renew the US one. But I think the US would be hard pressed to refuse the entry of its citizens....


It isn't a question of refusing entry to the US. It's that the border agent can essentially turn you over to an IRS agent who can then interrogate you on your tax situation based on what they have on you in their database ( I have heard of this happening, though I do not know which border crossing). Failure to file income tax returns or report offshore assets is a criminal offense. I do not know what they might then decide to do but they may be able to arrest you or prevent you from leaving the US until you have complied. Canada does have a tax treaty with the US, so Canada won't override the US if you are not in compliance with US tax laws.

As for the FBAR, Canada may refuse to share that information with the US due to its own privacy legislation, or it may decide to change its privacy laws - which is looking less likely at the moment because of the publicity over this. Jack Townsend's blog for tax lawyers has posted that technically, if you file delinquent FBARS (or even delinquent tax returns) you are admitting that 1.) you recognize your legal obligation to do so, and 2.) you are admitting that you violated the law by failing to file, even if it was out of ignorance. So you're essentially incriminating yourself, and providing the IRS with information they currently have no other way of getting. I'm not advising anyone to report or not report, and the IRS has always seemed to be reasonably lenient on people who do the quiet disclosure, but it's food for thought.


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## Peg

Nononymous said:


> First available appointment was only three weeks away. They only do one appointment a week, on Thursday afternoons, but that might have to change! It's with the consul himself apparently. I'll report back on the 13th.
> 
> There's a chance I may have to postpone on account of upcoming travel, but there were appointments available most weeks after that. Clearly I'm still getting in ahead of the rush.
> 
> I did tell them I hadn't yet begun to file taxes, but it didn't seem to matter for the first appointment. I doubt they'll give me any advice, but I do plan to ask questions, and give frank (but polite) opinions.


Nononymous - did you find the Consulate's email address online? Or did you call? I tried calling the Calgary office today and it went to an answering service who told me they are getting a lot of calls.

I would rather do the renunciation in Winnipeg but it says that it is Emergency Only services here. hmmm wonder if my difficulties travelling could count.


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## Nononymous

Peg said:


> Nononymous - did you find the Consulate's email address online? Or did you call? I tried calling the Calgary office today and it went to an answering service who told me they are getting a lot of calls.
> 
> I would rather do the renunciation in Winnipeg but it says that it is Emergency Only services here. hmmm wonder if my difficulties travelling could count.


Online, but can't remember how exactly. I think I just found the address [email protected] somewhere on the site and sent them a message that I wanted an appointment to renounce.


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## Vangrrl

Nononymous said:


> There's a clear legal requirement to use a US passport when entering the US as a US citizen.
> 
> However, I don't know what the consequences are for not doing so - can they not let you in, are you on the next plane to Gitmo, or do you simply get a lecture? I will go research this...


The law was enacted in 2008 and its my opinion that they are in the warning phases right now. More and more dual citizens I know have been told at the border that need to have a US passport. Eventually I think it will enforced.

But, again, what does "enforcement" look like? I would think it would mean at the very least, that you are going to miss your flight to Hawaii while they lecture you on your US citizen requirements. But beyond that, who knows?


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## Vangrrl

If you don't ever go to the US, nothing will happen to you. However, I live 15 km from the US border and it would be a pretty extreme decision for me to never go to the US again, and this is completely unrelated to my citizenship status. I might be pushed to make such a decision if I am faced with gigantic fines, but not beforehand. 

Personally I'd save the "You MUST let me in I'm an American" card for a dire emergency. I don't think I'd play it every time I want to go shopping in Tulalip. 

With regards to Estate/Disclosure issues... I'm married to a Canadian and he is the primary earner. Its fairly easy for us to structure our finances so that his income and financial dealings (including "gifts" to our children) are not reported to the IRS. We'll see how FATCA plays out, but I agree with those who say it will mostly disappear or be seriously downgraded.


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## Nononymous

Vangrrl said:


> The law was enacted in 2008 and its my opinion that they are in the warning phases right now. More and more dual citizens I know have been told at the border that need to have a US passport. Eventually I think it will enforced.
> 
> But, again, what does "enforcement" look like? I would think it would mean at the very least, that you are going to miss your flight to Hawaii while they lecture you on your US citizen requirements. But beyond that, who knows?


From a Canadian government web site - some comfort for anyone flying to the US:

_U.S. Customs and Border Protection (CBP) preclearance facilities are available at eight Canadian airports: Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Ottawa, Montreal-Trudeau, and Halifax. This service provides clearance for entry into the U.S. for persons and their luggage at a Canadian preclearance airport instead of on arrival in the U.S. To allow sufficient time for the preclearance process, you should be at the U.S. customs and immigration desk at least two hours before your flight departure time.

When using U.S. preclearance facilities at a Canadian airport, you are obligated to meet U.S. entry requirements. You will be interviewed by a U.S. preclearance officer. It is an offence under Canada's Preclearance Act to knowingly make a false or deceptive statement to a preclearance officer. American officials are authorized to inspect your luggage and can refuse you entry to the U.S. While you are in a preclearance area, you are subject to Canadian law, including the Canadian Charter of Rights and Freedoms, the Canadian Bill of Rights, the Canadian Human Rights Act, Canada's Preclearance Act, and Canadian criminal law, including those laws governing drugs and guns. You may withdraw your request to enter the U.S. and may leave the preclearance area at any time unless a U.S. preclearance officer suspects on reasonable grounds that you have made a false or deceptive statement or obstructed an officer. The officer may then detain you for violations of Canadian law._

Ergo, you're not likely going to be arrested for tax evasion at a Canadian airport. Land borders are another matter, however.


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## Bevdeforges

Very good and relevant questions, but let's not go getting our knickers in a twist here. The IRS thrives on the sort of "shock and awe" campaign they have apparently been doing in Canada over these issues. They tend to use scare tactics to get "everyone" reporting, mainly in the hope of catching some of the big time offenders who have been knowingly hiding income from the authorities.



Richard1948 said:


> This forum is very helpful for those people wanting to become compliant with IRS regs. But there are some obvious questions that have not been asked, or answered.
> 
> 1. What exactly can the IRS do to a dual citizen that does not file in the US? I understand that US law requires US citizens to enter and exit the US using a US passport (although this was not enforced in the past). A dual citizen's Canadian passport states the place of birth and this can trigger questions and hassles when going to the US. In order to get a US passport through the US consulate or embassy, one needs to be IRS compliant. So, ultimately non-filers might be denied entry to the US. So what happens if one simply does not go to the US?


The simple answer is "not very much." For years, some of the tax advisors here in Europe have sworn that every time you renew your passport (when you have to give your ss number) or enter the US after a long absence they "check your tax filings." I have found this to be an urban legend. There are laws in place that forbid government agencies from exchanging this sort of data - though some of those may have been changed since the 9/11 "security enhancements."

They can't actually deny entry to a US citizen bearing a US passport. They can, however, hold you once you're in the States - assuming they turn up the tax problem. And first they would have to have processed the paperwork to actually charge you with failure to file. 



> 2. A second issue is the introduction by the US of the Foreign Account Tax Compliance Act (FACTA). My understanding is that foreign financial institutions doing business in the US will be forced to disclose account information to the IRS about their clients who qualify as "US persons." But how will they identify US persons? And if they do identify an account held by a dual citizen that has not been disclosed to the IRS, what can the IRS do? My understanding is that the financial institution can be forced to withold tax on income generated from US securities. But what if the account holder has no income from US securities (or any other US assets).


Since 2001 there has been a global push to require banks to "know their customers" before opening a new account. This isn't just to mollify the US, but also to help fight money laundering and tax evasion in Europe and other developed countries. I think it's necessary these days for banks to collect information on the nationality of their new customers in most Western countries. The banks may withhold taxes on all earnings from various accounts based on the nationality of the customer. (I know they do this for European nationals now.) 

This is an OECD thing, not just the IRS. But obviously the IRS is taking full advantage.

I'll respond to your other questions in a separate post.
Cheers,
Bev


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## Bevdeforges

Richard1948 said:


> Here are some more considerations with respect to asset disclosure.
> 
> 1. The US has an estate tax (death tax). Canada does not. For 2011 and 2012 the deduction is $5 million (i.e., the estate has to be greater than this to attract the 35% tax). However, no one knows what will happen in 2013. President Obama is already on record as supporting a reduction in the limit to $3.5 million. It could of course go much lower.


For those with estates over the threshold, yes, you do have to file an estate tax form. (However, if none of your assets are physically located in the US, it's kind of an open question how they would ever know if you didn't - unless your own tax authority brought the issue to their attention, which sometimes happens.) For those with small estates well under the various limits - this is not a problem. 



> 2. The US has a gift tax. The most you can give away tax free is $13,000 per year to any person. The exception is a gift to your spouse. If the spouse is a US person there is no limit on the gift. If the spouse is not a US person, the limit is $134,000 per year.


Yeah, but - the gift tax is part and parcel with the estate tax. When you give a gift during your lifetime of over $13,000, you declare it on a gift tax form - but you pay nothing at the time. When you eventually file an estate tax form (or rather, when someone does so for you after you die), the gifts are then lumped in with your estate to determine what (if anything) is owed on the final distribution. No estate tax form, no bother with gift tax - even if you've filed gift tax declarations in the past.



> 3. The US has a capital gain tax on the sale of a primary residence. There is a $250,000 exemption. However, if you bought a bungalow in Vancouver in the 1980s you are probably looking at a $1 million capital gain.


Again, not much the US can do here if the property is located outside the US - unless you have other assets or financial accounts located in the US. In theory (and maybe in practice), the IRS is said to cooperate with various tax authorities overseas on the death of a dual national or an American citizen living abroad. They can (and sometimes do) compare the final tax returns with the other tax authority. (Actually they theoretically can compare annual tax returns, too, but unless they have some reason to suspect that you're hiding income from them, they rarely seem to do so.)

And on one other issue that keeps cropping up here - that of entering the US on a non-US passport - the penalty for so doing is a hefty fine. (I've been told something in the vicinity of $25,000 - but that was years ago.) Normally, to get caught for something like that, they'd need to either notice on your foreign passport that you were born in the US - or (the one case I heard of where it happened) make the logical connection for a family group traveling together. The one case I heard of was a US-UK couple where the children had been put onto their father's UK passport and had no US passports of their own. Because the mother was a US citizen, traveling on her US passport, it could reasonably be assumed the kids were US citizens. (One of the reasons they now dissuade people from putting their kids on a parent's passport.) It's not difficult to fly well below the radar on this one, as long as you weren't born in the US.
Cheers,
Bev


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## AmTaker

Vangrrl said:


> With regards to Estate/Disclosure issues... I'm married to a Canadian and he is the primary earner. Its fairly easy for us to structure our finances so that his income and financial dealings (including "gifts" to our children) are not reported to the IRS. We'll see how FATCA plays out, but I agree with those who say it will mostly disappear or be seriously downgraded.


I actually disagree with this. FATCA in its current form might be watered down, but the general principle of sharing of tax information between different countries is likely to only get more prevalent. Its already done between many EU countries and KYC and money laundering rules are becoming stricter worldwide. 

Of course, the US is likely to be a little reluctant to reveal information about all the Latin American nationals who stash money in Nevada corporations and Florida banks


----------



## AmTaker

Ladyhawk said:


> . Jack Townsend's blog for tax lawyers has posted that technically, if you file delinquent FBARS (or even delinquent tax returns) you are admitting that 1.) you recognize your legal obligation to do so, and 2.) you are admitting that you violated the law by failing to file, even if it was out of ignorance. So you're essentially incriminating yourself, and providing the IRS with information they currently have no other way of getting. I'm not advising anyone to report or not report, and the IRS has always seemed to be reasonably lenient on people who do the quiet disclosure, but it's food for thought.


I read Jack's blog too, and I don't think he said that. I think its only a crime to willfully fail to file returns (whether tax or FBAR). In general, most crimes require willfulness (although there was an excellent article in the WSJ about how this rule was being stretched, but it was not about tax crimes). The fact that you recognize a legal obligation in 2011 doesn't mean that you knew about it in 2010 or 2009 and willfully failed to meet it at that time. No, I'm not a lawyer, but I don't think its in any way 'incriminating'. It may be fodder for a civil audit, but I deem that extremely unlikely for people with little to no tax due and few US assets.


----------



## Peg

Bevdeforges said:


> ... And on one other issue that keeps cropping up here - that of entering the US on a non-US passport - the penalty for so doing is a hefty fine. (I've been told something in the vicinity of $25,000 - but that was years ago.) Normally, to get caught for something like that, they'd need to either notice on your foreign passport that you were born in the US ... It's not difficult to fly well below the radar on this one, as long as you weren't born in the US.
> Cheers,
> Bev


I have not had a US passport in 20 years and go to the USA a few times a year by land and air. My Canadian passport says I was born in the USA but have never had them question me. Most of the time I am travelling with my Canadian born spouse and kids.

Our land crossings are small and lightly travelled compared to Peach Arch and I don't know if they would be more relaxed or stricter when it came to questionning...

For those who have NEXUS - did you have to have a US passport?

Since I have no desire to live in the USA I simply don't want to have to worry about the laws of two countries for the next 50 years nor do I want my spouse or children to have to deal with it regarding my estate one day.


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## Ladyhawk

AmTaker said:


> I read Jack's blog too, and I don't think he said that. I think its only a crime to willfully fail to file returns (whether tax or FBAR). In general, most crimes require willfulness (although there was an excellent article in the WSJ about how this rule was being stretched, but it was not about tax crimes). The fact that you recognize a legal obligation in 2011 doesn't mean that you knew about it in 2010 or 2009 and willfully failed to meet it at that time. No, I'm not a lawyer, but I don't think its in any way 'incriminating'. It may be fodder for a civil audit, but I deem that extremely unlikely for people with little to no tax due and few US assets.


Here is what Jack said in the comments section of his post from July 31: "I am not sure that filing delinquent FBARs is the only way to support an argument for nonwilfulness. The FBAR penalty applies immediately after the due date (6/30 respectively, so that the penalty applies on 7/1). Filing a delinquent FBAR does not mean that the nonfiler / filer did not have the requisite mens rea (willfulness) when he or she failed to file.

Moreover, the issue is similar to the one faced with fraudulent returns and delinquent returns -- the crime, if any, is committed when the fraudulent return is filed or the unfiled return due date passes. Filing a subsequent amended return or delinquent original return does not technically cleanse the original crime, although it may mitigate the crime substantially.

But filing the amended return or delinquent return does establish elements of the crime that the Government would otherwise have to prove beyond a reasonable doubt. Accordingly, if you file a delinquent FBAR, you have just admitted that (i) you were required to file one and (ii) the amounts involved. Whether it is a wise idea to try to mitigate, not the crime, but the Government's incentive to prosecute the crime is a decision to made only with the advice of competent counsel."

As I said, I offer it as food for thought.


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## 416

Nononymous said:


> Ergo, you're not likely going to be arrested for tax evasion at a Canadian airport. Land borders are another matter, however.


The more intelligent thing would be for them to flag you for attention on the US end of the flight.


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## justbrowsing

Has anyone had experience in filing a 1040 as Head of Household? I am dual and my wife is Canadian only. We have 2 dual citizen children. The reason I ask is 3 tax preparers have given us 2 different answers.

Also, has anyone been hit with the AMT (Alternative Minimum Tax) while doing a 1040? My income was just about $115,000 and one preparer said no deductions could be used to offset the AMT of $4700 (ouch!) even though I paid a ton of tax in Canada.


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## Pathologic1

*Danger?*

Whoa. All these questions about what could the USA do if you don't file and don't pay seem to be missing the big point (or perhaps I just missed it). Ignoring the fact that you are supposed to file FBARs and taxes will be dangerous, and not at the border or airport.

The IRS stance will be that this has been in the media and news enough in Canada that you knew or should have known of your requirement to file taxes and FBAR forms. This omission was therefore willful and a criminal offence. There is an extradition agreement between the US and Canada and this is what scares me the most. Turning noncompliance into a criminal charge. A US prison and huge fines is not what I want. Way too great a risk for me. 

I would rather the IRS was simply after me for not filing my FBARs in a timely, non-willful fashion, as I know they will have an impossible task trying to collect (which they won't even try) and the Canadian government has already indicated they will try and protect people like me. But if it was criminal matter I'm not sure the Candian government has the means to protect me as the extradition agreement is already in place for criminal offences. If it was as simple as me just running off to some country and thumbing your nose at them, there are some real wealthy people in US prisons with big UBS accounts that would have done that. If the US deems it criminal, they have a very long arm and will find you unless you are in some 3rd world country where you might be able to hide.

If you think they won't do that, then be my guest, but I'm not that confident. The IRS is doing all this to get people to file and if Canadian Americans don't respond, then extraditing a few would likely increase compliance immediately. I wouldn't put it past them. They know it would work and so do we. If you think having to file now is bad how are you going to feel knowing that you might be subject to criminal charges? Nightmares....

And the talk of watering down FATCA. There isn't any indication that the US is backing down. They broke the back of the famous legislated Swiss bank secrecy and Canada is a comparative piece of cake. And the way most US citizens would be identified, is by your place of birth. If you think you will just lie to the bank as to your birthplace, consider this will be a definite badge of trying to hide funds from the IRS. Jail time is almost certain if caught under these conditions. 

It seems to me the time to file is now. Before the US makes it even more difficult and FATCA comes into place. And yes you can renounce before filing but taxes must still be for the past five years and all the legal problems mentioned remain. It seems to me that the simplest thing to do is file now.


----------



## Arlington

Interesting:

Several Congressmen wrote a letter last week to the Secretary of the Treasury expressing concern that the Foreign Account Tax Compliance Act (FATCA) will scare foreign financial institutions away from the United States


----------



## Arlington

An MP writes to Jim Flaherty, Minister of Finance:

MP SUPPORTS GOV’T ON TALKS OVER U.S. TAX | Osoyoos Times


----------



## Vangrrl

Bevdeforges said:


> The one case I heard of was a US-UK couple where the children had been put onto their father's UK passport and had no US passports of their own. Because the mother was a US citizen, traveling on her US passport, it could reasonably be assumed the kids were US citizens. (One of the reasons they now dissuade people from putting their kids on a parent's passport.) It's not difficult to fly well below the radar on this one, as long as you weren't born in the US.
> Cheers,
> Bev


I have been asked this question when travelling with my children. And the answer I give is "No, she is not an American citizen". She is born in Canada and I do not fit the residency requirements to pass on citizenship to her. But it worries me to even be asked the question, because I can't prove easily that she ISN'T one because that would require showing proof of where I've lived every year since birth. I don't even know how I would do that.


----------



## Vangrrl

Pathologic1 said:


> And the talk of watering down FATCA. There isn't any indication that the US is backing down. They broke the back of the famous legislated Swiss bank secrecy and Canada is a comparative piece of cake. And the way most US citizens would be identified, is by your place of birth. If you think you will just lie to the bank as to your birthplace, consider this will be a definite badge of trying to hide funds from the IRS. Jail time is almost certain if caught under these conditions.


I'm the one who said that above, and I realize I misspoke. What I meant to say is that I *think* that FBARs will be watered down (simplified) as a result of FATCA. Simply because there are different sources for the same information.

I do still think that there are limits to what the IRS can reasonably know about any given individual. But as counter-intuitive as it is, I believe that the way to get off of the IRS radar is actually to file rather than to not file. If you are American and you behave like an American (have a US passport, file US tax returns) then there isn't really a whole lot to distinguish you from other Americans except that you live abroad. And that works to your advantage since it identifies you as someone with no US taxes owing, no US financial holdings and most likely some protection of another government.


----------



## Nononymous

*this seems almost too easy...*

So I'm reading renunciationguide.com and I had a thought. A clever thought.

I was looking at the requirements for form 8854 - the "exit tax" - thinking this was something I wish to avoid. You have to submit this form if you meet any one of three conditions:

1. Income over $145,000.
2. Net worth over $2 million.
3. "The expatriate does not certify that he met all U.S. tax obligations for the five years before expatriation."

If you go this route, you pay tax based on the profit from a "deemed sale" of all your assets, but the first $627,000 of that amount is exempt.

In my case, the profit will be a lot closer to zero than $627k. So could I potentially just get away with renouncing and filing an 8854 that shows I owe nothing? No digging around to file five years of 1040s and FBARs, no (admittedly very small) risk of penalties? Or would the requirement to become tax compliant still apply?

It seems too good to be true, so it probably is.


----------



## Vangrrl

But how would you show you owe nothing without filing tax returns?

How would you prove your assets without the fbars coming into discussion?


----------



## 416

Nononymous said:


> It seems too good to be true, so it probably is.



I think that route invites hostile scrutiny, but by all means try it and tell us how it turns out.


----------



## Nononymous

416 said:


> I think that route invites hostile scrutiny, but by all means try it and tell us how it turns out.


I'll ask the consul!


----------



## Vangrrl

justbrowsing said:


> Has anyone had experience in filing a 1040 as Head of Household? I am dual and my wife is Canadian only. We have 2 dual citizen children. The reason I ask is 3 tax preparers have given us 2 different answers.
> 
> Also, has anyone been hit with the AMT (Alternative Minimum Tax) while doing a 1040? My income was just about $115,000 and one preparer said no deductions could be used to offset the AMT of $4700 (ouch!) even though I paid a ton of tax in Canada.


My accountant prepared my return, so I might be completely wrong about this.... perhaps you are taking too many deductions? My accountant only deducted me and one of my kids. He didn't apply mortgage interest or any other deductions. 

My combined income is just under $100k and in one year $40k was not eligible for the income exclusion (my mat leave benefits) but even then only claiming myself and one child (who has an SSN), I had no tax owing.


----------



## justbrowsing

Vangrrl said:


> My accountant prepared my return, so I might be completely wrong about this.... perhaps you are taking too many deductions? My accountant only deducted me and one of my kids. He didn't apply mortgage interest or any other deductions.
> 
> My combined income is just under $100k and in one year $40k was not eligible for the income exclusion (my mat leave benefits) but even then only claiming myself and one child (who has an SSN), I had no tax owing.


I believe the AMT kicks in around the $115k to $120k mark. This is from 2006/07 when returns on investments were not too bad.

A phone call with the IRS (93 minutes on hold) confirmed that I can file as Head of Household and under those circumstances NO tax of any kind is payable and in fact I would get a $50 child tax credit. :confused2:


----------



## Bevdeforges

Nononymous said:


> If you go this route, you pay tax based on the profit from a "deemed sale" of all your assets, but the first $627,000 of that amount is exempt.


Check to see if that exempt amount is for _the profit from the deemed sale_ of all your assets or on _the profit from the first $627,000 of assets._ The way they word those tax regulations can be tricky.

Though again (as with the FBAR and FATCA forms), they really are after only the fat cats who actually owe significant amounts.
Cheers,
Bev


----------



## Mona Lisa76

Bevdeforges said:


> Check to see if that exempt amount is for _the profit from the deemed sale_ of all your assets or on _the profit from the first $627,000 of assets._ The way they word those tax regulations can be tricky.
> 
> Though again (as with the FBAR and FATCA forms), they really are after only the fat cats who actually owe significant amounts.
> Cheers,
> Bev


But Bev, don't you think it's possible that they may in fact decide to conduct a full audit on me, as I foolishly had the bulk of my assets in PFIC funds, so with phantom gains wound up owing over $13,000 in taxes going back to 2007 up through 2010, plus my estimated taxes paid for 2011...they may well decide to go through my accountant's complex calculations as they may assume she wasbeing aggressive and try to get more taxes out of me.

It's terrifying to think that what are mainstream UK unit trusts (and tax free ones at that with no UK capital gains) are being clobbered so hard by the IRS...I fear that they may decide she did it all incorrectly and wipe me out completely.

I thought the treaties were supposed to protect me from what is essentially discrimination. I am getting the wrong end of the stick. I can't begin to tell you how much stress this has caused me, plus the fact that because I'd inadvertedly under-reported my total income by over 25%, I will have a six year statute of limitations for the delinquent amended returns instead of the normal 3 year statute. what a long long time to wait tobe in the clear...Bev, do you think I'll be alright or am I doomed? I feel so vulnerable being caught in the headlights.

I have dual us/uk citizenship and have made my life in England and hadmistakingly thought that I only had to file a basic us return as a formality, as I pay british taxes, file uk returns, pay worldwide tax there etc. Had only recently lewrned that tge treatieshave get out clauses for americans whichcancause them to bedoubke taxed whuch stinks. It would appear that I am an anomaly.


----------



## Mona Lisa76

Bevdeforges said:


> Check to see if that exempt amount is for _the profit from the deemed sale_ of all your assets or on _the profit from the first $627,000 of assets._ The way they word those tax regulations can be tricky.
> 
> Though again (as with the FBAR and FATCA forms), they really are after only the fat cats who actually owe significant amounts.
> Cheers,
> Bev


But do you think they may want to audit my return, given that it had over 50 pfic funds...they may check my accountant'd calcylations and fecide i owe thoudands more. Total taxes so far forfour years is over $14,000 which coyld be deemed substantial...and with $60,000 in a us account, they could easily try to seize that. I'm really scared. Simoly hadn't realused the ramifications of investing in uk funds....I've been in uk since my early 20s and simply hadn't realised my cintinued us tax obligations...also had thought that the treaty's mean't I could take advantage of tax free uk investments, especially as i have dual uk/us citizenship.

So I'm not onkyhaving to pay us taxes on these tax free investments, but also onerous rates of taxes and back interest on what were merely phantom gains.

Do you think I'll be ok or will be targeted, Bev, since they could assume she may have calculated my returns aggressively and assume i'd owe more tax? I feel like a sitting duck...

Sorry about double post, had thought i'd lost the earlier one


----------



## AmTaker

Mona Lisa76 said:


> But Bev, don't you think it's possible that they may in fact decide to conduct a full audit on me, as I foolishly had the bulk of my assets in PFIC funds, so with phantom gains wound up owing over $13,000 in taxes going back to 2007 up through 2010, plus my estimated taxes paid for 2011...they may well decide to go through my accountant's complex calculations as they may assume she wasbeing aggressive and try to get more taxes out of me.
> 
> It's terrifying to think that what are mainstream UK unit trusts (and tax free ones at that with no UK capital gains) are being clobbered so hard by the IRS...I fear that they may decide she did it all incorrectly and wipe me out completely.
> 
> I thought the treaties were supposed to protect me from what is essentially discrimination. I am getting the wrong end of the stick. I can't begin to tell you how much stress this has caused me, plus the fact that because I'd inadvertedly under-reported my total income by over 25%, I will have a six year statute of limitations for the delinquent amended returns instead of the normal 3 year statute. what a long long time to wait tobe in the clear...Bev, do you think I'll be alright or am I doomed? I feel so vulnerable being caught in the headlights.
> 
> I have dual us/uk citizenship and have made my life in England and hadmistakingly thought that I only had to file a basic us return as a formality, as I pay british taxes, file uk returns, pay worldwide tax there etc. Had only recently lewrned that tge treatieshave get out clauses for americans whichcancause them to bedoubke taxed whuch stinks. It would appear that I am an anomaly.


Mona, if your accountant charged 16K (or whatever you said it was), I hope she did the calculations correctly !! But I wouldn't worry too much about small glitches in what is an extremely complex set of PFIC rules. 

About the SoL: as I understand it, the statute of limitations is extended to 6 years for any return (but just for that return) where income is under-reported by 25%. If there is no 25% under-reporting, that return has the normal SoL. And its from the original due date/amended date, not from when you submitted the amended return. [ For FBARs, its 6 from the original due date]

I think your position is somewhat different from others on the forum, because you do have some taxes due (although 13K is really not that much), and because you had already filed original returns (did you check the Schedule B box on the original returns where it asks about foreign accounts ?). I would think (hope ?) that the IRS has better things to do than to audit someone who is a long term expat, and has genuine reasons for not including income (foreign retirement account), but I doubt that anyone outside the IRS (and maybe only a few people inside) can say for sure. If you don't have any significant US income or assets I doubt they would bother. 

The dual tax stuff sucks when you live in a high tax country since foreign earned income exclusions doesn't benefit you anyway.


----------



## Mona Lisa76

AmTaker said:


> Mona, if your accountant charged 16K (or whatever you said it was), I hope she did the calculations correctly !! But I wouldn't worry too much about small glitches in what is an extremely complex set of PFIC rules.
> 
> About the SoL: as I understand it, the statute of limitations is extended to 6 years for any return (but just for that return) where income is under-reported by 25%. If there is no 25% under-reporting, that return has the normal SoL. And its from the original due date/amended date, not from when you submitted the amended return. [ For FBARs, its 6 from the original due date]
> 
> I think your position is somewhat different from others on the forum, because you do have some taxes due (although 13K is really not that much), and because you had already filed original returns (did you check the Schedule B box on the original returns where it asks about foreign accounts ?). I would think (hope ?) that the IRS has better things to do than to audit someone who is a long term expat, and has genuine reasons for not including income (foreign retirement account), but I doubt that anyone outside the IRS (and maybe only a few people inside) can say for sure. If you don't have any significant US income or assets I doubt they would bother.
> 
> The dual tax stuff sucks when you live in a high tax country since foreign earned income exclusions doesn't benefit you anyway.


They weren't retirement funds but rather tax free investment funds callef ISAs. I agree that I unintentionally could technically be guilty of fraud fir having failed to check the box in schedule b of my return but at least I didn't blatantlyunearned lie by answering no on thethe box; I merely left it blank. I had thought that because I was already paying taxes in the UK which are. normally higher than the US that I didn't need to declare my income


----------



## Mona Lisa76

AmTaker said:


> Mona, if your accountant charged 16K (or whatever you said it was), I hope she did the calculations correctly !! But I wouldn't worry too much about small glitches in what is an extremely complex set of PFIC rules.
> 
> About the SoL: as I understand it, the statute of limitations is extended to 6 years for any return (but just for that return) where income is under-reported by 25%. If there is no 25% under-reporting, that return has the normal SoL. And its from the original due date/amended date, not from when you submitted the amended return. [ For FBARs, its 6 from the original due date]
> 
> I think your position is somewhat different from others on the forum, because you do have some taxes due (although 13K is really not that much), and because you had already filed original returns (did you check the Schedule B box on the original returns where it asks about foreign accounts ?). I would think (hope ?) that the IRS has better things to do than to audit someone who is a long term expat, and has genuine reasons for not including income (foreign retirement account), but I doubt that anyone outside the IRS (and maybe only a few people inside) can say for sure. If you don't have any significant US income or assets I doubt they would bother.
> 
> The dual tax stuff sucks when you live in a high tax country since foreign earned income exclusions doesn't benefit you anyway.


They weren't retirement funds but rather tax free investment funds callef ISAs. I agree that I unintentionally could technically be guilty of fraud fir having failed to check the box in schedule b of my return but at least I didn't blatantlyunearned lie by answering no on thethe box; I merely left it blank. I had thought that because I was already paying taxes in the UK which are. normally higher than the US that I didn't need to declare my income


----------



## Mona Lisa76

I wasn't sure though if my amended returns' statute of limitations would be extended to six years from their original due dates or from the day I submitted the amended returns. Another thing that occurred to me is that if I amended them showing the correctly increased income within the original three years of thevoriginal three year statute that hopefilly the statute wouldn't be extended to six years...it gets so confusing. I feel so scared because i honestly thought that the treaties meant I was already covered bypaying uk tax on both my uk and us investments. It makes me wonder if they be harsh and make an example of me


----------



## Mona Lisa76

What I meant to say was I didn't think I had to worry about listing my unearned income because i'd erroneously believed that the tax treaties meant that i was covered since i'd alrady paid my uk taxes on these investments and that the irs could consult hmrc if they wanted more info about me. Had been fully declaring both my uk and us income on my uk tax returns thought all i had to do was list my earned income (covrred by 2555) and us investment gains and income on the us returns. 

Thought that article 26 protected me from discrimation in such matters...i feel i'm being royally screwed


----------



## 416

Vangrrl said:


> But as counter-intuitive as it is, I believe that the way to get off of the IRS radar is actually to file rather than to not file. If you are American and you behave like an American (have a US passport, file US tax returns) then there isn't really a whole lot to distinguish you from other Americans except that you live abroad. And that works to your advantage since it identifies you as someone with no US taxes owing, no US financial holdings and most likely some protection of another government.


Something like this:


----------



## Pathologic1

Mona Lisa
I can sure sympathize with your situation. You have been honest in paying the taxes of your home country and find that you owe some taxes to Uncle Sam. Many Canadians will find themselves in the same position. 
Like Canadians you won't be able to determine the risk and no one else can either. Even the best lawyer/accountant cannot possibly know. What a position to be in.

AS I see it there are three options.
1) be perfectly honest and file amended returns which will immediately get the IRS's attention and they will check that your FBARs were correct and they will take a closer look at your returns. You will be stressed and pay penalties and who knows what. I would only choose this option if I didn't have any FBAR problems (I had filed them). I'd just pay the penalties etc. I'd get one of the many expat accountants on the net (the one I used is in message 107) to file them and pay the penalties and interest and be done with it.
2) get rid of the PFICs immediately and begin filing correctly from now on without filing amended reports. This wont get their attention and you are good going forward. This may be the best option.
3) Renounce immediately and file your final return next year as you must to be legal. Indicate that you have filed the past five years (forgetting about the PFICs). After that you are off the radar and there would be no reason to bring your file up again. This is the ultimate relief and you should strongly consider it. Get off the IRS radar permanently and return to a normal life.

None are perfectly acceptable but you are in a spot where there is no easy way out. That's true of many of us and everyone has a different story.

One last comment; The statute of limitation kicks in from whenever your tax return is due, or when you actually file, whichever comes later. If you report all your income, it's 3 years. If you under-report by 25% of more, it's 6 years. (Note: if you intentionally file a fraudulent return, there is no statute of limitations, and the IRS can come after you at any time.)

It's no fun being an American... And good luck. Keep us posted.


----------



## 416

Draft guidelines for form 8938 published. Accounts below a $200,000 threshold (in total) on the last day of the year exempted: http://www.irs.gov/pub/irs-dft/i8938--dft.pdf


----------



## Bevdeforges

Hi Mona Lisa,
I really don't know what to tell you, except that the IRS has brought down upon themselves a ton of work. Actually, even if they don't believe what you've filed, the first thing they'll do is to contact you to ask for more information - and only after that will they even think about doing an audit. That could take YEARS - if they even decide to go that far. (And they don't appear to be any clearer on the regs than anyone else at this point.)

If and when you do get contacted by the IRS, you should probably then contact the IRS taxpayer advocate service: Taxpayer Advocate Service They actually are quite helpful and they do put forward your side of the argument - including the "good faith" effort you've made. 

I haven't used the IRS advocate service, but I had a problem with the California state tax people, and the taxpayer advocate I worked with was extremely helpful and basically helped me avoid penalties and fines in favor of simply getting the situation straightened out.

The IRS really is out to get the serious tax cheats, not people caught up in the sort of confusion of these new (and very frustrating) new rules. And frankly, if they turn up enough serious tax cheats, they won't have the time or the interest to bother hassling someone like you who is just caught between the two tax systems. I haven't heard of too many dual-nationals who have even gotten audited, so they may just take your returns as filed and spend their time looking for real tax dodgers.
Cheers,
Bev


----------



## AmTaker

Pathologic1 said:


> One last comment; The statute of limitation kicks in from whenever your tax return is due, or when you actually file, whichever comes later. If you report all your income, it's 3 years. If you under-report by 25% of more, it's 6 years. (Note: if you intentionally file a fraudulent return, there is no statute of limitations, and the IRS can come after you at any time.)
> 
> It's no fun being an American... And good luck. Keep us posted.


For an amended return (which MonaLisa said she filed), I believe it starts from the date of filing the original return. An amended return does not extend the statute of limitations (beyond 60 days if you are at the end of the original SoL). There are also some complications for returns that were still open at the time FATCA was passed -- they are extended to 6 years if more than 5k of income was due. [ I think]

pretty complicated, and I think some SoLs are suspended if you are outside the US.


----------



## Mona Lisa76

Pathologic1 said:


> Mona Lisa
> I can sure sympathize with your situation. You have been honest in paying the taxes of your home country and find that you owe some taxes to Uncle Sam. Many Canadians will find themselves in the same position.
> Like Canadians you won't be able to determine the risk and no one else can either. Even the best lawyer/accountant cannot possibly know. What a position to be in.
> 
> AS I see it there are three options.
> 1) be perfectly honest and file amended returns which will immediately get the IRS's attention and they will check that your FBARs were correct and they will take a closer look at your returns. You will be stressed and pay penalties and who knows what. I would only choose this option if I didn't have any FBAR problems (I had filed them). I'd just pay the penalties etc. I'd get one of the many expat accountants on the net (the one I used is in message 107) to file them and pay the penalties and interest and be done with it.
> 2) get rid of the PFICs immediately and begin filing correctly from now on without filing amended reports. This wont get their attention and you are good going forward. This may be the best option.
> 3) Renounce immediately and file your final return next year as you must to be legal. Indicate that you have filed the past five years (forgetting about the PFICs). After that you are off the radar and there would be no reason to bring your file up again. This is the ultimate relief and you should strongly consider it. Get off the IRS radar permanently and return to a normal life.
> 
> None are perfectly acceptable but you are in a spot where there is no easy way out. That's true of many of us and everyone has a different story.
> 
> One last comment; The statute of limitation kicks in from whenever your tax return is due, or when you actually file, whichever comes later. If you report all your income, it's 3 years. If you under-report by 25% of more, it's 6 years. (Note: if you intentionally file a fraudulent return, there is no statute of limitations, and the IRS can come after you at any time.)
> 
> It's no fun being an American... And good luck. Keep us posted.


Thank you very much for your considered response. Believe me, I have considered renouncing but I come from a very patriotic family and they'd never forgive me if I did that. I couldn't bear to hurt them, plus I don't really want to give up my US citizenship anyway. I have heard rumours that, if anything, the IRS are more likely to harass someone like me if they renounce then if I meekly go to them with my tail between my legs...Plus one never knows how peculiar they may become in future years about ex-citizens being even allowed to travel into the country. I have family ties and will also eventually inherit a substantial amount so my inheritance from my US parents would be heavily taxed by the US before I'd be able to receive it. It would seem I'm screwed however which way I look at it.

I would have dearly loved to get out of all the PFICs but with fatca coming plus the fact that I hadn't been filing FBARs, I came to the conclusion that I had no way out of making a disclosure...ironically enough, if I hadn't been filing returns at all, I probably could have got away with it by sorting out my portfolio, and then claim ignorance if I were ever discovered several years down the line; and by that time, enough time would have passed that they woudlnt' have known about the PFICs.

But it's the FBAR that's caught me out, plus the new 8938 fatca form that's coming in next year. Unfortunately, I have over $200,000 so will annoyingly have to file it directly with my 1040. If I were to have continued filing incomplete returns as I'd been doing, especially now that I am aware of the rules, I would then be guilty of willful non-disclosure which is a criminal offense.

I thus felt that the safest and most prudent thing to do was to find a good enrolled agent who is quite experienced with my type of problems who would do things correctly, including the PFIC calculations and 8621s. I was essentially like a deer caught in the headlights; as I saw no easy way around this, I concluded it was best to grit my teeth and get the pain over and done with as soon as possible. I thus fully but quietly disclosed. 

I've been filing US returns for many years but hadn't checked the box in schedule B, nor had I declared my investment income and savings interest from my UK assets which I've now learned is a big no-no. 

I feel terrible about it because I consider myself an honest person. It's just that it's been such an onerous process; my three amended returns (2007-09 plus 2010) came to 580 pages!!!

All I can hope is that the IRS won't want to plough through all that, especially as I know they like to close cases as quickly as possible.

At least my accountant felt that I was innocent enough to be put forward via a quiet disclosure whereby I'd only have to pay the taxes I owed with interest and a small penalty, whereas the OVDI programme would have probably cost me at least $25,000 with the 5% penalty plus my tax bill itself would have probably been doubled due to negligence penalties so we'd be talking about an additonal $40,000 in total, along with another four years of accounting fees which would have cost me an additional $10,000 probably, so call it $50,000 plus the $40,000 I will have wound having to pay when it's all over and done with..

And to top it all off, they might have even decided to push forward the full 25% penalty as they might have argued that my investment trust funds included enough US source income (even though they were registered in UK) to bring me ever the annual $10,000 threshold of US-based income.

I am grateful to her because she has given me some hope that it will just be a matter of time of going through the process. She claims that she has never had the IRS come back to her to clobber her clients with fines who have made a good faith disclosure as long as they paid back all their taxes. She also claims that at least up to now the IRS haven't been enforcing civilian FBAR penalties because they would probably be considered unconstitutional due to their severity.

She also believes that my amended returns would still just have a three years statute of limitations since they will have been corrected within the original three years of statue though don't know if this is correct or not.


----------



## Mona Lisa76

Bevdeforges said:


> Hi Mona Lisa,
> I really don't know what to tell you, except that the IRS has brought down upon themselves a ton of work. Actually, even if they don't believe what you've filed, the first thing they'll do is to contact you to ask for more information - and only after that will they even think about doing an audit. That could take YEARS - if they even decide to go that far. (And they don't appear to be any clearer on the regs than anyone else at this point.)
> 
> If and when you do get contacted by the IRS, you should probably then contact the IRS taxpayer advocate service: Taxpayer Advocate Service They actually are quite helpful and they do put forward your side of the argument - including the "good faith" effort you've made.
> 
> I haven't used the IRS advocate service, but I had a problem with the California state tax people, and the taxpayer advocate I worked with was extremely helpful and basically helped me avoid penalties and fines in favor of simply getting the situation straightened out.
> 
> The IRS really is out to get the serious tax cheats, not people caught up in the sort of confusion of these new (and very frustrating) new rules. And frankly, if they turn up enough serious tax cheats, they won't have the time or the interest to bother hassling someone like you who is just caught between the two tax systems. I haven't heard of too many dual-nationals who have even gotten audited, so they may just take your returns as filed and spend their time looking for real tax dodgers.
> Cheers,
> Bev


I've already been contacted by the IRS but I feel reassured that so far they've only claimed minor tax corrections such as a $46 shortfall for my amended 2007 return which is no big deal. It would suggest to me that it means that the returns are being processed and that if they were really not happy with them that they would have contacted me with questions, which they haven't done (so far).

The more I think about it, the more I believe that you're right. I doubt if they're going to give me a hard time, especially given that I've made a good faith effort to come forward and be completely honest with them. After all, I don't think a 580 page set of four years of returns would appear to have been faked, especially given that I will have had to pay back a five figure sum which, while not huge, is still a hefty chunk when I haven't lived there for over 23 years.

I agree that the Tax Advocate could be a possibility if things get really bad. I'm just so very sorry that it even happened because I hate cheats and I consider myself an honest person...but, alas, I'd been negligent and hadn't realized my continued tax obligations and responsibilities.

I almost get the impression that the IRS have a 'don't ask, don't tell' attitude for smaller fish like me (though I also realize that I'm not a minnow). I nontheless have Asperger's Syndrome so have never earned a full-fledged living. I work part-time for a tourbus company in London and was relying on my PFIC investments to serve as a de facto retirement plan.

My spouse had to take early retirement at 50 (he's 60 now) due having had a stroke in his forties; he thus only has a small pension and inheritance of his own...over the years, he gave me monthly amounts of money to invest so that if something ever happened to him and he had to go into a nursing home, that I would thus have enough assets in case the local council decided to seize all his savings to pay for his nursing care.

In hindsight, I should have done the opposite and put the bulk of our assets in his name so they could stay unexposed to US taxation...it outrages me that I actually have annual limit on how much I can gift to my husband, given that he is not a US citizen. He's my SPOUSE for God's sake. It enrages me how the US can control my finances when I have British citizenship and have made my life over here in England. I also feel that his wealth is being indirectly attacked since most of my financing for my investments came from him.

I never plan to ever go back to the states. to live (though will still visit)..if I didn't have family ties, I'd ahve considered renouncing but as things are, I need to keep my US citizenship because it would dishonour my family if I gave it up; they'd deem it an act of Treason.

I was brought up to believe that sometimes loyalty counts for more than money and I would have to say that I agree. I may be really angry about this onerous situation but at the end of the day, I should have been aware of it so that's the way it goes.


----------



## Mona Lisa76

AmTaker said:


> For an amended return (which MonaLisa said she filed), I believe it starts from the date of filing the original return. An amended return does not extend the statute of limitations (beyond 60 days if you are at the end of the original SoL). There are also some complications for returns that were still open at the time FATCA was passed -- they are extended to 6 years if more than 5k of income was due. [ I think]
> 
> pretty complicated, and I think some SoLs are suspended if you are outside the US.


Actually, I think you're right; I seem to remember reading somewhere that the IRS has in theory the right to audit an expat's return indefinitely. There is no statute of limitations for American citizens living permanently abroad. 

But if it were in theory three years' statute, I would hope that having filed the correctly amended returns (even though they will be showing more than 25% increased income) that they would still remain within the three years statute instead of being extended to six years.

So perhaps I should just assume that if they haven't bothered me within a couple years of having filed the amended returns that they probably won't bother me.

It sucks though that I'm still going to have to file that onerous 8938 return with my 2011 1040 though...It's bad enough having to file FBARs. My delinquent fbars were the simplified ones though because I had over 25 accounts!! I just hope that it doesn't seem dodgy to the Treasury and IRS...I'm really scared, I must admit.

My impression is that if people come forward now, even with quiet disclosures, that they should be forgiven; but that after fatca is implemented they won't be understanding any longer because they'll then have the direct means to find out what people have or haven't disclosed.

I'm just so relieved I had the sense to ask around before impulsively putting myself forward for OVDI. I do hope that they will be merciful with the Canadians here who rang the bell, so to speak. Even a 5% penalty is outrageous for a mere reporting error, though am optimistic that it will be OK for them. Don't think the UK is so willing to push back though for whatever reason.


----------



## AmTaker

Mona Lisa76 said:


> And to top it all off, they might have even decided to push forward the full 25% penalty as they might have argued that my investment trust funds included enough US source income (even though they were registered in UK) to bring me ever the annual $10,000 threshold of US-based income.
> 
> I am grateful to her because she has given me some hope that it will just be a matter of time of going through the process. She claims that she has never had the IRS come back to her to clobber her clients with fines who have made a good faith disclosure as long as they paid back all their taxes. She also claims that at least up to now the IRS haven't been enforcing civilian FBAR penalties because they would probably be considered unconstitutional due to their severity.
> 
> She also believes that my amended returns would still just have a three years statute of limitations since they will have been corrected within the original three years of statue though don't know if this is correct or not.


If there was a so-called substantial understatement (25%), then its 6 from the date of filing original returns, as I understand. But that doesn't mean you have to wait on tenterhooks for n years, if nothing happens within oh, a year or so, I would assume you are home clear. Or even if you get hit with a minimal fine (say $500 total or so, that would be the same). 

I think (for what its worth) that QD was right for you, especially because of the twist that you mentioned (indirect US source income through UK funds) that might push you into the 25% category. Hadn't thought of that, and I wonder if other people in OVDI might see the same problem. 

[ However I'd be very wary of claims about unconstitutionality of penalties, at least from someone who is not a tax or constitutional law expert. Jack Townsend, an expert in criminal tax law said in a post a while back that he thought that penalties would only start becoming unconstitutional if they came to the 100% mark per violation (i.e. per year) because there is apparently a Supreme Court case to that effect. There are too many kooks who toss around the word 'unconstitutional' about tax laws ... whole web pages full of such arguments. ]

That was just an aside -- the really large penalties would typically only be applied to really bad offenders (not just tax offenders, but illegal income), they are not relevant for normal folks. Even the smaller so-called non willful penalties can pile up, but again, I would expect them to be applied to egregious offenders only, not someone who left the country decades ago and made a honest mistake. 

In terms of inheriting from your parents, there are ways to do that and minimize tax bite even if you are not a US citizen. A good estate and trust lawyer might be able to do that for your parents. Such a person wouldn't be cheap, but could be worth it. Good luck, and try and sleep well.


----------



## AmTaker

Mona Lisa76 said:


> It sucks though that I'm still going to have to file that onerous 8938 return with my 2011 1040 though...It's bad enough having to file FBARs. My delinquent fbars were the simplified ones though because I had over 25 accounts!! I just hope that it doesn't seem dodgy to the Treasury and IRS...I'm really scared, I must admit.
> 
> .


Actually, I think it would seem more dodgy if someone had one large account. Surely people trying to conceal things would keep one large account, rather than 2 dozen small accounts !!


----------



## Peg

416 said:


> Draft guidelines for form 8938 published. Accounts below a $200,000 threshold (in total) on the last day of the year exempted: http://www.irs.gov/pub/irs-dft/i8938--dft.pdf


Why couldn't they backdate this change?!? It looks like smaller accounts might be exempt from filing the 8938.

Curious if this change was in the works or if it is in response to the uproar by expats!


----------



## Bevdeforges

AmTaker said:


> pretty complicated, and I think some SoLs are suspended if you are outside the US.


I'm curious where you've gotten that from. To my knowledge, the statute of limitations is what it is - and there is no "suspension" for those of us living overseas. (But if you're right - I'd like to know about it, for all the obvious reasons.)
Cheers,
Bev


----------



## Vangrrl

Bevdeforges said:


> I'm curious where you've gotten that from. To my knowledge, the statute of limitations is what it is - and there is no "suspension" for those of us living overseas. (But if you're right - I'd like to know about it, for all the obvious reasons.)
> Cheers,
> Bev


I would read this to mean that you can't flee the country and hide out, all the while letting the statute of limitations run out. Then you happily return 10 years later with all your tax issues behind you.


----------



## Nononymous

Peg said:


> Why couldn't they backdate this change?!? It looks like smaller accounts might be exempt from filing the 8938.


Is this the thing that replaces the FBAR form? If so, the limit just went from $10k to $200k, so it becomes a total non-issue for many of us.

Or am I completely mistaken?


----------



## Peg

Nononymous said:


> Is this the thing that replaces the FBAR form? If so, the limit just went from $10k to $200k, so it becomes a total non-issue for many of us.
> 
> Or am I completely mistaken?


Bottom left of page 2 at that link for the draft 8938: Filing Form 8938 does not relieve you of the requirement to file Form TD F 90-22.1, FBAR, if you are otherwise required to file Form TD F 90-22.1.

From what I can tell, the 8938 is a form to go along with your US tax return form 1040.

Regardless of it's use, it appears that it is in the right direction to eliminate reporting for thousands of us! 

It makes me more confident that they won't come after me for my under $100K of investments :clap2:


----------



## Mona Lisa76

AmTaker said:


> Actually, I think it would seem more dodgy if someone had one large account. Surely people trying to conceal things would keep one large account, rather than 2 dozen small accounts !!


True, but would have thought that as my fbar lists that i had 43 accounts without actualky listing them out might cause them to want to audit me to find out what exactly I do have

I suppose that's what the blasted 8938 form will force me to fully disclose. At least I have made every effort to fully become compliant, plus I have closed down most of my accounts (many of which had been dormant) with hardly any money in them.) It just irritates me because it will mean that accountants will raise their fees even higher for people like me. I will probably have to budget for perhaps two thousand pounds of accounting fees each year due to this onerous form.

This is what rankles me: not just the fact that I will have had to shell out thousands in back taxes, accounting for amended returns and financial planning; all this will have cost me a couple years' wages and now I learn that I will have to pay fairly large fees for my annual accounting costsin order to remain compliant. On the ither hand, I will be able to easily file my UK return without an accountant.

I suppose though that everything us relative; I don't feel wealthy but perhaps compared to most on here, I would be considered fairly well off. But I still think $200,000 is not exactly a lot of money these days, especially when many middle class people will have built up pension funds that could easily bring their total assets above this amount, thus triggering the reporting requirement.

Whike I agree with Bev that reasonable estimates should suffice for the fbar, I'd imagine that the 8938 firm would be more likely to trigger enforceable penalties if there were any inaccuricies. But it's hard to get precise valuations for my personal pension.

I alsi pray they don't try to hit me with fines for failure to have filed 3520 and 3520A for it, as they may well consider it a'foreign grantor trust'. These forms cost thousands in additiion to the accounting fees.

I will also not be allowed to start drawing from it till 59 and a half under US rules even though it's 55 in Britain where I live. This also rankles me.

If I didn't have my family ties, I would have felt a huge sense of relief if I could have renounced but as things are, I will just have to get on with it. It makes me furious though.


----------



## Bevdeforges

Vangrrl said:


> I would read this to mean that you can't flee the country and hide out, all the while letting the statute of limitations run out. Then you happily return 10 years later with all your tax issues behind you.


I don't know, but lots of us live outside the country and the statute of limitations clock just keeps merrily ticking along just like it does in country. For income you have not reported, there is no statute of limitations, and whether you stay in the US or head elsewhere, they can always come after you for that.
Cheers,
Bev


----------



## Mona Lisa76

True, but was under the impression that the media blitz in Canada was in reality more to get ordinary Canadians with US obligations to get back into the system rathervthan to go after them, even though their non-filed returns in theory have non ststute of limitations. I thought it was in reality fraud that has no statute of limitations rather than innocent undereporting of income, such as phantom gains.

But does a correctly amended return listing more than 25% increase in income automatically get extended to six years' statute of limitations from its original due date or if amended within the original three year statute, would it remain at three years? gets so confusing.
There could be many Canadians who amend their return to include Canadian investment incomebut innocently overlook pfic rules and thus unintentionally omit the reporting of phantom mark to market gains on their mutual funds


----------



## Bevdeforges

I've found what looks to be a very good explanation of the purpose behind this FATCA stuff: JCX-42-09

OK, it's 65 pages long, and you really don't need to read the whole thing in depth. But this is the "technical explanation" of the legislation, prepared by the Joint Committee on Taxation. As you'll see, the real focus of the bill seems to be establishing withholding on non-resident aliens with US source income and finding foreign accounts and investment vehicles that take in US source income that isn't being reported by "US persons." 

Yes, it applies to US citizens living abroad and it seems to require a hell of alot of reporting, but there are several mentions that the Secretary "may" eventually issue regulations exempting various categories of accounts from reporting, if they are deemed to be not particularly subject to abuse. There are also several mentions of the penalties for failing to file these documents being waived for those with a "reasonable explanation" and "no willful intent" to hide information.

It just supports my contention that the IRS is going to pick and choose carefully which filings they choose for audit - based on the intent of the legislation (which is to catch willful tax evaders using foreign accounts and other vehicles to squirrel away US source income). Maybe after they run out of willful tax evaders, they'll get curious about the rest of us, but the chances of your being audited are still pretty slim - especially if you're resident outside the country.
Cheers,
Bev


----------



## Guest

Peg said:


> Why couldn't they backdate this change?!? It looks like smaller accounts might be exempt from filing the 8938.
> 
> Curious if this change was in the works or if it is in response to the uproar by expats!


Hi,

I read through the draft, thinking that it might provide some relief, unfortunately (and I hate to bring a dark cloud in) it seems that even the $200,000 threshold will not provide relief to those of us with far less than that in the bank. It would seem that one asset that I had forgotten about is my home. In today's market, it is probably worth about $375,000, with a mortgage approximately $180,000. While the property is jointly owned with my Canadian spouse, I still have to claim the entire value which is $195,000 (fair market value less mortgage) and add it to my savings and RRSP's. That will easily put me over the threshold, even though my savings are far less than $100,000. Unfortunately, there doesn't seem to be any relief in sight, even for us "small fish". This document is clearly not going to help us out of this nightmare.


----------



## Mona Lisa76

CanadianAtHeart said:


> Hi,
> 
> I read through the draft, thinking that it might provide some relief, unfortunately (and I hate to bring a dark cloud in) it seems that even the $200,000 threshold will not provide relief to those of us with far less than that in the bank. It would seem that one asset that I had forgotten about is my home. In today's market, it is probably worth about $375,000, with a mortgage approximately $180,000. While the property is jointly owned with my Canadian spouse, I still have to claim the entire value which is $195,000 (fair market value less mortgage) and add it to my savings and RRSP's. That will easily put me over the threshold, even though my savings are far less than $100,000. Unfortunately, there doesn't seem to be any relief in sight, even for us "small fish". This document is clearly not going to help us out of this nightmare.


Agree it sucks but am relieved I went ahead and made my disclosure/amended returns this year instead of hitting them full throttle with it all next year....but it means that my 2011 return will probably be over 200 pages (versus 8 pages for my UK return). My accountant will probably charge me over $3000 and possibly up to$5000 for it though hopefully my US return for 2012 will cost much less, as I will have greatly simplified things by closing most of my accounts and moving what had been in my numerous PFICs into just one US compliant portfolio. 

Was also of the impression that your main residence if you live abroad didn't have to be disclosed on the 8938- just holiday and rented out properties, though could be mistaken. Could be that a wealth tax is on its way. 
I agree with Bev that expats abroad are probably not their main target but it's nonetheless going to be onerous having to budget for expensive annual accounting charges going forward in order to keep compliant. I earnestly hope they'll see sense and decide to raise the threshold to $1,000,000 or even two million dollars.


----------



## Nononymous

Mona Lisa76 said:


> True, but was under the impression that the media blitz in Canada was in reality more to get ordinary Canadians with US obligations to get back into the system rathervthan to go after them, even though their non-filed returns in theory have non ststute of limitations. I thought it was in reality fraud that has no statute of limitations rather than innocent undereporting of income, such as phantom gains.
> 
> But does a correctly amended return listing more than 25% increase in income automatically get extended to six years' statute of limitations from its original due date or if amended within the original three year statute, would it remain at three years? gets so confusing.
> There could be many Canadians who amend their return to include Canadian investment incomebut innocently overlook pfic rules and thus unintentionally omit the reporting of phantom mark to market gains on their mutual funds


How the media blitz started in Canada is a bit curious. I doubt it was the IRS PR department going out and planting stories. There was one article in the Globe & Mail back in early July, presumably triggered by a small number of concerned individuals noticing that the approaching OVDI deadline actually might have an impact on something close to a million people. Then a burst of attention in late August and early September, followed by some angry editorials, and now it's sinking back off the radar. 

No idea about statute of limitations, nor any particular interest in that from Canadian perspective, as I'm still optimistic there will be a de facto mass amnesty given the scope of the problem (hundreds of thousands of "accidental" citizens with no connection to the US, or Americans who naturalized decades earlier but who, in their view, had their citizenships retroactively unrenounced without their consent) plus the true intent of FBAR and resistance to FATCA. 

The issue in Canada is not under-reporting, but reporting at all - one estimate I saw (a law student's research cited in comments on the Hodgen blog) suggested something like 40,000 out of 600,000 "eligible" Canadian-Americans actually filed US tax returns. And when the Globe & Mail ran a poll after a high-profile commentary piece, more than half the respondents said their plans were to continue ignoring this. Which I think is still the sensible approach for anyone with no direct connection to the US (family ties, potential inheritance or assets, and that horrible black mark - US birthplace on the passport). 

Personally, I'm somewhat past my sputtering outrage and willingness to immediately renounce. I think it's probably smarter to join the flood and file minimal 1040s for five years (just enough not to perjure myself on passport renewal) and get on with it. Might ignore FBAR on principle or wait until it's a direct order. But as I have an appointment with the consul in two weeks, I'm going to go down and talk to him and ask some questions. If nothing else, it's a way to officially register one's disgust - by taking up an hour of a diplomat's time - and given the quality of professional advice around here (all the people who panicked and let lawyers and accountants talk them into OVDI) I think I'd rather go closer to the source. 

What I have no interest in doing is paying thousands for accountants to get everything exact, since there's no money owing. I've said this a few times before, but a non-dual American friend here just takes a 1040, writes down his total income and zero tax owing, staples it to a copy of his Canadian return, and sends it off. Basta. Works like a charm. 

[PS to Mona Lisa - You could just renounce without telling anybody, no? It's not like people read the Federal Register every day.]


----------



## Bevdeforges

Nononymous said:


> How the media blitz started in Canada is a bit curious. I doubt it was the IRS PR department going out and planting stories. There was one article in the Globe & Mail back in early July, presumably triggered by a small number of concerned individuals noticing that the approaching OVDI deadline actually might have an impact on something close to a million people. Then a burst of attention in late August and early September, followed by some angry editorials, and now it's sinking back off the radar.


It's standard operating practice in the US for the IRS to issue press releases just before the April 15th filing deadline, highlighting all the big tax cases they've won in the last year. It's clearly a sort of scare tactic designed to "remind" people about filing.

I'm sure the article in the Globe & Mail was the result of an IRS press release.

Then someone posted an article on FB today about a similar "scare tactic" the US Postal Service is using to remind people of the "dangers" of paying their bills online rather than writing a nice check and sticking a stamp on it to mail. The Post Office in the US is in danger of going broke, so they're trying to scare folks back into using snail mail in the hopes of generating a little cash.
Cheers,
Bev


----------



## Mona Lisa76

Nononymous said:


> How the media blitz started in Canada is a bit curious. I doubt it was the IRS PR department going out and planting stories. There was one article in the Globe & Mail back in early July, presumably triggered by a small number of concerned individuals noticing that the approaching OVDI deadline actually might have an impact on something close to a million people. Then a burst of attention in late August and early September, followed by some angry editorials, and now it's sinking back off the radar.
> 
> No idea about statute of limitations, nor any particular interest in that from Canadian perspective, as I'm still optimistic there will be a de facto mass amnesty given the scope of the problem (hundreds of thousands of "accidental" citizens with no connection to the US, or Americans who naturalized decades earlier but who, in their view, had their citizenships retroactively unrenounced without their consent) plus the true intent of FBAR and resistance to FATCA.
> 
> The issue in Canada is not under-reporting, but reporting at all - one estimate I saw (a law student's research cited in comments on the Hodgen blog) suggested something like 40,000 out of 600,000 "eligible" Canadian-Americans actually filed US tax returns. And when the Globe & Mail ran a poll after a high-profile commentary piece, more than half the respondents said their plans were to continue ignoring this. Which I think is still the sensible approach for anyone with no direct connection to the US (family ties, potential inheritance or assets, and that horrible black mark - US birthplace on the passport). I
> 
> Personally, I'm somewhat past my sputtering outrage and willingness to immediately renounce. I think it's probably smarter to join the flood and file minimal 1040s for five years (just enough not to perjure myself on passport renewal) and get on with it. Might ignore FBAR on principle or wait until it's a direct order. But as I have an appointment with the consul in two weeks, I'm going to go down and talk to him and ask some questions. If nothing else, it's a way to officially register one's disgust - by taking up an hour of a diplomat's time - and given the quality of professional advice around here (all the people who panicked and let lawyers and accountants talk them into OVDI) I think I'd rather go closer to the source.
> 
> What I have no interest in doing is paying thousands for accountants to get everything exact, since there's no money owing. I've said this a few times before, but a non-dual American friend here just takes a 1040, writes down his total income and zero tax owing, staples it to a copy of his Canadian return, and sends it off. Basta. Works like a charm.
> 
> [PS to Mona Lisa - You could just renounce without telling anybody, no? It's not like people read the Federal Register every day.]


It's not an option because I owed significant taxes due to the pfic problem, plus had already been filing incomplete returns so there was no way around it that I could see....i thus had to make a cpmplete disclosure and make sure it was calculated completely correctly, otherwise itcould have been deemed willful nondisclosure. The fbars and fatca made me conclude that I had no other option but to comply.


----------



## Mona Lisa76

Many Canadians could have investment funds that could be considered pfic's, as most foreign unit trusts are. This could mean that many could wind up owing substantial us raxes like I did...and with fatca coming, their accounts could become discovered which is why I concluded that I had no other option but to come forward. I'd like to think that the irs will be reasonable but taxes owed are taxes owed even if from accidently anomalous investments. But where I'm iptimistic is that they will almost certainly accept waivers of punitive fines if delinquent fbars or 3520s are reported.


----------



## Guest

*Accidental U.S. Citizenship and Renunciation*

I am considering requesting an appointment to discuss renunciation of U.S. citizenship and to find out what I need to do to proceed with the same for my adult developmentally challenged son. I have been contributing to a Registered Disability Savings Plan (RDSP) for my son’s financial needs when I am gone and do not want to jeopardize that “retirement plan” set up for him. I presume the following would be the same as for minor children.
_F. RENUNCIATION FOR MINOR CHILDREN

Parents cannot renounce U.S. citizenship on behalf of their minor children. Before an oath of renunciation will be administered under Section 349(a)(5) of the INA, a person under the age of eighteen must convince a U.S. diplomatic or consular officer that he/she fully understands the nature and consequences of the oath of renunciation, is not subject to duress or undue influence, and is voluntarily seeking to renounce his/her U.S. citizenship. _​
I came to Canada as a landed immigrant in 1969 and soon after became a Canadian citizen – and at the time honestly was under the impression that I had renounced my U.S. citizenship in doing so. Thus, I had not been filing U.S. income taxes nor submitting FBAR’s but filed as soon as I learned it was a requirement as it appears I am still a U.S. citizen (2005, 2006, 2007, 2008, 2009, 2010 and respective year FABR’s). 

As I read it, I have a window of opportunity to renounce my U.S. citizenship as I would be exempt (but I would want this verified) as I do not meet any of the criteria:

_You qualify for the covered expatriate and the related exit tax, if you meet any of the following criteria:

you have a net worth of US$ 2 million or more;

you have an average net U.S. income tax liability of greater than US$ 139,000 (thereafter indexed for inflation; $145,000 for people expatriating in 2009) for the five year period prior to expatriation; or

you fail to certify that you have complied with all U.S. federal tax obligations for the preceding five years.

Herewith, all property subject to gift tax and all property, where you hold a use right, are included for purposes of the net worth test.​_
It is sad that renunciation of U.S. citizenship is the only way to end the stress and expense of having a cross-border accountant each year prepare my and my husband’s Canadian and then U.S. tax filings based on our Canadian taxes, with no actual tax due to the IRS.

As I read it, my son, born in Canada of parents born in the U.S. and never having lived in the U.S. would qualify if he understood all implications of renunciation. (He has no benefit with his accidental U.S. citizenship.):

_The exceptions are dual nationals from birth, who have not lived in the US for more than 10 years from the last 15, and persons younger than 18½ who have not lived in the US for more than 10 years._​
Does anyone have a similar situation? 

Thanks for all the information on this blog!


----------



## Ladyhawk

CanadianAtHeart said:


> Hi,
> 
> I read through the draft, thinking that it might provide some relief, unfortunately (and I hate to bring a dark cloud in) it seems that even the $200,000 threshold will not provide relief to those of us with far less than that in the bank. It would seem that one asset that I had forgotten about is my home. In today's market, it is probably worth about $375,000, with a mortgage approximately $180,000. While the property is jointly owned with my Canadian spouse, I still have to claim the entire value which is $195,000 (fair market value less mortgage) and add it to my savings and RRSP's. That will easily put me over the threshold, even though my savings are far less than $100,000. Unfortunately, there doesn't seem to be any relief in sight, even for us "small fish". This document is clearly not going to help us out of this nightmare.


I thought that we did not have to report material assets like our personal residence or our vehicles, just money, investment and pension accounts. Now I am confused. What gives?


----------



## Ladyhawk

Nononymous said:


> What I have no interest in doing is paying thousands for accountants to get everything exact, since there's no money owing. I've said this a few times before, but a non-dual American friend here just takes a 1040, writes down his total income and zero tax owing, staples it to a copy of his Canadian return, and sends it off. Basta. Works like a charm.
> 
> ]


I have a relative here with dual citizenship, and that is what he does with the 1040 and his canadian reyurn, he has been doing this for over 5 years and no problem. He does fill out the form (forget which now) to defer tax on his RRSP.


----------



## Mona Lisa76

I often wonder if the accountants and attorneys try to make the irs sound worse than they actually are. I'd assume that if you're honestly listing all your Canadian earned and unearned income on your 1040 and can demonstrate you have no tax owing after taking into account foreign tax credits that you should ok. It's only people who, like myself, who invested in UK pooled funds that will have tax liabilities due to phantom gains and anolamous pfic taxation...such is life.

And because Jim Flaherty has stated that they're not going to enforce IRS fines for lack of reporting, I'd imagine that the vast majority of USCs in Canada should be fine. It will be interesting to see if Britain will push back in a similar way.

It's also fairly awkward for the IRS to directly seize assets located outside the US which is why my advisor is suggesting I move the bulk of my US assets to the UK where I live. Doing so will also make UK compliance easier, which they seem to overlook. The US can be imperialistic like that. They seem to forget that I also have to consider Uk tax compliance issues...


----------



## CanadianHoosier

CanadianHoosier said:


> I read the article in the National Post in August, "Americans among US" This prompted me to send an email to to the editor, Diane Francis. She is also a US citizen
> 
> I provided my summary:
> 
> Moved to Canada from the US in 1982 to marry a Canadian.
> Lived and worked in Canada for 30 years. Acquired Canadian citizenship in 2003.
> 
> NO source of US income. Have not submitted a US tax return since 1981.
> 
> Submit CDN tax returns every year. I have RRSP's, RESP's and TFSA's.
> 
> Her response: Get professional advice.
> 
> So I contacted a local certified accountant, he took my Canadian returns for the past 5 years, completed US income tax returns.
> 
> 2010 - Zero owed
> 2009 - Zero owed
> 2008 - $3101 owed
> 2007 - $507 owed
> 2006 - Zero owed
> 
> Completed a document that summarized my individual and joint bank accounts and account numbers, as well as all RRSP's account numbers and same for TFSA's and RESP's. He charged me $1300 bucks.
> 
> Wrote a cheque to the IRS and sent it down to the US on Wednesday.
> 
> I am now working on Renouncing my US citizenship.
> I am also contacting my Minister of Parliament, Jim Flaherty


My cheque to the IRS was cashed. Now dreading the mailman....

I have my US Citizenship renunciation documents completed and will try to schedule an appointment as soon as possible.


----------



## Nononymous

CanadianHoosier said:


> My cheque to the IRS was cashed. Now dreading the mailman....
> 
> I have my US Citizenship renunciation documents completed and will try to schedule an appointment as soon as possible.


Purely out of curiosity - if it's not too complex or private - why did you owe those two years?


----------



## Pathologic1

*FBAR boogeymen has No Teeth in Canada*

Don't worry. 

I would bet big, big money that you'll never hear anything at all, ever, which is good news.

Again they could get whatever you owe in taxes through the CRA but they would have to go to a US court to have any FBAR fines imposed. You owe nothing until the court says so. These are not the same as taxes and taking you to court would be a waste of money because that court's judgement means nothing in Canada and you could just ignore it. The IRS has to make money and that is a losing proposition for them. This is why the IRS has NEVER gone after someone like you for FBAR fines. The chances of you being the first are less than your winning the lotto.

I owed more than you and I used to be worried but now I couldn't care less. I'll laugh in their face if they say I owe them a cent from their stupid forms. I'm sure they are just tickled pink that I submitted them at least they are getting some compliance. 

One easy way to end up owing the US taxman is if you have Canadian dividends or capital gains, especially from a Canadian small business



CanadianHoosier said:


> My cheque to the IRS was cashed. Now dreading the mailman....
> 
> I have my US Citizenship renunciation documents completed and will try to schedule an appointment as soon as possible.


----------



## Mona Lisa76

Does anyone here have any idea how much enrolled agents or accountants typically will be chargung for filing the upcoming 'son of fbar' 8938 form?


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## Mona Lisa76

they're not going to hassle USCs living inCanada unless they directly became defiant. A good faith effort to comply would almost certainly be respected. It also wouldn't be practical for IRS to enforce draconian fines for genuine mistakes...also agree with an earlier post that one could appeal to the taxman's advocate such as when the might get awkward about onerous forms such as the 3520 and 3520A that they might want for a personal pension scheme. These forms cost rhousands to get profrssionally prepared and many wouldn't be able to afford filing them. They'd need to see reason especially when it's obvious there waa no evasion taking place.

Also would be difficult for them to seize assets in Canadian accounts, especially with the Maple Leaf pushback


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## Peg

What do you mean "son of FBAR" form? Will that replace the FBAR?


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## Mona Lisa76

No, it will be for expats with more than $200,000 and will be in addition to fbar...it will have to be directly attached to the 1040. However, only provisional draft of instructions has been published, not the form itself yet. Hopefully may never come out at all or at least be pushed back to the 2012 tax year to be filed in 2013 so we can have more time to simplify our accounts. I had over 45 accounts to list on the simplified fbar which should be reduced to eight with the simplified compliant portfolio going forward, etc.


----------



## Vangrrl

Bevdeforges said:


> I don't know, but lots of us live outside the country and the statute of limitations clock just keeps merrily ticking along just like it does in country. For income you have not reported, there is no statute of limitations, and whether you stay in the US or head elsewhere, they can always come after you for that.
> Cheers,
> Bev


I think there's a difference in intent. If you are an expat who is filing taxes from abroad, then the US knows where to find you and so the SOL still applies. If you leave the country for the express purpose of evading taxes, then its reasonable that the IRS would have the option of waiting for your to return to the US before going after you, rather than attempting to find you abroad (which could be next to impossible). That would fall under the "no SOL if they suspect fraud" category.

Again, this is just conjecture on my part. Common sense may have nothing to do with it!


----------



## Bevdeforges

Vangrrl said:


> I think there's a difference in intent. If you are an expat who is filing taxes from abroad, then the US knows where to find you and so the SOL still applies. If you leave the country for the express purpose of evading taxes, then its reasonable that the IRS would have the option of waiting for your to return to the US before going after you, rather than attempting to find you abroad (which could be next to impossible). That would fall under the "no SOL if they suspect fraud" category.
> 
> Again, this is just conjecture on my part. Common sense may have nothing to do with it!


How would the US know whether I left the country for the express purpose of evading taxes or not? (Or, for that matter, where to find me?)

I know lots of people who have been living overseas for 20 or 30 years and never realized they were supposed to have been filing their tax returns. There is no SOL on unreported income, that's true (because under-reporting by 25% or more is assumed to be fraud). But as long as you disclose, the clock starts running - no matter why you left the US.
Cheers,
Bev


----------



## technopal

*Nonanonymous*

Please keep us posted on your expatriation. I emailed Phil Hodgens on the exit tax for Dual Citizens at birth and the exit tax. He wrote a great blog on his site and I know feel like we can move forward without penalty.


----------



## AmTaker

*Statute of Limitations*

On the Statute of Limitations

I read a post on Jack Townsend's blog a while back that described some of the statutes of limitations issue for people who live abroad. Note these are criminal SoLs only, not civil SoLs so probably not a big concern for most people here.
-- If someone resides abroad, the statute of limitations for tax crimes is suspended when the person is abroad.
-- For FBARs (as they are not tax crimes), the statute of limitations is only suspended when someone is a fugitive from justice AND outside the US. 

Civil SoLs are more important for most of us. I'm not sure, but I don't think civil SoL's are impacted much by residing abroad. I think there is some extra collection period and some suspension if there is any difficulty in getting records from abroad. Also, if some of the foreign trust forms are not filled, that year remains open. 

But unless someone owes a really large chunk of money, I doubt the IRS would bother to go > 6 years, and if they don't think there is a 25% understatement, I doubt they would go > 3 years.


----------



## AmTaker

Mona Lisa76 said:


> True, but was under the impression that the media blitz in Canada was in reality more to get ordinary Canadians with US obligations to get back into the system rathervthan to go after them, even though their non-filed returns in theory have non ststute of limitations. I thought it was in reality fraud that has no statute of limitations rather than innocent undereporting of income, such as phantom gains.
> 
> But does a correctly amended return listing more than 25% increase in income automatically get extended to six years' statute of limitations from its original due date or if amended within the original three year statute, would it remain at three years? gets so confusing.
> There could be many Canadians who amend their return to include Canadian investment incomebut innocently overlook pfic rules and thus unintentionally omit the reporting of phantom mark to market gains on their mutual funds


Right, fraud has no SoL. Underporting of income by itself unless it can be attributed to fraud (which is quite hard to prove) just extends the SoL out to 6 years for THAT return from the original due date or filing date (whichever is later). Since you filed an original return, I think its 6 from original date. [ Additional quirks for a few returns still open when FATCA was signed, they can get extended to 6 in some cases].


----------



## northof60

Good questions. Regarding FATCA, in addition to violating Canadian privacy laws, it looks like it may violate clause 15 of the Canadian Charter of Rights and Freedoms guaranteeing freedom from discrimination based on nationality. Any lawyers out there with an opinion on this?



Richard1948 said:


> This forum is very helpful for those people wanting to become compliant with IRS regs. But there are some obvious questions that have not been asked, or answered.
> 
> 1. What exactly can the IRS do to a dual citizen that does not file in the US? I understand that US law requires US citizens to enter and exit the US using a US passport (although this was not enforced in the past). A dual citizen's Canadian passport states the place of birth and this can trigger questions and hassles when going to the US. In order to get a US passport through the US consulate or embassy, one needs to be IRS compliant. So, ultimately non-filers might be denied entry to the US. So what happens if one simply does not go to the US?
> 
> 2. A second issue is the introduction by the US of the Foreign Account Tax Compliance Act (FACTA). My understanding is that foreign financial institutions doing business in the US will be forced to disclose account information to the IRS about their clients who qualify as "US persons." But how will they identify US persons? And if they do identify an account held by a dual citizen that has not been disclosed to the IRS, what can the IRS do? My understanding is that the financial institution can be forced to withold tax on income generated from US securities. But what if the account holder has no income from US securities (or any other US assets).


----------



## Mona Lisa76

AmTaker said:


> Right, fraud has no SoL. Underporting of income by itself unless it can be attributed to fraud (which is quite hard to prove) just extends the SoL out to 6 years for THAT return from the original due date or filing date (whichever is later). Since you filed an original return, I think its 6 from original date. [ Additional quirks for a few returns still open when FATCA was signed, they can get extended to 6 in some cases].


AmTaker, thank you for trying to clarify that for me. From what you're saying it sounds as though my original returns from 2007, 2008 and 2009 will thus have a six year statute of limitations and thus be 'live' till June 2014, 2015 and 2015 respectively. But would my _*amended *_returns for those years which I filed in late June also have a six year statue or be back to the original three year statute since they would now be showing the correct total income (earned and unearned). Especially as they will have been correctly amended showing the increased income within the original three year period. Gets so confusing.


----------



## Mona Lisa76

Amtaker, another issue I have is that even once I've become fully compliant with my investments by 2012, I will have still have the possible problems with the IRS having issues about me not filing the 3520/3520A foreign trust forms for a private personal pension that my spouse opened for me. It's only worth a modest amount, plus am only allowed to put in about $5000 a year into it but my accountant charges at least $5000 (in addiont to her standard accounting fees) just to submit these foreign trust forms. I simply can't afford to pay her those sorts of fees, especially as it would be an ongoing cost each year; it's going to be bad enough that I will have to pay higher accounting fees once this 8938 form has to be included with the 1040. She is fair to me though and claims she can claim against the treaty but I worry that she's taking an aggressive position and that the IRS might try to hit me with fines for not filing these foreign trust forms.

All I can think is that in a worst case scenario, I could appeal to the Taxpayer's Advocate about how onerous the reporting forms are, especially as I will have fully reported the pension fund assets on both the 8938 and FBAR. I hate the fact that I can't undo what I have done, that I can't cancel the pension plan and transfer it to my spouse. UK rules are strict about that. It's completely acceptable in UK to have a personal pension, especially as my employer won't open a pension for me due to FATCA...the Taxpayer's Advocate should understand my plight if they have any humanity.


----------



## 416

northof60 said:


> Good questions. Regarding FATCA, in addition to violating Canadian privacy laws, it looks like it may violate clause 15 of the Canadian Charter of Rights and Freedoms guaranteeing freedom from discrimination based on nationality. Any lawyers out there with an opinion on this?



The Charter governs state action. What is clear is that it would be illegal under Canadian human rights laws for banks to try to ditch their USC clients (as happened in Europe).


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## 416

technopal said:


> Please keep us posted on your expatriation. I emailed Phil Hodgens on the exit tax for Dual Citizens at birth and the exit tax. He wrote a great blog on his site and I know feel like we can move forward without penalty.


Thanks for pointing to this. I'm trying to visualize how the final 1040 (to be submitted with Form 8854) works. If you expatriate in January, can you file it in February with the financial details of the period in January leading up to the expatriation date?


----------



## Vangrrl

So my husband brought home some forms for us to sign to move the RESPs from my name to his. Sure enough, the very last question on the application form is "Are you also a US citizen?" and if yes than a spot to enter your "Foreign Social Security Number".

Our financial advisor had already filled out the form (it was for my husband) and had already checked off "No". I'm fairly certain this is a new form and I've never answered that question before. The only photo ID they have on record is my BC driver's license. 

So, if asked this question by your bank, are you guys planning on answering "yes, I am a US citizen" ? 

What would be the consequence of answering "No"? I have every intention of filling out my fbars going forward (until I decide to renounce), but I have no intention of giving carte blanche to my Canadian bank to hand over my information to the IRS (or anyone else for that matter). 

What do you guys think?


----------



## Nononymous

Vangrrl said:


> So my husband brought home some forms for us to sign to move the RESPs from my name to his. Sure enough, the very last question on the application form is "Are you also a US citizen?" and if yes than a spot to enter your "Foreign Social Security Number".
> 
> Our financial advisor had already filled out the form (it was for my husband) and had already checked off "No". I'm fairly certain this is a new form and I've never answered that question before. The only photo ID they have on record is my BC driver's license.
> 
> So, if asked this question by your bank, are you guys planning on answering "yes, I am a US citizen" ?
> 
> What would be the consequence of answering "No"? I have every intention of filling out my fbars going forward (until I decide to renounce), but I have no intention of giving carte blanche to my Canadian bank to hand over my information to the IRS (or anyone else for that matter).
> 
> What do you guys think?


Oh, the sly devils.

I would actually refuse to answer the question, and would then see what the bank does. 

Or write "not for much longer!"

Good luck with that, IRS.


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## Vangrrl

Nononymous said:


> Oh, the sly devils.
> 
> I would actually refuse to answer the question, and would then see what the bank does.
> 
> Or write "not for much longer!"
> 
> Good luck with that, IRS.


Hubby and I had already agreed that if the question ever came up that we would refuse to answer... but then the advisor just went ahead and ticked the box for him. And I'm more than mildly annoyed that after all the ranting and raving I've been doing about this issue for the last month, husband didn't even notice the question on the form until I pointed it out!

Our financial advisor knows full well that I am a US citizen because that's the whole reason we are transferring the RESP. What is she going to do when I answer "No" the next time I am faced with that form? Is she going to tell my husband (and his company's substantial portfolio) that he can no longer invest with them?

I really thought that FATCA would come down to more than just a tick box, but maybe I'm wrong? This is just a weak CYA move "Hey, we asked! She said she wasn't a citizen!".


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## Vangrrl

Another question: would FATCA work if the bank didn't have a person's SSN? If my bank decides that I am a US citizen, can they submit my account info to the IRS based just on my name? Would that info be useful to the IRS?

I just can't wrap my brain around how FATCA is going to work in practical terms.


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## DualCitizeninCanada

Vangrrl said:


> So my husband brought home some forms for us to sign to move the RESPs from my name to his. Sure enough, the very last question on the application form is "Are you also a US citizen?" and if yes than a spot to enter your "Foreign Social Security Number".


I'm assuming this is just a way for the bank to cover their own ass. I can't imagine the consequences (or possibility) of getting caught answering 'no'. But regardless, it's disturbing. I thought FATCA isn't supposed to come into force for another 2-3 years? I wonder if it's actually a voluntary question. I am curious to hear what happens if you just don't answer it. Would the bank actually refuse your money?


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## Arlington

Vangrrl said:


> Our financial advisor knows full well that I am a US citizen because that's the whole reason we are transferring the RESP. What is she going to do when I answer "No" the next time I am faced with that form? Is she going to tell my husband (and his company's substantial portfolio) that he can no longer invest with them?
> 
> .


My investment advisor had us update all our investment forms last week. He also knows we are American. He's the one that sent me that first Globe and Mail article. I told him over the phone I was not comfortable being known as an American. He sent the forms and the boxes were checked as NOT American. I was pleasantly surprised.


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## Pathologic1

And you signed the forms which the IRS would see as an attempt to hide accounts, a criminal offence. It's not that you were only negligent now, there is also evidence that you recognized the problem and willfully hid accounts.

Interestingly just checking the wrong box on the 1040 indicating no foreign accounts is one of the main reasons many Americans including some expats entered OVDI. Those who filed this way were in a far worse boat than those that never filed. They had indicated they had no offshore accounts when they did, putting them at risk of criminal charges. Those who didn't file could just plead ignorance (although in theory that doesn't get them off the hook). You are also trying to hide accounts from the IRS which they won't look upon with any mercy if they were to find you. 

I think this is a bad idea and you would be better off just being truthful, ignoring it and pleading ignorance, than trying to hide in an overt manner like this. But that's only my opinion. 





Arlington said:


> My investment advisor had us update all our investment forms last week. He also knows we are American. He's the one that sent me that first Globe and Mail article. I told him over the phone I was not comfortable being known as an American. He sent the forms and the boxes were checked as NOT American. I was pleasantly surprised.


----------



## Arlington

Pathologic1 said:


> I think this is a bad idea and you would be better off just being truthful, ignoring it and pleading ignorance, than trying to hide in an overt manner like this. But that's only my opinion.


I'm not too concerned. It was about 40 pages to initial and sign - all prepared by the investment company. Easy to overlook one little box. 

I told my advisor that when we were compliant, we would indicate we are Americans. And we are now compliant. We have to do these investment forms every year or so anyway. I can change that page any time. It's not like this form is going to go to the IRS. Not until FATCA. Lots of time.


----------



## Vangrrl

Pathologic1 said:


> And you signed the forms which the IRS would see as an attempt to hide accounts, a criminal offence. It's not that you were only negligent now, there is also evidence that you recognized the problem and willfully hid accounts.


But there is no law (Canadian, US or otherwise) requiring me to disclose my US citizenship to my Canadian bank, is there? The form also asks for "citizenship" and "taxation home" presumably so that my bank reports investment income to the Canada.

The law is that I truthfully file my 1040s and submit my FBARs. I'm now doing that. 

But I refuse to give the IRS carte-blanche access to all of my financial information, and that of my Canadian family remembers. Banks have already hinted that they are not necessarily going to follow FATCA's reporting threshold - they would rather send all of our information to the IRS, than to have to sort through it themselves. That's not acceptable to me. The IRS can come to my bank and ask for specific information and my bank can come to me to get permission to provide that information to them.


----------



## Arlington

Vangrrl said:


> But there is no law (Canadian, US or otherwise) requiring me to disclose my US citizenship to my Canadian bank, is there? The form also asks for "citizenship" and "taxation home" presumably so that my bank reports investment income to the Canada.
> 
> The law is that I truthfully file my 1040s and submit my FBARs. I'm now doing that.
> 
> But I refuse to give the IRS carte-blanche access to all of my financial information, and that of my Canadian family remembers. Banks have already hinted that they are not necessarily going to follow FATCA's reporting threshold - they would rather send all of our information to the IRS, than to have to sort through it themselves. That's not acceptable to me. The IRS can come to my bank and ask for specific information and my bank can come to me to get permission to provide that information to them.


Thanks, Vangrrl. We think alike. Like you, I'm not hiding anything. The IRS now knows about all of my accounts, where they are and how much is in each. Eventually my investment company will know that I'm an American.


----------



## Vangrrl

Just received all my completed 1040s and fbars from the accountant. He suggested that I put all the 1040's together in one envelope with a cover letter explaining why they are late and send it by registered mail. Similarly he suggests sending all the fbars together with a cover letter.

Sounds reasonable to me, but its not what most of you are doing, is it? I thought most of you were sending each fbar and each 1040 in separate envelopes. What was the rationale for doing it this way?


----------



## AmTaker

Vangrrl said:


> But there is no law (Canadian, US or otherwise) requiring me to disclose my US citizenship to my Canadian bank, is there? The form also asks for "citizenship" and "taxation home" presumably so that my bank reports investment income to the Canada.


I don't know if there's any law specifically about that, but if one fills in a form inaccurately and submits it to a bank/brokerage, then it seems that there would be some violations involved -- maybe not US law, but maybe some Canadian law, or just a contract with a bank, or something. After all you are signing the form and certifying the information is accurate and complete. I doubt very much there would be any consequences, but I dispute the notion that no law is being breached. I don' t think you are required to proactively inform your bank of your US citizenship, but if they ask you, then it would be better not to answer then to answer incorrectly. 

[ I remember the FATCA act also has a term for people who don't disclose their citizenship -- they're called 'recalcitrant customers ]


----------



## Arlington

Vangrrl said:


> Just received all my completed 1040s and fbars from the accountant. He suggested that I put all the 1040's together in one envelope with a cover letter explaining why they are late and send it by registered mail. Similarly he suggests sending all the fbars together with a cover letter.
> 
> Sounds reasonable to me, but its not what most of you are doing, is it? I thought most of you were sending each fbar and each 1040 in separate envelopes. What was the rationale for doing it this way?


I sent all my 1040's etc in one envelope and all my fbars in another. Both had covering letters (one in each envelope). I had no rationale except for common sense . . which probably isn't a cherished attribute within the IRS.


----------



## Vangrrl

AmTaker said:


> [ I remember the FATCA act also has a term for people who don't disclose their citizenship -- they're called 'recalcitrant customers ]


Yes, and I believe that recalcitrant customers are treated as if they are American and subject to the 30% withholding on US investments. So not answering the question is effectively the same as answering "yes I am a US citizen"

I am not knowledgeable at all regarding investments - how hard is it to set up your investment portfolio to have NO US holdings contained within? Would you be at a serious disadvantage financially if you limit yourself that way?


----------



## Vangrrl

Arlington said:


> I sent all my 1040's etc in one envelope and all my fbars in another. Both had covering letters (one in each envelope). I had no rationale except for common sense . . which probably isn't a cherished attribute within the IRS.


Perfect. I didn't feel like digging back through the thread but I thought the consensus was a separate envelope for each year's return.


----------



## Bevdeforges

Arlington said:


> I sent all my 1040's etc in one envelope and all my fbars in another. Both had covering letters (one in each envelope). I had no rationale except for common sense . . which probably isn't a cherished attribute within the IRS.


Income tax returns and FBARS have to be sent to different offices. The income tax forms go to the IRS (there is a special address for filings from overseas) and the FBAR forms go to the Treasury Department - the address is on the FBAR forms.
Cheers,
Bev


----------



## Peg

Vangrrl said:


> Perfect. I didn't feel like digging back through the thread but I thought the consensus was a separate envelope for each year's return.


I remember reading that best to put each year in a separate envelope but could then do one large envelope. No staples. Someone also said that the IRS doesn't care about covering letters but I sitll plan on including one too!


----------



## Nononymous

Vangrrl said:


> Yes, and I believe that recalcitrant customers are treated as if they are American and subject to the 30% withholding on US investments. So not answering the question is effectively the same as answering "yes I am a US citizen"


I would think that there's a world of difference between saying no (i.e. lying) and refusing to answer (i.e. it's none of your damn business). Particularly if there are no US investments.


----------



## Arlington

Bevdeforges said:


> Income tax returns and FBARS have to be sent to different offices. The income tax forms go to the IRS (there is a special address for filings from overseas) and the FBAR forms go to the Treasury Department - the address is on the FBAR forms.
> Cheers,
> Bev


Yes, I should have made that clear. Thanks, Bev.


----------



## Peg

Pathologic1 said:


> Interestingly just checking the wrong box on the 1040 indicating no foreign accounts is one of the main reasons many Americans including some expats entered OVDI. Those who filed this way were in a far worse boat than those that never filed. They had indicated they had no offshore accounts when they did, putting them at risk of criminal charges. Those who didn't file could just plead ignorance (although in theory that doesn't get them off the hook).


Either the 1040 has changed or I need new glasses because I do not see any "box to check" on the 1040 regarding foreign accounts :confused2:. I just reread the 2009 and 2010 version. It would be great if someone could specifically advise where on the form the box is located. Since I have completed my 5 years of returns, I really hope that I am not using the wrong 1040!


----------



## Arlington

Peg said:


> Either the 1040 has changed or I need new glasses because I do not see any "box to check" on the 1040 regarding foreign accounts :confused2:. I just reread the 2009 and 2010 version. It would be great if someone could specifically advise where on the form the box is located. Since I have completed my 5 years of returns, I really hope that I am not using the wrong 1040!


Peg . . it's at the bottom of Schedule B.


----------



## Peg

Arlington said:


> Peg . . it's at the bottom of Schedule B.


Thank you Arlington. Since I don't have interest or dividends I never looked at the Schedule B. :ranger:


----------



## Peg

p.s. what the heck, I'll complete Schedule B for my $1.80 in interest income . hmmm wonder how many other forms I can find to waste their time but not cost me a dime.


----------



## AmTaker

Peg said:


> p.s. what the heck, I'll complete Schedule B for my $1.80 in interest income . hmmm wonder how many other forms I can find to waste their time but not cost me a dime.


I don't think you're required to fill out Schedule B just to tick the foreign account box if you don't otherwise have to fill it because you don't meet the threshold for filing. If you do file file it, make sure to fill the foreign account statement correctly !! The IRS seems to make the assumption that filing Schedule B, but not answering the foreign account statement correctly is a sign of willful violation.


----------



## Peg

AmTaker said:


> I don't think you're required to fill out Schedule B just to tick the foreign account box if you don't otherwise have to fill it because you don't meet the threshold for filing. If you do file file it, make sure to fill the foreign account statement correctly !! The IRS seems to make the assumption that filing Schedule B, but not answering the foreign account statement correctly is a sign of willful violation.


Thanks AmTaker. I did a quick read of it and could not find a threshold - will check again.


----------



## Peg

AmTaker said:


> I don't think you're required to fill out Schedule B just to tick the foreign account box if you don't otherwise have to fill it because you don't meet the threshold for filing. If you do file file it, make sure to fill the foreign account statement correctly !! The IRS seems to make the assumption that filing Schedule B, but not answering the foreign account statement correctly is a sign of willful violation.


AmTaker - from the information below in the instructions for 1040 - Schedule B, anyone who has an account outside of the USA needs to complete the Schedule B. It does not even give a minimum dollar amount! 

Therefore, I will claim my $1.80 in interest (and round it up to $10) so that I complete this Sched B fully. 

I am determined to complete my US Tax Returns on my own because that is what I do in Canada (for all but one year) since I started filing 30 years ago. 

from instructions for 1040 - 2010. Bold is my emphasis.
Purpose of Form
Use Schedule B *if any of the following applies*.
• You had over $1,500 of taxable interest or ordinary dividends.
(six other points listed on the schedule)
• *You had a financial interest in, or signature authority *(or other authority that is comparable to signature authority) *over, a financial account in a foreign country *or you received a distribution from, or were a grantor of, or transferor to, a foreign trust.
Part III of the schedule has questions about foreign accounts and trusts.


----------



## AmTaker

Peg said:


> AmTaker - from the information below in the instructions for 1040 - Schedule B, anyone who has an account outside of the USA needs to complete the Schedule B. It does not even give a minimum dollar amount!
> 
> Therefore, I will claim my $1.80 in interest (and round it up to $10) so that I complete this Sched B fully.
> 
> I am determined to complete my US Tax Returns on my own because that is what I do in Canada (for all but one year) since I started filing 30 years ago.
> 
> from instructions for 1040 - 2010. Bold is my emphasis.
> Purpose of Form
> Use Schedule B *if any of the following applies*.
> • You had over $1,500 of taxable interest or ordinary dividends.
> (six other points listed on the schedule)
> • *You had a financial interest in, or signature authority *(or other authority that is comparable to signature authority) *over, a financial account in a foreign country *or you received a distribution from, or were a grantor of, or transferor to, a foreign trust.
> Part III of the schedule has questions about foreign accounts and trusts.


I stand corrected. Although I still wouldn't round up the interest to more than $2


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## Arlington

NEW YORK (Reuters) - Canadian Finance Minister Jim Flaherty voiced cautious optimism on Wednesday that Canada would be granted an exemption from an onerous U.S. tax reporting law that he called an inefficient use of capital.

"We've had very useful discussions with the American officials and they understand that the goal of the legislation is to get after tax evaders using tax havens, and that Canada is not a tax haven," he said in a speech in New York to bankers and securities officials.

"I think we're getting some progress - we're not there yet."


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## Peg

My renunciation appointment in Calgary was just booked for November 17 - seven weeks from now. All dealings thus far have been by e-mail - first inquiry was yesterday morning and appointment is now booked.


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## CanadianHoosier

Arlington said:


> NEW YORK (Reuters) - Canadian Finance Minister Jim Flaherty voiced cautious optimism on Wednesday that Canada would be granted an exemption from an onerous U.S. tax reporting law that he called an inefficient use of capital.
> 
> "We've had very useful discussions with the American officials and they understand that the goal of the legislation is to get after tax evaders using tax havens, and that Canada is not a tax haven," he said in a speech in New York to bankers and securities officials.
> 
> "I think we're getting some progress - we're not there yet."


I googled and found and read the article. It refers to FATCA. 

Thanx for sharing.


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## Arlington

CanadianHoosier said:


> I googled and found and read the article. It refers to FATCA.
> 
> Thanx for sharing.


And now this udpate:

Responding to Flaherty's remarks, U.S. Treasury spokeswoman Sandra Salstrom said in an email to Reuters: "We're talking with foreign governments to figure out how we can implement FATCA in a cooperative way and leverage our existing relationships, but Treasury is not considering exempting specific countries from FATCA."

Oh, Sandra.


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## Ladyhawk

Arlington said:


> And now this udpate:
> 
> Responding to Flaherty's remarks, U.S. Treasury spokeswoman Sandra Salstrom said in an email to Reuters: "We're talking with foreign governments to figure out how we can implement FATCA in a cooperative way and leverage our existing relationships, but Treasury is not considering exempting specific countries from FATCA."
> 
> Oh, Sandra.


"Leverage our existing relationship"? Translation: we're blowing you off.

What a fatuous use of the English language. And bloody insulting.


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## Mona Lisa76

But maybe if enough countries push back like canada then hopefully they will ultimately back down enough to prevent a huge exodus. The uk is in a similar position. I suppose there are far more usc's directly affected in Canada though, especially also being right on the doorstep. It's not just the taxation; it's the onerous reporting requirements plus the way they make it almost impossibly complex, thus forcing even expats of midedts means to use expensive accountants...form 3520 and 3520a come to mind...


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## AmTaker

Mona Lisa76 said:


> But maybe if enough countries push back like canada then hopefully they will ultimately back down enough to prevent a huge exodus. The uk is in a similar position. I suppose there are far more usc's directly affected in Canada though, especially also being right on the doorstep. It's not just the taxation; it's the onerous reporting requirements plus the way they make it almost impossibly complex, thus forcing even expats of midedts means to use expensive accountants...form 3520 and 3520a come to mind...


Even if governments push back on FATCA reporting for institutions, an expat US person still has the obligation to file PFIC forms, trust forms and the FATCA form if required to do so. So that doesn't help you in terms of reporting.


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## Expatinca

Mona Lisa76 said:


> But maybe if enough countries push back like canada then hopefully they will ultimately back down enough to prevent a huge exodus. The uk is in a similar position. I suppose there are far more usc's directly affected in Canada though, especially also being right on the doorstep. It's not just the taxation; it's the onerous reporting requirements plus the way they make it almost impossibly complex, thus forcing even expats of midedts means to use expensive accountants...form 3520 and 3520a come to mind...


I wouldn't count on it. This has now become an issue of posturing - the US can't back down now without appearing weak. And as we know from Vietnam, Korea, Afghanistan, Iraq, &etc, the US would rather make a complete fool of itself and sacrifice many lives than look like it's capable of changing its mind.

Yeah, I'm really angry about all this FATCA stuff, too 

Anyways, as AmTaker said, it wouldn't change anything for us as far as reporting goes. The only difference it might back is that our penalties are more likely to be waived when we do file (as long as we turn ourselves in before they come to us). 

My personal (non-expert) advice is to get yourself squared away for at least the last 5 years and then start the process of renouncing your citizenship.


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## Ladyhawk

Expatinca said:


> My personal (non-expert) advice is to get yourself squared away for at least the last 5 years and then start the process of renouncing your citizenship.


Renouncing isn't desired by all, isn't an option for everyone, and has costs - like knowing the IRS will scrutinize the minutiae which may cause problems for folks who do not have complete records for all the years the IRS may want to look at. It could be a painful and demoralizing hassle. Not everyone wants to put themselves through that after the angst of getting compliant in the first place. Also, though I haven't looked into it myself, I've see it posted here several times that you still have to file taxes for a further 10 years after renouncing. Sounds nuts but then...doesn't it all?


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## Nursiegirl

Vangrrl said:


> Just received all my completed 1040s and fbars from the accountant. He suggested that I put all the 1040's together in one envelope with a cover letter explaining why they are late and send it by registered mail. Similarly he suggests sending all the fbars together with a cover letter.
> 
> Sounds reasonable to me, but its not what most of you are doing, is it? I thought most of you were sending each fbar and each 1040 in separate envelopes. What was the rationale for doing it this way?


I was also advised to send the 1040's all together in one envelope with a cover letter and then the FBAR's all together with a cover letter. I sent them eack registered mail, costing a grand total of 63.00. OUCH


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## justbrowsing

I believe the 10 year reporting rule was removed in 2009. Take a look at Site Overview | Renunciation of U.S. Citizenship: A Web Guide for a very detailed account of what is involved, I think you will find it is not that bad and worthwhile for many.


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## Vangrrl

Nursiegirl said:


> I was also advised to send the 1040's all together in one envelope with a cover letter and then the FBAR's all together with a cover letter. I sent them eack registered mail, costing a grand total of 63.00. OUCH


Thanks! I haven't done it yet. I'll compose my cover letter this weekend (after making turkey!) and then send it out Monday. I was considering driving across the border to mail it off because its so much cheaper - but that seems a bit weird.

I look forward to hearing everyone's experiences regarding expatriation. Its not my immediate plan but if reporting becomes more onerous/invasive in the future, then I'd like to be in a position to renounce.

I have a big problem with FATCA because it seems to say to expats that "We think you are a tax evader until proven otherwise". I am more than happy to answer any queries regarding my finances should any come up as a result of my tax return. I also don't trust my bank to not disclose information that is none of the IRS's business.


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## Bevdeforges

Honestly, I think all this talk of renouncing (especially over fairly trivial balances) is a little over the top. Yes, the tax reporting requirements are a royal PITA - but unless you have big financial holdings that may subject you to large amounts of tax, it's relatively simple to keep the IRS happy and retain your US citizenship. (Having an "extra" passport can come in handy in lots of situations...)

The FATCA laws are designed to find and catch tax evaders - mostly those who are actively using foreign corporations and financial accounts in an abusive manner to avoid paying taxes (US or otherwise) *that they rightfully should be paying.*

US expats and "accidental Americans overseas" have been caught up in the paperwork, but they are NOT the intended target, and as such can probably get away with "good faith" reporting. The key is to make sure everything is disclosed in some manner, and to the extent possible, find ways to indicate on your filing that you have already paid the taxes in your home country (or elsewhere) on all accounts and income streams you report. Best to do all this without enclosing a long, elaborate letter or verbal explanation.

If, when you report the interest income from your overseas bank accounts (along with any US interest income) your taxes still turn out to be $0 then you're done. Sure, you file the FBAR form, showing the various accounts - but as long as you reported your $200 of interest and you aren't showing a high balance of $5 million in that account, chances are they'll just tick off the fact that you filed everything necessary and move on. And even if your high balance was, indeed, $5 million, the worst that will happen is that you'll get a letter from the IRS asking you to explain the apparent discrepancy. If you've got a reasonable explanation, that will most likely be the end of it.

They really do have bigger fish to fry!
Cheers,
Bev


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## Mona Lisa76

AmTaker said:


> Even if governments push back on FATCA reporting for institutions, an expat US person still has the obligation to file PFIC forms, trust forms and the FATCA form if required to do so. So that doesn't help you in terms of reporting.


True, but I can't afford to pay an accountant an annual fee of 3000 to 5000 pounds for filing the foreign grantor trust forms 3520/3520A for a small personal pension fund worth merely 30,000 pounds for which i am only contributing a couple thousand pounds into. I am already going to be paying the accountant well over 1500 pounds to be filing the federal return with the upcoming 8938 form starting next year... while i can live with an annual fee of 1000 to 1500 pounds to remain compliant, i simply cannot afford a total annual charge of five grand, which it would be if i had to file the foreign trust forms too. 

My advisor suggests i thus move the personal pension into a us-based pension fund which fully reports to the irs, thus hopefully relieving me from the onerous 3520 and 3520a. 

Will be filing my fbars separately to Detroit or perhaps drop them off at IRS at US embassy in London...


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## Mona Lisa76

Ladyhawk said:


> Renouncing isn't desired by all, isn't an option for everyone, and has costs - like knowing the IRS will scrutinize the minutiae which may cause problems for folks who do not have complete records for all the years the IRS may want to look at. It could be a painful and demoralizing hassle. Not everyone wants to put themselves through that after the angst of getting compliant in the first place. Also, though I haven't looked into it myself, I've see it posted here several times that you still have to file taxes for a further 10 years after renouncing. Sounds nuts but then...doesn't it all?


I'm also missing some records which is why I'm terrified of a potential audit...I stupidly was disorganized and to my chagrin learned that some of my funds changed sharedealing administrators and that their records had been erased. I tend to agree with Bev that they should be reasonably satisfied with my good faith efforts to have become compliant, pay back what I owed, plus do all I can to becompliant going forward...i just hope that they'll understand why I can't afford to pay thousands annually to get obscur foreign truste forms filef that even the irs finds too complicated


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## Peg

The point is that I should not have to let the US gov know every detail about my financial situation especially about my child's bank account nor the details of bank accounts for my volunteer work as Treasurer. After leaving the USA at age 9 I shouldn't even have to say: "I am compliant in Canada." The country in which I live and am a citizen supports saving for university but the USA is treating it as a regular investment and making me calculate a capital gain

I am protesting the US system BY renouncing my citizenship. I do not want to be associated with the USA any longer.


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## Expatinca

Bevdeforges said:


> Honestly, I think all this talk of renouncing (especially over fairly trivial balances) is a little over the top. Yes, the tax reporting requirements are a royal PITA - but unless you have big financial holdings that may subject you to large amounts of tax, it's relatively simple to keep the IRS happy and retain your US citizenship. (Having an "extra" passport can come in handy in lots of situations...)


It's a very personal decision that everyone needs to make for themselves, and there's more to it than you make it seem.

For many, myself included, there's a lot of anger about being hit with this and the threatening/bullying language with which it was done. That tone is completely inappropriate. 

In my case, I do a lot of volunteer work, and I have signing authority on the bank accounts of several charities. That means that not only do I have to report private financial information about Canadian charities to the US, but soon our banks will have to disclose even more information about the charities and the other signatories because of me. I've become a liability, and because I didn't know about FBAR, I wasn't able to warn these organizations that this was coming when I started volunteering.

And that's not all - because of joint accounts, the US now gets access to private financial information about my non-US husband and son as well. My husband grew up in Russia and he's a very private person. He's upset that some foreign country he has no ties to is now going to be allowed to look through his bank accounts. 

The US has shown nothing but contempt for the personal privacy of individuals - many of whom, like my husband and son, are not even US citizens. The US is showing nothing but contempt for the laws of sovereign nations. This is a perfect example of US exceptionalism. 

I was content with just ignoring them before. But this is just ridiculous. I look forward to getting everything in order so that I can sever my ties with the US once and for all. I don't think these issues are trivial, and I don't think that the anger many of us feel is over the top.


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## Mona Lisa76

Expatinca said:


> It's a very personal decision that everyone needs to make for themselves, and there's more to it than you make it seem.
> 
> For many, myself included, there's a lot of anger about being hit with this and the threatening/bullying language with which it was done. That tone is completely inappropriate.
> 
> In my case, I do a lot of volunteer work, and I have signing authority on the bank accounts of several charities. That means that not only do I have to report private financial information about Canadian charities to the US, but soon our banks will have to disclose even more information about the charities and the other signatories because of me. I've become a liability, and because I didn't know about FBAR, I wasn't able to warn these organizations that this was coming when I started volunteering.
> 
> And that's not all - because of joint accounts, the US now gets access to private financial information about my non-US husband and son as well. My husband grew up in Russia and he's a very private person. He's upset that some foreign country he has no ties to is now going to be allowed to look through his bank accounts.
> 
> The US has shown nothing but contempt for the personal privacy of individuals - many of whom, like my husband and son, are not even US citizens. The US is showing nothing but contempt for the laws of sovereign nations. This is a perfect example of US exceptionalism.
> 
> I was content with just ignoring them before. But this is just ridiculous. I look forward to getting everything in order so that I can sever my ties with the US once and for all. I don't think these issues are trivial, and I don't think that the anger many of us feel is over the top.


I completely sympathize and feel similarly. I also feel that my husband's wealth is being indirectly attacked because most of what I've accumulated has come through him investing for me over the years...I've had to pay quite a lot of US taxes on what are UK tax-free investments, especially as we're both UK citizens. He is a NRA (non-resident alien) so has no links to US either but I, alas, do. We both wish now that, if anything, I'd switched all my assets into his name  

He'd gifted me money over the years because he's a lot older and suffered strokes and was only trying to protect me in case he ever winds up in long-term nursing care which could exhaust all his savings. We've thus both concluded that the best way is to hedge our bets by keeping our assets roughly equally in our separate names.

I need to be compliant because I still have family over there whom I need to be able to visit, including aging parents, plus there will inevitably be an inheritance that would be heavily taxed if I renounced, from what I understand. And as I also have to be UK compliant, I couldn't have them place the inheritance into a trust because the UK would consider that a foreign trust so I'm caught between a rock and a hard place.

I've even since learned to my horror that because the UK may consider me non-UK tax domiciled (in spite of my dual nationality) that I could also be hit with extra UK estate taxes if my husband predeceases me and has more than a fairly small amount to leave me...it seems I'm going to get screwed by the UK as well as the US. :'(


I saw absolutely no way out of fully disclosing and amending my returns because even if I had in theory sold all the tax free funds and gifted them to my spouse, there would be no way I could legally avoid disclosing this since virtually EVERYTHING of mine (even including when I opened and closed accounts) will have to be directly disclosed on this upcoming FATCA 8938 form (in addition to the FBARs). 

So no way out or I would have been willfully not fully declaring my assets/income. I'm thus in the headlights like a frozen rabbit, LOL

I feel philosophical, I suppose...money is certainly not everything.


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## justbrowsing

I agree 100% with Expatinca that this is a decision each person must make for themselves. Here are some of the factors I have considered for several weeks and for me the decision to renounce is becoming less ambiguous. Keep in mind that we are 'comfortable' but not rich and have very routine tax planning like RRSP's and 30 years of no issues with Rev. Canada.

1 - extensive and potentially costly future reporting requirements ($1,000/yr+)
2 - potential drop in the exit tax threshold
3 - estate tax not being kept at $5 million but being allowed to drop back to $1 million
4 - how long before the 100% allowance for foreign tax paid is reduced
5 - we have no property, friends, or family in the US since moving here in 1966
6 - Canadian passport will let me travel as easily as a US passport
7 - no desire to move to the US to live or work
8 - desire to have a TFSA but do not want the costly reporting requirements
9 - flexibility to make financial decisions to optimize my situation with respect to one tax system and not two.
10 - dramatic difference in the treatment of capital gains and lack of lifetime exemption in the US


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## Mona Lisa76

justbrowsing said:


> I agree 100% with Expatinca that this is a decision each person must make for themselves. Here are some of the factors I have considered for several weeks and for me the decision to renounce is becoming less ambiguous. Keep in mind that we are 'comfortable' but not rich and have very routine tax planning like RRSP's and 30 years of no issues with Rev. Canada.
> 
> 1 - extensive and potentially costly future reporting requirements ($1,000/yr+)
> 2 - potential drop in the exit tax threshold
> 3 - estate tax not being kept at $5 million but being allowed to drop back to $1 million
> 4 - how long before the 100% allowance for foreign tax paid is reduced
> 5 - we have no property, friends, or family in the US since moving here in 1966
> 6 - Canadian passport will let me travel as easily as a US passport
> 7 - no desire to move to the US to live or work
> 8 - desire to have a TFSA but do not want the costly reporting requirements
> 9 - flexibility to make financial decisions to optimize my situation with respect to one tax system and not two.
> 10 - dramatic difference in the treatment of capital gains and lack of lifetime exemption in the US


 Sounds understandable in your given circumstances, though I would have thought the US will continue to allow foreign tax credits to be set off against Canadian (and other foreign income) via the 1116 even if they completely got rid of the 2555 form. And because Canadian taxes are generally higher, they would mostly offset your US taxes though agree that US capital gains taxes could be an issue.

For all sorts of reasons I've don't want to renounce unless I find it completely impossible to avoid huge costly reporting requirements...but thankfully, my accountant is firmly of the opinion that she can claim against the UK/US tax treaty's treatment of UK personal pensions so that it won't require the onerous 3520/3520A forms which was my main concern. It seems ludicrous that they would require those foreign trust forms for a TFSA.

Filing the 8938 will be a royal PITA but as I will have greatly simplified my portfolio and accounts, it should be reasonably straightforward for the 2012 tax year filing.

I'd like to think that the US will eventually see sense and simplify things for expats, especially those in non-tax haven countries such as Canada or UK. It also occurs to me that while I may be pissed off with the US right now, that I could someday be even more pissed off with some future policy in the UK...at least by keeping both passports, I know I have more than one place to go.


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## 416

Bevdeforges said:


> Honestly, I think all this talk of renouncing (especially over fairly trivial balances) is a little over the top. Yes, the tax reporting requirements are a royal PITA - but unless you have big financial holdings that may subject you to large amounts of tax, it's relatively simple to keep the IRS happy and retain your US citizenship. (Having an "extra" passport can come in handy in lots of situations...)


Hi, Bev -

Thanks for all your good advice on these forums. 

Just speaking to my own situation - I was born and have always lived in Canada, and don't have any plans to move to the US. My wife works in the broader public sector here, and might be portable between provinces, but not to the US. My children have no way of inheriting US citizenship through me (see 'always lived in Canada'). I'd be a true 'accidental American' if I hadn't got it into my head to get a US passport in the early 90s.

Going forward, I'm looking at a substantial annual maintenance fee for my US citizenship which amounts to several major household expenses combined. (All together now: "It's not the tax, it's the paperwork!") Add to that stress about medieval financial penalties which probably won't be applied, but could. Also, I don't want my executors to have to deal with the IRS - one country's estate paperwork is enough for anyone to have to deal with. 

So in my case renunciation seems like a very obvious choice.


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## Bevdeforges

Mona Lisa76 said:


> I'd like to think that the US will eventually see sense and simplify things for expats, especially those in non-tax haven countries such as Canada or UK. It also occurs to me that while I may be pissed off with the US right now, that I could someday be even more pissed off with some future policy in the UK...at least by keeping both passports, I know I have more than one place to go.


Hold that thought - though I have to admit that I don't have much faith the US is likely to let up on the expat crowd, already stereotyped as "caviar swilling" folks living on generous "expat allowances."

It's true - each person has to decide for themselves what risks they are willing and able to bear with regard to US taxation. For those with mostly salary income (well under the exclusion limits) and limited investments, there is little to no risk of being harassed. Things change for those with significant (to them) assets in the US, because in case of "disagreement" that's what the IRS will jump on first.

There is also a very legitimate question of precisely how much of the income from jointly held assets has to be declared on the US spouse's returns. It is possible to justify claiming a smaller than 50% portion, depending on the nature of the asset and who originally supplied the funds to purchase the asset in the first place.

For those with much at stake, yes, renunciation is an option that should be considered in light of the nature of the assets potentially at risk and the potential rights one could be giving up. But for those living well within the earned income exclusion limits and with only nominal amounts in investments (and who are reporting the income from those investments), it's more a PITA than a serious risk.
Cheers,
Bev


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## Mona Lisa76

Bevdeforges said:


> Hold that thought - though I have to admit that I don't have much faith the US is likely to let up on the expat crowd, already stereotyped as "caviar swilling" folks living on generous "expat allowances."
> 
> It's true - each person has to decide for themselves what risks they are willing and able to bear with regard to US taxation. For those with mostly salary income (well under the exclusion limits) and limited investments, there is little to no risk of being harassed. Things change for those with significant (to them) assets in the US, because in case of "disagreement" that's what the IRS will jump on first.
> 
> There is also a very legitimate question of precisely how much of the income from jointly held assets has to be declared on the US spouse's returns. It is possible to justify claiming a smaller than 50% portion, depending on the nature of the asset and who originally supplied the funds to purchase the asset in the first place.
> 
> For those with much at stake, yes, renunciation is an option that should be considered in light of the nature of the assets potentially at risk and the potential rights one could be giving up. But for those living well within the earned income exclusion limits and with only nominal amounts in investments (and who are reporting the income from those investments), it's more a PITA than a serious risk.
> Cheers,
> Bev


This is what I've also concluded...and in spite of my dismay, I will still always love the land of my birth. Though it's onerous, I also realize that I should have been keeping better informed of my US tax compliance obligations and should have checked everything out before I even began investing over here in the UK so it's just one of those things in my view...though I can completely understand why accidental Americans who've spent all their life in Canada feel the way they do.

I'd imagine that they'd almost certainly be allowed just to file three years of back returns along with this year's and then comply going forward. But I appreciate that they could in theory be caught out by PFIC taxation as I was, along with having to file foreign trust forms for certain types of investments which is a swine.

But perhaps if it's affecting a huge number of people, as there'd be a rising number of accountants to meet the growing demand for US tax filing, I'd imagine that costs for filing the various reporting forms should wind up dropping since there'd be more places doing them for clients.

It's also possible to request a formal ruling from the IRS and they might exempt certain things from the foreign trust forms though would imagine that many would still be required to file 8938 from next year since $200,000 in assets is not that much after taking into account the values of pensions too.

I wonder though if I would draw unwanted attention to the IRS if I were to transfer, say, $45,000 from my US account to a UK account. Would it trigger all sorts of strange reports from my US brokerage account to the IRS? I'm just thinking that, while a remote risk, I'd feel safer having the money here in the UK for the reasons you mentioned above. It would be going into a UK-based portfolio that reports to the US but at least it would be in the UK if that makes any sense...the IRS would thus need to go to a UK court to try to collect any potential fine.


----------



## AmTaker

Mona Lisa76 said:


> But perhaps if it's affecting a huge number of people, as there'd be a rising number of accountants to meet the growing demand for US tax filing, I'd imagine that costs for filing the various reporting forms should wind up dropping since there'd be more places doing them for clients.
> 
> It's also possible to request a formal ruling from the IRS and they might exempt certain things from the foreign trust forms though would imagine that many would still be required to file 8938 from next year since $200,000 in assets is not that much after taking into account the values of pensions too.
> 
> I wonder though if I would draw unwanted attention to the IRS if I were to transfer, say, $45,000 from my US account to a UK account. Would it trigger all sorts of strange reports from my US brokerage account to the IRS? I'm just thinking that, while a remote risk, I'd feel safer having the money here in the UK for the reasons you mentioned above. It would be going into a UK-based portfolio that reports to the US but at least it would be in the UK if that makes any sense...the IRS would thus need to go to a UK court to try to collect any potential fine.



About your first point, I don't think rates are likely to drop too much (although 16K still sounds extortionate !!) because there are liability and insurance concerns, and lets face it -- it does require some skill. DiYers could probably do most of it themselves. In fact, FBAR forms are probably the easiest to fill out, and are unnecessarily expensive (since pros have to buy insurance if they do it for clients) so I would recommend doing those yourself. 

About the 2nd point, the US Treasury presumably wants to avoid people using complex trusts in tax havens to avoid taxes, so I'm not sure there will be much relief from some of the rules (I don't know if the US Treasury has discretionary powers to exempt trusts that have a low risk of tax evasion). 

About the last point, I doubt you would draw any more attention then you might have through your silent disclosure .


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## Mona Lisa76

AmTaker said:


> About your first point, I don't think rates are likely to drop too much (although 16K still sounds extortionate !!) because there are liability and insurance concerns, and lets face it -- it does require some skill. DiYers could probably do most of it themselves. In fact, FBAR forms are probably the easiest to fill out, and are unnecessarily expensive (since pros have to buy insurance if they do it for clients) so I would recommend doing those yourself.
> 
> About the 2nd point, the US Treasury presumably wants to avoid people using complex trusts in tax havens to avoid taxes, so I'm not sure there will be much relief from some of the rules (I don't know if the US Treasury has discretionary powers to exempt trusts that have a low risk of tax evasion).
> 
> About the last point, I doubt you would draw any more attention then you might have through your silent disclosure .


What do you think are typical fees that accountants charge to file the 3520 and 3520A foreign trust forms? 

The reason they had to charge so much (it came to about $2500 per tax year) was because they amended 2007 through 2009 and filed 2010 going forward. She also had to calculate PFIC taxes on not one but *49* funds so I think, if anything, she let me off lightly because there were hundred of reinvested dividends included that she had to determine the various exchange differences in dollars vs pounds, etc. some of which had been reinvesting since the mid-1990s.

I will also have to get them to file two or three years' of UK returns since it turns out that my gains on my eight US mutual funds also will suffer anomalous tax treatment by the UK tax authorities so thus need specialized accounting (though not as complicated as the 8621s). I just want to put all this mess behind me...at the time, had thought that the way I was investing was reasonably straightforward but in retrospect, it obviously was not.

As I had so many accounts, I filed simplified FBAR forms going back to 2005 where I just listed the number of accounts, as I had over 25 accounts. These are ironically easier to fill in because the Treasury will contact me if they want the full details. I suppose their computers can't cope! 

I've gone to great efforts to move all my stuff into what are dual compliant investments via an investment house that specializes in US expats living in the UK so will have reduced my total number of reportable accounts down from about 43 to perhaps seven or eight which makes life so much simpler!!

I do, however, wonder if Alertpay and Paypal accounts have to be listed on FBARs, along with pre-paid cell phone cards, as these could in theory be a way to transfer money around...they could technically be deemed financial accounts.

It's been terrifying and horrible but at least I'm doing all I can to put things right.

I do, however, feel sorry for those who lied and answered 'no' about whether they had foreign accounts on Schedule B instead of just not answering fullstop. I'd imagine it would look more likely to be willful to have actually answered 'no' instead of not answering at all.

My total amended returns came to almost six hundred pages, I kid you not. And with 8938, I'd imagine that the 2011 return might come to about two hundred pages!! But hopefully my 2012 return will be far simpler. It will thus mainly comprise of the 1040 sections and 1116 along with a treaty claim for the personal pension. She seems to think it's better for me to acquire foreign tax credits via the 1116 rather than claiming 2555, perhaps so I can apply some of them in future to offset US taxation on the lump sum I'll want to take from the pension (which will be tax free in UK, though not US).

I wonder though if perhaps filing the 8938 may be delayed till the 2012 tax year since they still haven't yet produced their final form?


----------



## jeans

*info request*



Pathologic1 said:


> Do not fret. The reason that there are many different opinions is because this is new and the "amnesty" program has caused much confusion. If you want to ask a professional I would strongly suggest an accountant or firm in the US that has dealt with expats for a long time. There are alot of misinformed people out there on both sides of the border.
> 
> I have said it before but the bottom line is that if you have honestly been paying your Canadian taxes based on world wide income you really have nothing to fear. Just back file your tax forms and FBARs for the past six years and you are home free. Do not wait until they find you. That is when things can go very bad.
> 
> I have obtained this information through US tax lawyers, accountants and the IRS itself. If you need advice in terms of the US accounting firm I am using I would be happy to provide it to you if you PM me. ( I am hesitant to put it here as it could be seen as advertising. I am in no way associated with the firm other than being one of their clients)



Could you kindly give me the name of the accounting firm? There is so much conflicting information that I would like to review my specific situtation with them to get clarity.

Thanks!


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## Bevdeforges

AmTaker said:


> About the 2nd point, the US Treasury presumably wants to avoid people using complex trusts in tax havens to avoid taxes, so I'm not sure there will be much relief from some of the rules (I don't know if the US Treasury has discretionary powers to exempt trusts that have a low risk of tax evasion).


There is a section of the law setting up these myriad forms that specifically allows the Treasury Department to exempt certain types of investments that are shown to have little risk of abuse. It will, however, take several years of seeing what all these forms turn up - and more than a few audits - to determine where the money (for the IRS and Treasury Dept.) really is hidden. I wouldn't hold my breath for any quick changes or exemptions.
Cheers,
Bev


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## Expatinca

Wow, Mona Lisa. 600 pages!!!!

We only started investing this year, so thankfully my back taxes aren't very complicated. I have H&R Block doing that for me for $250, and I mailed my FBAR forms today. Those were actually very easy to fill in myself (I kept fairly good records most years, and I made my best conservative guess for the rest).

Next year will probably be more complicated, but at least everything will be filed on time.

Now I mostly just have the stress of waiting and hoping that there won't be any penalties...


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## Mona Lisa76

Expatinca said:


> Wow, Mona Lisa. 600 pages!!!!
> 
> We only started investing this year, so thankfully my back taxes aren't very complicated. I have H&R Block doing that for me for $250, and I mailed my FBAR forms today. Those were actually very easy to fill in myself (I kept fairly good records most years, and I made my best conservative guess for the rest).
> 
> Next year will probably be more complicated, but at least everything will be filed on time.
> 
> Now I mostly just have the stress of waiting and hoping that there won't be any penalties...


Yes, there's every chance that the irs will have red flagged my returns due to the sheer size of what I submitted, 'tis scary


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## Expatinca

Mona Lisa76 said:


> Yes, there's every chance that the irs will have red flagged my returns due to the sheer size of what I submitted, 'tis scary


If you've been honest, there's nothing to be afraid of. They may audit you or ask for more information, but you can just show them your records. Being red flagged when you have nothing to hide isn't a big deal.

I was audited by CRA a few years ago in our of their random searches. I just showed them my original documents and that was the end of it.


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## Mona Lisa76

Expatinca said:


> If you've been honest, there's nothing to be afraid of. They may audit you or ask for more information, but you can just show them your records. Being red flagged when you have nothing to hide isn't a big deal.
> 
> I was audited by CRA a few years ago in our of their random searches. I just showed them my original documents and that was the end of it.


Fair point, but I unfortunately do have gaps in my records  but was able to make a good faith disclosure wirh at least 95% accuracy, so should be alright  still disconcerting though :/

Just hope they'll be understanding, as this caught me completely off guard, especially as I didn't need to even declare most of my stuff on my uk tax return (hence sloppy record keeping) due to them mostly being tax free...seems unfair but so be it...

This has all taught me a harsh lesson because, if nothing else, I will be suffering sleepless nights till I get through the statute of limitations, which will be at least three years, and possibly six.....


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## Expatinca

Mona Lisa76 said:


> Fair point, but I unfortunately do have gaps in my records  but was able to make a good faith disclosure wirh at least 95% accuracy, so should be alright  still disconcerting though :/
> 
> Just hope they'll be understanding, as this caught me completely off guard, especially as I didn't need to even declare most of my stuff on my uk tax return (hence sloppy record keeping) due to them mostly being tax free...seems unfair but so be it...
> 
> This has all taught me a harsh lesson because, if nothing else, I will be suffering sleepless nights till I get through the statute of limitations, which will be at least three years, and possibly six.....


Same here. My situation isn't complicated at all, but I didn't keep any bank records from 2003-2008 (because why would I? CRA has never been interested in my bank balances!). I guessed REALLY high, just in case. But yes, it's quite disconcerting. 

I'm choosing to believe that the IRS will be so inundated with a massive influx of filings that they'll only bother with the really egregious ones, like the ones that have millions of dollars, so they won't bother with normal people who have amounts consistent with having a job and putting a little money away for retirement. I choose to believe this because I, too, would like to be able to get some sleep within the next couple years...


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## Mona Lisa76

Expatinca said:


> Same here. My situation isn't complicated at all, but I didn't keep any bank records from 2003-2008 (because why would I? CRA has never been interested in my bank balances!). I guessed REALLY high, just in case. But yes, it's quite disconcerting.
> 
> I'm choosing to believe that the IRS will be so inundated with a massive influx of filings that they'll only bother with the really egregious ones, like the ones that have millions of dollars, so they won't bother with normal people who have amounts consistent with having a job and putting a little money away for retirement. I choose to believe this because I, too, would like to be able to get some sleep within the next couple years...


Relieved that I'm not alone with these worries and agree that the US is imperialistic...but as I should have been aware of all this stuff years ago, I feel like I've been negligent to understanding my US obligations so I've brought it all onto myself. I pray they'll be reasonable but if they're going to di a cash grab, then not much I can do...I feel so vulnerable, I can't even begin to tell you how scared I still am.

As you have no ties to US, I don't blame you for wanting to renounce but I just can't forsake my country, as upset as I am...to me, it's about honour. I screwed up and if it costs me all my assets, it's just the way life goes...Canadians are lucky to have Jim Flarety to stick up for them; over here, I feel completely on my own with it...don't think that the UK will want to get involved with something that's out of their domain. My parents and husband feel awful for mebut I was brought up to be truthful.


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## RødGrød

Mona Lisa76 said:


> Relieved that I'm not alone with these worries and agree that the US is imperialistic...but as I should have been aware of all this stuff years ago, I feel like I've been negligent to understanding my US obligations so I've brought it all onto myself. I pray they'll be reasonable but if they're going to di a cash grab, then not much I can do...I feel so vulnerable, I can't even begin to tell you how scared I still am.
> 
> As you have no ties to US, I don't blame you for wanting to renounce but I just can't forsake my country, as upset as I am...to me, it's about honour. I screwed up and if it costs me all my assets, it's just the way life goes...Canadians are lucky to have Jim Flarety to stick up for them; over here, I feel completely on my own with it...don't think that the UK will want to get involved with something that's out of their domain. My parents and husband feel awful for mebut I was brought up to be truthful.


Plentey of sleepless nights here as well. You are definitely not alone. Hopefully the IRS will concentrate on tax evaders and not on confused expats who didn't know about some forms. After all, no true tax cheat in his right mind would move to the UK, Canada or most EU countries in order to _avoid_ taxes! 

As for renouncing citizenship, I've come to realize that I'll always be an American and I'll always love where I came from, with or without the blue passport. I am renouncing because it'll make my life and my family's life much easier and because having to answer to one set of authorities and deal with one tax system is enough for me. I am not my passport. Luckily my family in the US understands and supports this.


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## Mona Lisa76

Hope you're right...I suspect they will be merciful


RødGrød;623542 said:


> Plentey of sleepless nights here as well. You are definitely not alone. Hopefully the IRS will concentrate on tax evaders and not on confused expats who didn't know about some forms. After all, no true tax cheat in his right mind would move to the UK, Canada or most EU countries in order to _avoid_ taxes!
> 
> As for renouncing citizenship, I've come to realize that I'll always be an American and I'll always love where I came from, with or without the blue passport. I am renouncing because it'll make my life and my family's life much easier and because having to answer to one set of authorities and deal with one tax system is enough for me. I am not my passport. Luckily my family in the US understands and supports this.


In a way, I feel the opposite; being an American is a privilege and to renounce just to avoid tax is a form of selling my soul...if I lose all my wordly goods, I will still be me with my heritage...but to renounce would be a treasonable act to my family and all they stand for...but they would understand if my situation became desperate though don't know that I could forgive myself.

At the moment it's still hypothetical; perhaps if things got really desperate then I might change my mind if it would greatly simplfy my life....but as things stand, it just appears that I will have to use an expat accountant for the rest of my life....a pain, but not the end of the world


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## Expatinca

Mona Lisa76 said:


> Relieved that I'm not alone with these worries and agree that the US is imperialistic...but as I should have been aware of all this stuff years ago, I feel like I've been negligent to understanding my US obligations so I've brought it all onto myself. I pray they'll be reasonable but if they're going to di a cash grab, then not much I can do...I feel so vulnerable, I can't even begin to tell you how scared I still am.


Yes and no. Yes, it was technically our responsibility to find out about all of this, but no the US bears some of the responsibility too. For example, when a resident goes to a US embassy to renew our passports, how about they give us a little pamphlet letting us know about our obligations? 

There are relatively simple steps the US could have taken that would have mitigated this situation, and that didn't require all the threats and bullying.



Mona Lisa76 said:


> As you have no ties to US, I don't blame you for wanting to renounce but I just can't forsake my country, as upset as I am...to me, it's about honour. I screwed up and if it costs me all my assets, it's just the way life goes...Canadians are lucky to have Jim Flarety to stick up for them; over here, I feel completely on my own with it...don't think that the UK will want to get involved with something that's out of their domain. My parents and husband feel awful for mebut I was brought up to be truthful.


I can completely understand. I was born and raised in Switzerland and, if Switzerland had ever offered me citizenship, things would have had to have gotten REALLY bad for me to renounce it. It's home, and it'll always be home - even though I no longer live there and even though I have no legal status there.

That's why I keep saying, renouncing citizenship is a very personal choice. It's not just about "rational reasons," and it's not just about getting out of this tax mess. As I tried to explain to Bev somewhere else (but I don't think I explained myself very well), my biggest reason to want to renounce is actually not the tax thing. It's the anger I feel at the US for approaching me with the threat of ruination. If someone from the US embassy had just kindly said "hey, by the way, did you know you're supposed to file your taxes and records of your bank accounts?" when I went to renew my passport, I wouldn't be making this decision nearly so easily now.


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## Mona Lisa76

Expatinca said:


> Yes and no. Yes, it was technically our responsibility to find out about all of this, but no the US bears some of the responsibility too. For example, when a resident goes to a US embassy to renew our passports, how about they give us a little pamphlet letting us know about our obligations?
> 
> There are relatively simple steps the US could have taken that would have mitigated this situation, and that didn't require all the threats and bullying.
> 
> 
> 
> I can completely understand. I was born and raised in Switzerland and, if Switzerland had ever offered me citizenship, things would have had to have gotten REALLY bad for me to renounce it. It's home, and it'll always be home - even though I no longer live there and even though I have no legal status there.
> 
> That's why I keep saying, renouncing citizenship is a very personal choice. It's not just about "rational reasons," and it's not just about getting out of this tax mess. As I tried to explain to Bev somewhere else (but I don't think I explained myself very well), my biggest reason to want to renounce is actually not the tax thing. It's the anger I feel at the US for approaching me with the threat of ruination. If someone from the US embassy had just kindly said "hey, by the way, did you know you're supposed to file your taxes and records of your bank accounts?" when I went to renew my passport, I wouldn't be making this decision nearly so easily now.


Don't get me wrong; I completely appreciate where you're coming from: about how resentful you feel about their heavy-handed manner. Also agree they could have made it more clear in the past so I too feel badly let down...but the information has always been in my passport (albeit in small print) plus most of us have the internet virtually at our fingertips, so I feel accountable for having overlooked all this over the years.

I met and had a conversation with an American expat who's also been over in the UK for fifteen years and she too has been filing US returns but only been listing her earned income (for which she claimed the foreign earned income exclusion) plus her US-based investments but had the same belief that I did until recently that the tax treaties mean't she only had to declare and pay tax on her UK investments to the British tax authorities. She wasn't aware of sometimes anamolous double taxation or of all the onerous reporting requirements such as FBAR. It just goes to show that I wasn't the only one who had this mistaken belief. We both had intuitively assumed that we should be protected from discriminatory treatment and thus be allowed to take advantage of tax free savings and investment plans such as ISAs.

What I suspect has happened is that up to fairly recently the spirit of the tax treaties was accepted but the US has been taking a far less generous interpretation of the treaty due to the huge deficit. They will thus interpret things to their favour even if it means trampling over the sovereignty of other nations...the US is like a cornered caged animal and increasingly desperate. Some of us should wind up reasonably OK but there will no doubt be many casualties, especially after Fatca kicks in...woe betide to anyone they find first, even the 'little' people....I could imagine them being made a full example of. I believe I will have made an honest disclosure just in a nick of time...


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## Expatinca

It's hard to think to look something up when you have no idea it's even an issue!



Mona Lisa76 said:


> What I suspect has happened is that up to fairly recently the spirit of the tax treaties was accepted but the US has been taking a far less generous interpretation of the treaty due to the huge deficit. They will thus interpret things to their favour even if it means trampling over the sovereignty of other nations...the US is like a cornered caged animal and increasingly desperate. Some of us should wind up reasonably OK but there will no doubt be many casualties, especially after Fatca kicks in...woe betide to anyone they find first, even the 'little' people....I could imagine them being made a full example of. I believe I will have made an honest disclosure just in a nick of time...


I suspect that you're right, which is a shame because lashing out like this will only cause foreign investors to pull out of US investments. This could have very drastic and lasting effects on US residents' pensions.

I was whinging about FATCA on Facebook when a friend of a friend asked me if his mother was in danger. She's in her 70s, left the US when she was a child, and has Canadian citizenship. My advice was to file straight away. Like you, I'm fearful for the people the IRS catches first.


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## Mona Lisa76

If she has all her assets in Canada and none in US, she should be reasonably OK, especially if she never plans to go back there to visit. Especially as she was only a child and thus accidental American. It's different when someone moves abroad as an adult and more serious again if someone under-reports their foreign income and worse ahain if someone lies by amswering 'no' in schefule b about whether they have foreign accounts instead of leaving the box unanswered.

My situation is more awkward because I need to get back regularly to see my family and would probably have a large percentage of my eventual inheritance taxed or penalized if I hadn't become compliant (and even more so if I renounced).

I believe that those who've renounced suffer extra taxes on any inherited US estate, though I might be getting mixed up: could in fact be that my estate would be heavily taxed by IRS if I was leaving money to my US family, etc. if no longet a citizen.

It's all this confusion that's so disturbing about it all.

Though I'm also very upset about Fatca, I feel it's safer to keep a low profile on Facebook because it might be just the sort of thing to make them vindictive. I am vulnerable, having just made my disclosures three months ago which is still early days. I don't want to antagonize them or they might assume I was a tax protestor.


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## Bevdeforges

Mona Lisa76 said:


> What I suspect has happened is that up to fairly recently the spirit of the tax treaties was accepted but the US has been taking a far less generous interpretation of the treaty due to the huge deficit. They will thus interpret things to their favour even if it means trampling over the sovereignty of other nations...the US is like a cornered caged animal and increasingly desperate. Some of us should wind up reasonably OK but there will no doubt be many casualties, especially after Fatca kicks in...woe betide to anyone they find first, even the 'little' people....I could imagine them being made a full example of. I believe I will have made an honest disclosure just in a nick of time...


Actually, this all has very little to do with the deficit. The US has been pretty aggressive in its stance toward taxation of citizens resident overseas for quite a long time now. Honestly, a rather large percentage of US expats either didn't bother to file at all or they just filed "nominal" returns and have gotten away with it for years (actually, for decades) with little or no problem.

The IRS has always used scare tactics to encourage compliance - in part because the US tax system is very much a self-declaring, self-calculating system that relies on the basic honesty of the citizens. It's pretty much the same for those living in the US - big press releases about long jail sentences and heavy fines imposed on tax cheats and non-filers always appear in the newspapers just before the April 15th domestic filing deadlines.

What set off this latest round of reporting requirements was a combination of 9/11 and a big OECD push (also fueled by the Europeans) to go after tax cheats and money launderers making use of offshore accounts in well-known tax havens (Switzerland, Liechtenstein, Luxembourg, Guernsey, Isle of Man, etc. etc.). Allegedly they are looking for money transfers to hide taxable income and to fund terrorist organizations.

The expats are really mostly collateral damage here. If you look at the IRS statistics for money collected, what they get from overseas addresses is something like a few hundredths of a percent of the overall total of all taxes collected. And the overseas IRS offices are very much understaffed and underfunded, which makes audits just that much more unlikely for those of us living overseas - unless someone is very, very sure they can collect a whole bunch of back tax.

The US expat groups have been fighting the whole expat taxation things for years now, but they haven't made much headway. It is extremely frustrating - and I completely understand why people are considering renouncing their US citizenship over this. But each of us has our own personal circumstances we have to consider.
Cheers,
Bev


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## Mona Lisa76

Bevdeforges said:


> Actually, this all has very little to do with the deficit. The US has been pretty aggressive in its stance toward taxation of citizens resident overseas for quite a long time now. Honestly, a rather large percentage of US expats either didn't bother to file at all or they just filed "nominal" returns and have gotten away with it for years (actually, for decades) with little or no problem.
> 
> The IRS has always used scare tactics to encourage compliance - in part because the US tax system is very much a self-declaring, self-calculating system that relies on the basic honesty of the citizens. It's pretty much the same for those living in the US - big press releases about long jail sentences and heavy fines imposed on tax cheats and non-filers always appear in the newspapers just before the April 15th domestic filing deadlines.
> 
> What set off this latest round of reporting requirements was a combination of 9/11 and a big OECD push (also fueled by the Europeans) to go after tax cheats and money launderers making use of offshore accounts in well-known tax havens (Switzerland, Liechtenstein, Luxembourg, Guernsey, Isle of Man, etc. etc.). Allegedly they are looking for money transfers to hid


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## Mona Lisa76

Mona Lisa76 said:


> Bevdeforges said:
> 
> 
> 
> Actually, this all has very little to do with the deficit. The US has been pretty aggressive in its stance toward taxation of citizens resident overseas for quite a long time now. Honestly, a rather large percentage of US expats either didn't bother to file at all or they just filed "nominal" returns and have gotten away with it for years (actually, for decades) with little or no problem.
> 
> The IRS has always used scare tactics to encourage compliance - in part because the US tax system is very much a self-declaring, self-calculating system that relies on the basic honesty of the citizens. It's pretty much the same for those living in the US - big press releases about long jail sentences and heavy fines imposed on tax cheats and non-filers always appear in the newspapers just before the April 15th domestic filing deadlines.
> 
> What set off this latest round of reporting requirements was a combination of 9/11 and a big OECD push (also fueled by the Europeans) to go after tax cheats and money launderers making use of offshore accounts in well-known tax havens (Switzerland, Liechtenstein, Luxembourg, Guernsey, Isle of Man, etc. etc.). Allegedly they are looking for money transfers to hid
> 
> 
> 
> I filed nominal returns for decades because was fully declaring to Inland Revenue and thought I was protected by tax treatries. As I've made my life in Britain, thought it OK to use ISAs, especially as i'm also British. The Europeans are cracking down but aren't threatening their expats with ruination. Plus the threat of Fbar and Fatca is bludgeoning us into compliance. Naturally, we feel bitter and frightened, especially when it seems the UK, unlike Jim Flarety, is not going to stick up for us.
Click to expand...


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## Guest

This is an excellent point. I have the newest passport model (The biometric one with the ugly eagle on the info page) and there is only a small paragraph stating that you have to report your worldwide income on the last page. I think there should be much more detailed information printed with specific references to the FBAR in particular. 

I don't particularly like the idea, but I think the US needs to pass a law whereby you legally have to register your address with the US consulate in the jurisdiction where you reside abroad. I have to do this as an Italian citizen and it actually works quite well as they send all required information in the post and communicate with my home Comune. This way the US could actually tell its expats about changes in the tax code and of expected reporting obligations as opposed to acting like we are all Merlin the wizard and are simply omnipotent beings that are telepathically made aware of every paragraph of the US tax code the moment it is passed.



Expatinca said:


> Yes and no. Yes, it was technically our responsibility to find out about all of this, but no the US bears some of the responsibility too. For example, when a resident goes to a US embassy to renew our passports, how about they give us a little pamphlet letting us know about our obligations?
> 
> There are relatively simple steps the US could have taken that would have mitigated this situation, and that didn't require all the threats and bullying.


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## 416

Some weekend links:

telegraphjournal.com - U.S. tax net even affects premier | Chris Morris - Breaking News, New Brunswick, Canada

NB Premier David Alward is caught in the same net as the rest of us, though (contrary to what's on Hogden's blog) it's not stated whether he's in OVDI or filing back returns. I would hope he could afford good enough tax advice to keep him out of OVDI. 

Tax for US expats « David Christianson

David Christianson talks about the frustratingly ambigous signals the IRS is sending on expatriate taxation. 




> "By the ethics of my profession (I’m an EA, subject to Circular 230 rules) I have to advise them to follow the law, even if that’s going to bankrupt them with penalties. As a human being, I can’t do that. So either I fudge, or I send them to another accountant. I have spoken to the IRS about this many times. They, of course, have to say “The law applies to everyone,” but then they go on about how their resources are limited and they can only actively pursue major cases. To me, this amounts to a wink and a nod and an acknowledgment of selective enforcement. I think laws that need to be enforced selective are a really bad idea, but in this case I’m counting on it, so I generally advise my clients to get into compliance going forward and forget about the past, on the theory that they shouldn’t do anything to bring themselves to the IRS’ attention. We’ll see if that works. "


Canadians on Campobello Island caught up in U.S. tax dragnet

And half the population of Campobello Island are delinquent US taxpayers.


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## Peg

A September 21, 2011 opinion piece in the LA Times: IRS puts the bite on Canadians - latimes.com

Encouraging comment from: http://www.theglobeandmail.com/repo...adian-financial-firms-on-edge/article2192258/

... Speaking to reporters after a speech in New York Wednesday, Canadian Finance Minister Jim Flaherty said he’s optimistic there will be a resolution to a tax dispute that affects roughly one million U.S. citizens living in Canada. But he offered no details. ...


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## Peg

416 said:


> telegraphjournal.com - U.S. tax net even affects premier | Chris Morris - Breaking News, New Brunswick, Canada
> 
> NB Premier David Alward is caught in the same net as the rest of us, though (contrary to what's on Hogden's blog) it's not stated whether he's in OVDI or filing back returns. I would hope he could afford good enough tax advice to keep him out of OVDI.


It sounded like Premier Alward did not know about the requirement either which certainly makes it easier, in my opinion, for us average citizens to not know either!


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## Vangrrl

Expatinca said:


> Yes and no. Yes, it was technically our responsibility to find out about all of this, but no the US bears some of the responsibility too. For example, when a resident goes to a US embassy to renew our passports, how about they give us a little pamphlet letting us know about our obligations?
> 
> There are relatively simple steps the US could have taken that would have mitigated this situation, and that didn't require all the threats and bullying.


This is actually how I found out about this whole issue. My son's passport needed to be renewed in July and for a minor's passport you need to apply in person. The consular officer made me read the blurb on the application regarding "reporting worldwide income" and specifically said "We have been instructed to make sure everyone reads this". 

Of course, the rest of us apply for our passports by mail, and I had read that blurb before but genuinely thought it applied only to resident US citizens (obviously I was reading it to mean what I thought it should mean). It wasn't until the officer pointed it out to me, specifically knowing I was a non-resident that I realized I need to pay attention.

I think that compliance is going to be a slow process, but step one was making us all require a US passport to travel to the US and eventually step two will be to tie passport renewal (especially abroad) to tax compliance. 

I don't think they will ever be checking our tax status at the border. There was a time when a passport issued abroad was a different colour and easily identified a non-resident but not any more. If they are going to check every single American's tax status at the border, the border queues will be enormous. Not to mention that this will affect resident Americans and they will fight back.


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## Expatinca

Vangrrl - I had to renew my passport just in February because I got married and was changing my name. There was no mention of taxes/FBAR. When did your son have his done?

I may be wrong, but I believe that there's been an explicit ban on tying passports to taxes. It may have been a supreme court decision, but I'm not sure. I just remember coming across it as I was researching all this mess and trying to figure out exactly what I was and was not responsible for.

Thanks to the people providing articles! I've started up a blog just about the issue for US expats in Canada (for funsies, and also because trying to explain it all to others is a great way to make sense of things in my own head). I have an article about Alward scheduled for the next couple days. If anyone is interested, you can find it here: Expats in Canada | Living with a US citizenship in the Frozen North I'd love comments/feedback, of course 

The more I read, the more optimistic I'm feeling that people like me, who have very low incomes and are clearly not "evading taxes" won't be hit with the hefty penalties. I'm starting to feel a little more relaxed (and actually getting some sleep!). I can't possibly express how thankful I am to politicians like Jim Flaherty who've been putting so much work in on my behalf.


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## Ladyhawk

There is an organization called American Citizens Abroad (ACA) which has been around a long time, and is a place where expats can find useful information and help on matters like this one. They even have local gatherings in some places, like US Thanksgiving dinners together where expats can meet one another.

Anyway, they have written a letter on their website about this OVDI issue and called it out for what it is - a scam that lured innocent people into a program and then changed the rules on them. I found this in a comment after a post on Phil Hogden's blog: 

"American Citizens Abroad (ACA) just posted a good article on their web site. See link below and share it.

It is titled FBAR SCAM.

Although ACA charter and focus is American expat directed, this article has a lot of relevance for green card holders residing overseas, and Immigrants here now facing the harsh realities of the OVDI program which is using the FBAR as a bludgeoning tool for revenue extraction. It should resonate with many Minnows who are feeling the harsh and unjust characterizations by the IRS and in the media where they are just lumped together collectively with the Whales as Cheats, Dodgers and Evaders.

Required reading, I would say.

http://www.aca.ch/fbarscam.pdf"

BTW, regarding the issue of tying passports to taxes, there has recently been a change in the law so that the IRS can now share information with Border Services, so that border agents can theoretically question expats crossing the border into the US about their tax compliance. I'll see if I can find my original reference to this as I have been aware of it for a couple of months. I think we should anticipate that passport renewals will soon, if not already, be withheld unless you are tax compliant.


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## Peg

Expatinca said:


> ... The more I read, the more optimistic I'm feeling that people like me, who have very low incomes and are clearly not "evading taxes" won't be hit with the hefty penalties. I'm starting to feel a little more relaxed (and actually getting some sleep!). ...


I agree completely! For weeks I was sick about it whereas now that I understand it I am just getting the paperwork done and then will be on to the next stressor...


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## Vangrrl

Expatinca said:


> Vangrrl - I had to renew my passport just in February because I got married and was changing my name. There was no mention of taxes/FBAR. When did your son have his done?


It was July. Literally a week or two before the first article about renunciation (and how hard it is) appeared in the Globe and Mail and a month before the flurry of Vancouver Sun articles that got the issue going. So it really does seem like all of this media attention was part of a concerted effort by the IRS to the issue out there. There was no mention of fbar - simply the "reporting of worldwide income".

For what its worth, I'd be totally fine with a border agent reminding Americans that they must file taxes even when they live abroad. If someone had done that for me, I'd have known what my responsibilities were years ago. As the only US citizen in my family, my parents didn't have a clue what the rules were. Heck, we didn't even know I *was* a US citizen until I was 22 years old (my parents had to give up their foreign citizenship when we became Canadian citizens, and they assumed my US citizenship was automatically renounced as well at the same time).


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## Bevdeforges

Ladyhawk said:


> BTW, regarding the issue of tying passports to taxes, there has recently been a change in the law so that the IRS can now share information with Border Services, so that border agents can theoretically question expats crossing the border into the US about their tax compliance. I'll see if I can find my original reference to this as I have been aware of it for a couple of months. I think we should anticipate that passport renewals will soon, if not already, be withheld unless you are tax compliant.


While it's possible the law on this has changed with regard to the IRS sharing information with the Border agency, there are still restrictions on the various agencies within the US government sharing detailed files with one another. (Reading through some of the Congressional reports on FATCA, they cite laws and internal regulations that prohibit the IRS from pursuing certain information - which is why some of the forms have to be sent to a different branch of the Treasury Department.)

It's pretty much impractical for passport renewal to be held up for "tax compliance" as the IRS doesn't really maintain any sort of list of who they deem to be tax compliant or not. Simply not filing isn't in and of itself a crime (or a misdemeanor) - if your income didn't meet the threshold filing levels, you have no reason to have filed. There are other circumstances where not filing is perfectly acceptable. And they don't have a giant list anywhere of US citizens who are "supposed" to be filing. (Actually, the IRS computers are pretty old and decrepit. They keep talking about the need to upgrade and modernize their system, but they have yet to get the funds to do so.)
Cheers,
Bev


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## Ladyhawk

Bevdeforges said:


> While it's possible the law on this has changed with regard to the IRS sharing information with the Border agency, there are still restrictions on the various agencies within the US government sharing detailed files with one another. (Reading through some of the Congressional reports on FATCA, they cite laws and internal regulations that prohibit the IRS from pursuing certain information - which is why some of the forms have to be sent to a different branch of the Treasury Department.)
> 
> It's pretty much impractical for passport renewal to be held up for "tax compliance" as the IRS doesn't really maintain any sort of list of who they deem to be tax compliant or not. Simply not filing isn't in and of itself a crime (or a misdemeanor) - if your income didn't meet the threshold filing levels, you have no reason to have filed. There are other circumstances where not filing is perfectly acceptable. And they don't have a giant list anywhere of US citizens who are "supposed" to be filing. (Actually, the IRS computers are pretty old and decrepit. They keep talking about the need to upgrade and modernize their system, but they have yet to get the funds to do so.)
> Cheers,
> Bev


Bev - maybe the rumor of being stopped at the border is all part of the manufactured "hype" around this whole issue, to prod people into filing. Though I do wonder about the fact that published news articles cite examples of people who have been questioned at the border, and I recall one that described a couple who were "frog-marched to an IRS agent" who then questioned them about why they had not filed their 1040's every year. They were not, however, refused entry.
One does become weary at all the scare stories, followed by assurances that the IRS isn't that competent, and one's mood goes up and down depending on what one has last read. The IRS is probably too overstretched to chase down the minnows, but the arbitrariness of their powers is what keeps the nightmares alive.


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## Ladyhawk

The first draft of the instructions for filing Form 8938, (AKA Son of FBAR, which duplicates a lot of FBAR info and is a new requirement for 2011) have been released, just found them here:

http://www.irs.gov/pub/irs-dft/i8938--dft.pdf

Read it and weep. On first quick read, however, I do not see anything about reporting the value of your home residence, even if it is income-producing (like a farm, or a rental unit in the house, or small business run from home), but it will take some time to go through it all.


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## AmTaker

Ladyhawk said:


> Bev - maybe the rumor of being stopped at the border is all part of the manufactured "hype" around this whole issue, to prod people into filing. Though I do wonder about the fact that published news articles cite examples of people who have been questioned at the border, and I recall one that described a couple who were "frog-marched to an IRS agent" who then questioned them about why they had not filed their 1040's every year. They were not, however, refused entry.


I saw this happen once in a customs/immigration line. However, I did not pay too much attention to that, since I was occupied with the woman in front of me, who was trying to smuggle a little dog (a rather mangy beast) she had picked up in her Mexico trip into the US without quarantine


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## Peg

Ladyhawk said:


> ... One does become weary at all the scare stories, followed by assurances that the IRS isn't that competent, and one's mood goes up and down depending on what one has last read. The IRS is probably too overstretched to chase down the minnows, but the arbitrariness of their powers is what keeps the nightmares alive.


Well said Ladyhawk! :clap2: My father lives in the USA and when I told him of our fun with the IRS he simply said they are mean and nasty. (however, his record-keeping probably has not been as meticulous as mine... )


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## Mona Lisa76

Ladyhawk said:


> The first draft of the instructions for filing Form 8938, (AKA Son of FBAR, which duplicates a lot of FBAR info and is a new requirement for 2011) have been released, just found them here:
> 
> http://www.irs.gov/pub/irs-dft/i8938--dft.pdf
> 
> Read it and weep. On first quick read, however, I do not see anything about reporting the value of your home residence, even if it is income-producing (like a farm, or a rental unit in the house, or small business run from home), but it will take some time to go through it all.


As these are only the first published draft of instructions and with it already being October, I wouldn't be surprized if they delay requirements to file 8938 till 2013 for the 2012 tax year. And let's hope that if someone prominent enough finds a constitutional problem, it may hopefully be pushed back indefinitely.


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## Bevdeforges

AmTaker said:


> I saw this happen once in a customs/immigration line. However, I did not pay too much attention to that, since I was occupied with the woman in front of me, who was trying to smuggle a little dog (a rather mangy beast) she had picked up in her Mexico trip into the US without quarantine


You aren't, by any chance, referring to the long-standing "urban legend" about the "Mexican dog" that turns out to be a very large rat? snopes.com: The Mexican Pet

The US doesn't have a quarantine for dogs or cats entering the country. There was a quarantine at one time if you were taking animals to Hawaii, but that was eliminated several years ago.
Cheers,
Bev


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## Bevdeforges

Peg said:


> Well said Ladyhawk! :clap2: My father lives in the USA and when I told him of our fun with the IRS he simply said they are mean and nasty. (however, his record-keeping probably has not been as meticulous as mine... )


The IRS in the States IS mean and nasty. The IRS agents who handle matters outside the US are those who have managed to get themselves cushy overseas postings at the consulates. There are far fewer of them per capita than needed, and they tend to be far more mellow than their domestic colleagues. 
Cheers,
Bev


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## AmTaker

Bevdeforges said:


> You aren't, by any chance, referring to the long-standing "urban legend" about the "Mexican dog" that turns out to be a very large rat? snopes.com: The Mexican Pet
> 
> Cheers,
> Bev


Yes, I was implying (perhaps too subtly) that the idea of IRS agents grabbing entrants at borders and haranguing them over unfilled tax returns seemed to be largely an urban legend to me and that one was likely to see that happen as to see a woman with a mexican pet that turned out to be a rat


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## Ladyhawk

*Canadian version of OVDI*

Hey guess what! Canada also has a program to lure citizens back into tax compliance regarding offshore stashes of assets (ie, people who deliberately try to evade taxes, not Canadians who live overseas). It's called the VDP (Voluntary Disclosure Program) and here is what it says about delinquent filers:

"CRA DOES NOT PROSECUTE VDP APPLICANTS
There is no sinister "tax man" or "tax police" in dark glasses waiting to pounce on you and throw you in jail for tax evasion or not filing tax returns if you do a VDP application. CRA does not prosecute VDP applicants. The purpose of the Canada tax amnesty program is to encourage Canadian taxpayers to voluntarily comply with their income tax obligations.* Prosecution would be contrary to the goals of the VD program and contrary to the published guidelines (binding on CRA) that make it clear there will be no prosecution. *The latest published statistics shows that for 2008-2009 CRA referred 164 income tax and GST/HST investigations to the Public Prosecution Service of Canada. During this same time period there were over 11,000 voluntary disclosures submitted. These prosecutions were for taxpayers who were caught evading taxes, or who were sent requests and demands to file tax returns and ignored the demands. The prosecutions are NOT as a result of submitted VDP applications."
From Canadian Voluntary Disclosure- Tax Amnesty Lawyer,Tax and Business law firm.

No fines, no penalties, no late fees, just voluntarily disclose before they come looking for you, and all you owe is back taxes plus interest.
So far they've had 11,000 applicants - nearly as many as the IRS, which has probably ten times as many non-filers out there. 

Looks like you catch more flies with honey than with threats of financial ruin. Who'da thunk it??


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## Guest

If you aren't already aware, go to this site. (Google the name, sorry but this website so far isn't letting me post URLs even though I now have the silly 4 posts it says I need before it trust me to post a URL...)

American Citizens Abroad is lobbying furiously with Congress, the Treasury Secretary (good luck with that ... even under Obama ...) and urging people to lobby their relatives in the US, providing draft petition and letter forms for those who want them -- all in aid of attacking this grotesque and, dare I use the word, imperialist IRS tax-grab outside US borders.

This website contains some real horror stories of how awful this is becoming and why it needs to be fought, not submitted to. That a country founded largely on the Boston Tea Party and objections to taxation without representation is in 2011 going down this road would be hilarious if it weren't so grotesque and awful. Every day now when I wake up, I bless myself for having dumped my US citizenship 35 years ago. I thought things were bad in the US during the Vietnam War; they're much worse now in my opinion, but this isn't the forum for that discussion ...

Don't submit, fight.

For inspiration, read what in my opinion is the best essay by arguably the greatest American writer, Henry David Thoreau. Not "Walden Pond," much as I like it too ... read "Civil Disobedience," which he wrote shortly after doing jail time for refusal to pay his poll tax (in 1845 the US didn't have income tax, it had poll tax) because it was being spent to support slavery and a US war of agression against Mexico to annex Texas -- Abe Lincoln, I seem to recall, also did jail time in 1845 or thereabouts, for the same reasons).

There's a long American tradition of resistance to tyranny, which the IRS, most US politicians and sadly a lot of Americans have now forgotten. And no, I would emphatically NOT be a supporter of the current so-called Tea Party were I a US citizen or resident (neither of which I now am, thank God).


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## Expatinca

Ladyhawk said:


> Looks like you catch more flies with honey than with threats of financial ruin. Who'da thunk it??


Who'da thunk it, indeed!

I've been generally pleased with CRA. We have our differences, of course, and there are things that I think should be improved with the tax system here. But generally, I've found them to be very helpful and willing to work with people to get them fully compliant, rather than jumping straight for punishment.

For example, I used to be involved with a charity that didn't fill out its T3010 one year (very small volunteer-run charity, there was a changeover in power right at the wrong time, and everyone thought the other group had done it). We just got a letter, called them, and the rep worked with us to figure out what needed to be done. That was it, no threats or bullying.


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## Peg

Schubert said:


> American Citizens Abroad is lobbying furiously with Congress, the Treasury Secretary (good luck with that ... even under Obama ...) and urging people to lobby their relatives in the US, providing draft petition and letter forms for those who want them -- all in aid of attacking this grotesque and, dare I use the word, imperialist IRS tax-grab outside US borders.
> 
> This website contains some real horror stories of how awful this is becoming and why it needs to be fought, not submitted to. ...
> Don't submit, fight. ...


In a panic I filed under OVDI and regret it. But now the problem is that if I opt out the potential penalty goes up substantially.

Wondering if anyone has gotten information back from OVDI yet?


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## Expatinca

Peg said:


> In a panic I filed under OVDI and regret it. But now the problem is that if I opt out the potential penalty goes up substantially.
> 
> Wondering if anyone has gotten information back from OVDI yet?


Yikes! I would have done the same if I'd found out about it in time, and I'm glad I was spared. If you do hear a response, whether good news or bad, I'd be very interested in hearing about it for my blog.

Good luck!


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## Bevdeforges

Schubert said:


> If you aren't already aware, go to this site. (Google the name, sorry but this website so far isn't letting me post URLs even though I now have the silly 4 posts it says I need before it trust me to post a URL...)


No idea why you can't post links, but for those interested, here is the ACA website: ACA American Citizens Abroad They have been trying for a LONG time to get the US to drop the filing requirement for overseas residents. 
Cheers,
Bev


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## Ladyhawk

Schubert said:


> If you aren't already aware, go to this site. (Google the name, sorry but this website so far isn't letting me post URLs even though I now have the silly 4 posts it says I need before it trust me to post a URL...)
> 
> American Citizens Abroad is lobbying furiously with Congress, the Treasury Secretary (good luck with that ... even under Obama ...) and urging people to lobby their relatives in the US, providing draft petition and letter forms for those who want them -- all in aid of attacking this grotesque and, dare I use the word, imperialist IRS tax-grab outside US borders.
> 
> 
> 
> ).


Yes. I posted this two days ago, I'll post the relevant bit again:

"There is an organization called American Citizens Abroad (ACA) which has been around a long time, and is a place where expats can find useful information and help on matters like this one. 

...they have written a letter on their website about this OVDI issue and called it out for what it is - a scam that lured innocent people into a program and then changed the rules on them. 

http://www.aca.ch/fbarscam.pdf"


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## DualCitizeninCanada

Bevdeforges said:


> It's pretty much impractical for passport renewal to be held up for "tax compliance" as the IRS doesn't really maintain any sort of list of who they deem to be tax compliant or not. Simply not filing isn't in and of itself a crime (or a misdemeanor) - if your income didn't meet the threshold filing levels, you have no reason to have filed. There are other circumstances where not filing is perfectly acceptable. And they don't have a giant list anywhere of US citizens who are "supposed" to be filing.


Along these lines, part of what I'm confused about is what exactly the foreign income exclusion (form 2555, I think) really means. If my income is well below the $93,000 (or whatever it is right now), and for US tax purposes my income ends up being $0, isn't that the same as having income under the filing threshold level? I know the answer to my question - I do have to file - but if I do, I just don't get what an income exclusion really means, then. And still I'm not sure if I want to go with 1116 or 2555 (this was discussed a bit earlier in the forum). I don't think there's a real difference in the end, for now.


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## Saskslam

*Warning - IRS Phishing Scam*

I like to think that I have some internet smarts...however, was very nearly proven very wrong.

I submitted 6 years of tax forms to the IRS at the end of August for my spouse. 

I received an email last week from the IRS with the subject line - "Your Tax Return" stating the following:
*Important information about your tax return
We are unable to process your tax return

We received your tax return. However, we are unable to process the return as filed. 

Our records indicate that the person identified as the primary taxpayer or spouse on the tax return was deceased prior to the tax year shown on the tax form. Our records are based on information received from the Social Security Administration.
Based on this information, the tax account for this individual has been locked. 

What you need to do*

And of course there was a link to another supposed IRS page that instructed you to go through various steps to resolve this. Most of the information requested being personal ID type of info. and all looking very IRS legit.

Now for various reasons - at first read this seemed very legit.. There was a small possibility that we had used her deceased fathers SSN by mistake - as my wife searched old files to find here SSN. We then thought "How did they have our email address"? Perhaps they had contacted the accountant that prepared our tax forms?

It wasn't until I attempted to open the link on another laptop - where I received a "Warning - potentially unsafe website" that I actually started to put it together. then I googled "IRS email Scam" and sure enough - there it was.

I feel like an idiot - but thought I should post this warning.

And finally - we can't figure out how our email would have ended up on this scam "phishing"expidition. 

Is there any possibility that somehow my email address was lifted from this site as a member?


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## Bevdeforges

DualCitizeninCanada said:


> Along these lines, part of what I'm confused about is what exactly the foreign income exclusion (form 2555, I think) really means. If my income is well below the $93,000 (or whatever it is right now), and for US tax purposes my income ends up being $0, isn't that the same as having income under the filing threshold level? I know the answer to my question - I do have to file - but if I do, I just don't get what an income exclusion really means, then. And still I'm not sure if I want to go with 1116 or 2555 (this was discussed a bit earlier in the forum). I don't think there's a real difference in the end, for now.


The foreign income exclusion (i.e. form 2555) is an "election" you can take to protect your foreign earned income. For various reasons, some people prefer to take the tax credit (form 1116) or handle their tax forms another way. It is not obligatory to exclude your overseas earned income - and I suppose there are some tax strategies where it's not a good idea.
Cheers,
Bev


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## Vangrrl

Question for those of you who have TFSAs:

I know that these are not tax deferred in the US. But does that necessarily mean that you end up paying tax to the US if you report the interest on your 1040?

If all the rest of your income is either excluded or covered using the foreign tax credit, would the standard deductions cover typical interest income given off by a TFSA (at this point in time the account wouldn't be much larger than $15,000 - I don't remember if there is a max value for the account)?

I don't have a TFSA started yet but it was on our list of things to look into for 2012. We'll start with one for my husband (since he's Canadian only) this year. Hopefully both TFSAs and RESPs will be recognized under the tax treaty soon but in the mean time are they a complete no-go for US tax filers?

Any advice on this issue?


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## Peg

Ladyhawk said:


> http://www.aca.ch/fbarscam.pdf


Thank you very much for sharing that link! It is a fabulous explanation of the situation and I will be sharing it with my lawyer to figure out how to proceed with opting out of the OVDI.


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## Peg

Saskslam said:


> I feel like an idiot - but thought I should post this warning.
> 
> And finally - we can't figure out how our email would have ended up on this scam "phishing"expidition.
> 
> Is there any possibility that somehow my email address was lifted from this site as a member?


Two weeks ago I received an "IRS email" but at work. It startled me and if it had come to my home email it would have taken longer for me to realize it was not legit.

Taxes stress out most people. I realize that the stress of this is huge - think about it: filing 6 years of income tax returns to a foreign government together with baring my financial soul with the FBARs combined with fear of draconian penalties.

Understandable that we would fall for a phishing scam!:boxing:


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## Arlington

Saskslam said:


> It wasn't until I attempted to open the link on another laptop - where I received a "Warning - potentially unsafe website" that I actually started to put it together. then I googled "IRS email Scam" and sure enough - there it was.
> 
> thought I should post this warning.


The same scam uses the Canada Revenue Agency. The legitimate CRA has a warning posted on its home webpage. My boss received one of these . .and since he is in arrears on his Canadian taxes, he momentarily thought it was legitimate.


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## Expatinca

Vangrrl - I only opened my TFSA this year, so I haven't had to deal with this yet. But I was reading somewhere that there's a child tax credit of $1K per child (under 17) living at home, but that most expats don't claim it because all of their taxes are already covered by the exclusions. So don't quote me on this because I haven't started exploring the possibility yet, but maybe that's own place where you could deduct the tax amount?

Something to talk over with your accountant, anyway.


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## Ladyhawk

Peg said:


> Thank you very much for sharing that link! It is a fabulous explanation of the situation and I will be sharing it with my lawyer to figure out how to proceed with opting out of the OVDI.


I am so glad it was helpful to you, Peg. Good luck, hope all goes well!


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## Cafreeb12

Hello Everyone,

I sat here last night and read this thread from page one to the end. I need to read it all again as there is some info in there I need to take notes on!

Like a lot of you I find myself swept up in the penalty grab the U.S. has now set up under HIRE. Right off the bat I'll tell you I"m going to renounce after I get under compliance. Not because I owe them anything or would, and not because I don't want to be American or to "avoid" paying taxes. It's because it's a burden to my family to have me in it while I'm still American. I no longer trust they won't come after my Canadian husbands income or my child in the future and who knows what kind of rules they will justify after this. I'm just done. I have been in Canada 30 years. Stay at home mom to a child with disabilities. If I am fined for being late with this paper work, the money will come out of my Canadian husbands income which he uses to support our family. That's not right or fair to him since he's never been American. I'm am very angry at having to choose between my country of birth or my family but, that's the way I feel about this. My family comes first.

There's no one in my city that does this stuff....so I am looking for a reasonably priced accountant to handle it elsewhere. That's another reason to renounce. I cannot afford year after year to have someone file this for me and the IRS forms are so confusing to me. I just want this over with for all and good. 

I had contacted the IRS on three different occassions since moving to Canada and all three times I was told that I did not make enough to require me to file. The last time I called them was April of 2011. My mother died in Feb. and she left me some money. I knew I would need to claim it. I had questions for them. I would need to file in the upcoming year after this January. At that time AGAIN I was told that I was okay for previous years and no mention of FBAR was made to me at all. I took down the agents name at the center in Austin who I spoke to. As I was looking for further info on inheritance tax in the U.S. I found out about all this!! 

I had been taking care of my mom on hospice just before she died in the U.S., after her death, funeral all in one month, I myself was hospitalized twice. Then over the summer we settled her estate almost fully. It's not a huge amount but, some. So I will file for the past five years and the one coming up *after January* which will include one year of inheritance to me. Then I will renounce and get away from this specious *******s. It's hard to do and I feel forced into it. Something I will never forgive them doing. 

If you are in south eastern Ontario and know of a good tax person please mention them to me. My only concern is going to visit in the U.S. after renouncing. My father is seventy one years old and not all that well. I don't want any hassle from them, I just want to protect my Canadian family from any future penalty grabs or any future head aches upon my death AND any future privacy invasions into their foreign accounts. I am really stressed about this all. A friend in the U.K, in position with four children has taken her name off everything they own to protect her family. So at age fifty she is legally a pauper. The Wall St. Journal and "The Hill" calls us "over seas tax cheats" and lumps us in with drug lords and criminals. I am extremely offended by these actions. I took my Canadian citizenship test last week. Moving forward with getting in compliance, getting my Canadian passport and then renouncing. There are a few choice words going through my mind at the moment but, I'll leave those to your imaginations.


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## Guest

I had a meeting yesterday with an immigration lawyer and am waiting for response on getting an appointment with the CA who does my Canadian and U.S. taxes to clarify how the U.S. will value my assets... 

I came to Canada as a landed immigrant in 1969 and soon after became a Canadian citizen – and at the time honestly was under the impression that I had renounced by U.S. citizenship to do so. I had not been filing U.S. income taxes nor submitting FBAR’s but filed as soon as (I thought) I knew it was a requirement as it appears I am still a U.S. citizen (2005, 2006, 2007, 2008, 2009, 2010 and respective year FABR’s). I was advised that I absolutely would have relinquished my U.S. citizenship with my oath for Canadian citizenship in 1972 or 1973. Unfortunately, I was also advised by my daughter that I had to do U.S. taxes and told by a U.S. border agent that I had to use a U.S. passport to enter the U.S. She was told when she applied for her U.S. passport that her parents would still be U.S. citizens. Yes, I should have paid for legal advice at that point.



I especially need to know how the U.S. will determine my net worth to make sure I will fall below $2 million; i.e. how would my work pension be valued, etc.? 

As I read it, I may have a window of opportunity to renounce my U.S. citizenship as I would be exempt (but I need this verified) as I do not meet any of the criteria for a covered expatriate and related exit tax:

You qualify for the covered expatriate and the related exit tax, if you meet any of the following criteria:

you have a net worth of US$ 2 million or more; 
you have an average net U.S. income tax liability of greater than US$ 139,000 (thereafter indexed for inflation; $145,000 for people expatriating in 2009) for the five year period prior to expatriation; or 
you fail to certify that you have complied with all U.S. federal tax obligations for the preceding five years. 
Herewith, all property subject to gift tax and all property, where you hold a use right, are included for purposes of the net worth test.

It is sad that renunciation of U.S. citizenship has to even be considered. My reasoning is that benefit of renunciation outweighs any benefit of U.S. citizenship:

I am certainly not confident that the IRS. will not further tighten their parameters (above). 
As I have an adult son with a developmental disability, I do not want to have to double hire taw and estate lawyers, Canadian and U.S., to make sure I am arranging things so my son can seamlessly be looked after when I am gone. As it is, the Canadian Registered Disability Savings Plan (RDSP) that I have set up for him (in lieu of an RRSP) has no benefit for him as it will be taxed by the U.S. the same as an RESP or a TFSA (negating benefit of these as a Canadian citizen). 
I don’t want to leave such extra responsibility and expense for my son’s needs to an executor or to my husband or daughter. 
It is very stressful each year to get everything together to have Canadian taxes prepared and then, based on that, get U.S. taxes done and mailed by April 15. Little or no taxes are owing to the U.S. after completing this extensive yearly exercise. It is a significant yearly expense for me, with little or no revenue gain for the U.S.
There is too much room for error in doing the FBARs and the excessive penalties for such are more than I can afford. FBARs do not reflect a true picture when accounts are changed and money transferred from an old account to a new one. There is yet another IRS form to soon be filed with 1040s that duplicates a lot of what is reported on the FBARs.
I don’t want to spend my retirement years with excessive worry about all of this. Stress is a contributing factor to medical conditions I have. I want to protect my health as best I can – for myself and for my family. 
I want to be confident my son will be secure when I am gone and that my children will not be short-changed because of my U.S. citizenship. I have worked too hard for this to be the reality. 
As I read it, my son, born in Canada of parents born in the U.S. and never having lived in the U.S. would qualify for renunciation if he understood all implications. (He has no benefit with his accidental U.S. citizenship.):

The exceptions are dual nationals from birth, who have not lived in the US for more than 10 years from the last 15, and persons younger than 18½ who have not lived in the US for more than 10 years.

Or, perhaps there is an argument that he was not born a U.S. citizen in Canada as his U.S. parents had relinquished their U.S. citizenship when they became U.S. citizens (only much later did I get a U.S. passport. 

It is immoral what this is doing to families. I'm even considering whether divorce is a way to free my husband from this nightmare that I have unintentionally created for my family. He is 71 and his remaining years should be the best quality they can be.


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## Cafreeb12

*Yes, it IS immora*l and I too had the thoughts of divorce going through my head to protect my family from the financial burden of ME being in it. I've been married twenty eight years....for me to even have to think that way, or you is simply horrible. It would save my family from all of this though. 




]


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## Expatinca

Calgary411 - I am so sorry that your family is finding itself in this situation. It isn't right, and it isn't fair,.

As far as your US citizenship goes - and this is the kicker - you DID renounce it when you took your Canadian citizenship because dual citizenship wasn't an option at the time, but a (fairly) recent decision in the US revoked this for anyone who didn't specifically notify the US of intent to renounce. They pulled the rug out from under you by changing the rules long after you could have actually done something about it.

It's not fair.

But please don't stress. As it stands right now, my understanding is that the US hasn't gone after Canadians yet, and our government is fighting hard on our behalf so that it stays that way. And in any case, worrying won't change anything. So please have a hot bath, take a walk in the park with your children to see the beautiful changing leaves, and calm yourselves down. 

My advice, as a non-professional, as one wife and mother to another, is for you to quietly file the back taxes and FBAR (three years on the taxes and back to 2003 on the FBAR), and then begin the process of renunciation. The IRS can still bother you about anything up until the point of your renunciation, but the fact that you believed you had renounced your US citizenship years ago - when you, in fact, did according to the laws as they stood - will count a great deal in your favour.

We're all in this with you, so are some of our MPs, and our government is fighting for us. We'll get through this together.

And I'm very sorry for the shamelessness of this, but I would be very interested in putting your story up on my blog. If you think that this is something you might be interested in, please e-mail me at [email protected].


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## Guest

I'm wishing you the best in your efforts to resolve the situation for your family. And, I wish our actions somehow solved our anger. Our relatives in the States as well as our friends here cannot really conceive that the U.S. IRS is capable of these actions / penalties.


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## Guest

*Your MP and our Minister of Finance need to hear these cases*

First, let me say up-front that I am not a supporter of the current governing party in Canada and never have been. However, I am impressed so far by what Jim Flaherty has been doing on this issue. He and his government need to do more, but they've made a good start.

I have a perhaps naive belief that writing your elected representative demanding some action or protection is a useful step in fighting things like this. At the very least, it can feel very therapeutic.

Particularly if you have some striking examples of how insanely cruel this latest act of US government stupidity, arrogance and insanity is as in the previous couple of posts on this thread --

write to your Member of Parliament. It won't take long; just cut and paste what you've already written in your post to this forum, maybe adding a few appropriate sentences. (E.g., I am one of your constituents and I want you and the government to do something to stop these awful actions by the IRS and the US government under HIRE, FATCA, FBAR, and the other acronyms. They are an attack on the incomes and retirement savings of ordinary Canadians who happen to have US birth and US citizenship, often without their choice or even awareness of the matter until recently. The proposed "requirement" on Canadian and other countries' financial institutions to report personal banking information directly to the IRS or suffer several financial penalties on their US holdings, would be a violation of Canadian and other countries' privacy and banking laws and indeed of our national sovereignty. The estimated costs to financial institutions in Canada to enforce these reporting "requirements" of the IRS exceed hundreds of millions of dollars which will ultimately be paid by all Canadian depositors no matter what their places of birth through increased banking and financial fees.) You get the idea.

Send separate letters with the same content to your federal MP and to the Minister of Finance. Even if you aren't a Canadian citizen or didn't vote for these folks or at all, as a legal Canadian resident you have a right to their consideration and protection. They need to hear your story, especially your own MP needs to hear it (the Finance Minister is, I think, very well aware of some of these stories, but the entire House of Commons needs to hear about this).

If you're really angry, write to the US Ambassador and maybe even to the US President and tell them what you think about what they are doing. Especially if you have renounced your citizenship, or as soon as you have, write telling them what you did and why. It may not change anything, but at the very least you'll feel better about it.

I wrote a letter to Henry Kissinger 35 years ago when he was Secretary of State, telling him I'd become a Canadian with the intention of renouncing (now I'd use the legal word relinquishing, for reasons of the wording of the appropriate US law) my US citizenship, because of different issues in my case-- Vietnam, nuclear weapons, the overthrow of a democratically elected government in Chile, and other things. In response I got a Certificate of Loss of Nationality of the United States a few months later. That certificate exempts me from all these tax-grab monstronsities, because I have an official document from the US government proving that I am no longer a US citizen. In the 35 years since that document was sent to me, I have yet to be turned away at the US border when I visit my family in the States (the only reason I'd ever go there again). And if I do get turned away, at this stage I wouldn't give a damn. I travel only on my Canadian passport, which is the only passport I've ever had in my life, the only one I want, and the only one I'm legally entitled to. It says I was born in the US, so I always carry with me a photocopy of my Certificate as well. So far I've never had to show it.

Don't suffer in silence. Tell the morons in Washington what you think of them and what they're doing, and separately (and more politely) ask your elected representative in Parliament and our national Finance Minister to do something to protect Canadians from this madness.

Depending on your family situation you might also want to tell your US relatives what is going on and ask them to write on your behalf to their own congressional representatives, supporting you. See the American Citizens Abroad website for more on this, including suggested letter wordings. If I were doing that, I think I might throw in a sentence or two about the Boston Tea Party, taxation without representation, and how grotesque and outrageous it is that the US government is now doing to its overseas citizens EXACTLY the same kinds of things that the British empire was (at least from the viewpoint of some of those colonists, though not of the United Empire Loyalists) doing to its overseas colonists in 1776, and we all know how that turned out don't we, eh?


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## Guest

Thank you for your supportive words. I promise -- I will take more action.


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## Ladyhawk

Cafreeb12 said:


> Hello Everyone,
> 
> 
> If you are in south eastern Ontario and know of a good tax person please mention them to me.


Cafreeb, I am in your area, and I do not use accountants or tax lawyers, but I did ask my own lawyer about anyone with expertise in this area. He did not know of anyone in particular but said that there are accountants and lawyers with expertise in cross-border matters in the Toronto area. I have seen ads from such people in the Mississauga area. 
There are plenty of accountants who will happily charge you for filling out your 1040 and giving it to you to sign and send in, but they will accept no accountability if the IRS starts asking questions. It does take a lot of further education, and annual continuing education, to be a certified cross-border accountant, (the US tax code changes every year) , so not many accountants bother to become certified in that area. I am not sure what the other folks here are doing who do use accountants to help with their US taxes.


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## Cafreeb12

Calgary 411, my son too has disabilities and my reasons for renouncing are the exact same as yours. I do not want him left with a huge mess that he cannot deal with should both my husband and I die with me still being American. Nor do I want my husband trying to figure out what the IRS wants from him should I die and leave my portion of our assets to him and my son. They have very little as it is and my husband and I have almost no pension coming since our debt due to costs related to my son has been substantial. The stress of going through all this, trying to settle my mothers estate all in the same year has affected my own health too. If I thought I could sue them over what they have put us through I would do it. What's next from these heartless people? Maybe they will just round us all up and not let us go till all the papers are filed and the fines paid on money we never owed them. Yes, that is dramatic however, I no longer trust the "compassion" and "fairness" of my country. The United States in regard to this issue are behaving like psychopaths with zero empathy and exploiting American citizens and their families just because they can. 

They will get no big bunch of money out of this as the big fish, the real criminals off shoring for tax purposes will find ways to hide. I think Levin should personally have to over see the paperwork this is creating for some agents who I am sure by now think this is heinous.


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## Cafreeb12

Ladyhawk said:


> Cafreeb, I am in your area, and I do not use accountants or tax lawyers, but I did ask my own lawyer about anyone with expertise in this area. He did not know of anyone in particular but said that there are accountants and lawyers with expertise in cross-border matters in the Toronto area. I have seen ads from such people in the Mississauga area.
> There are plenty of accountants who will happily charge you for filling out your 1040 and giving it to you to sign and send in, but they will accept no accountability if the IRS starts asking questions. It does take a lot of further education, and annual continuing education, to be a certified cross-border accountant, (the US tax code changes every year) , so not many accountants bother to become certified in that area. I am not sure what the other folks here are doing who do use accountants to help with their US taxes.


I tried looking at these forms myself and read for hours and hours. The IRS forms are confusing as can be for me. It's not clear for instance in some cases if I need to report an RRSP that my husband contributes to through his Canadian job , which will go to me if he dies but, which my name is not on? Many things like that also complicated by the fact that last year after January I inherited a sum upon my mothers death. That's how I found out about all this when I called the IRS to talk about what to do with U.S. fund reporting that I inherited. The IRS didn't tell me about it during our half hour conversation. No mention of FBAR, nothing. I found out reading a blog online when seeking inheritance tax info! 

I am in Kingston which means going to T.O. to get this sorted is the only option for finding someone with any expertise...there is ONE person here but, that firm is highly expensive. I simply cannot afford them. I don't mind going to T.O. a few times if I have to, in order to sort this out. Five years back and then back to 2003 on the FBAR. Then next year after January dealing with the inheritance amount. After that I will renounce for good. Something I never thought I would do. I hope the IRS and the Treasury get it that I am not renouncing for "tax purposes" since I would for 29 of those thirty years have owed them zero. I'm renouncing to protect my foreign son and husband getting dinged and paying fines to the U.S. where they have never been citizens. And to keep them having to deal with the IRS upon my death. It's the emotional and financial toll on THEM I worry about. Especially my son who has disabilities. 

One person on here said they used H and R Block..I wonder how that worked out?

I used to encourage my husband when his company gave him a choice to invest some of his RRSP managing into U.S. companies as I liked he idea for many reasons. One was to help the economy in my home country. I have now told him to contact his company and invest ZERO in U.S. funds of any kind but, to use something else. I wonder if they know how this will hurt the U.S. when others do the same and stop investing in companies there? It's not that I think this would cost us more or less. It's just I don't want to "help" them by anyone in my family being invested in that country now. To heck with them.


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## Arlington

*Offshore Tax Scorecard*



Cafreeb12 said:


> They will get no big bunch of money out of this as the big fish, the real criminals off shoring for tax purposes will find ways to hide. I think Levin should personally have to over see the paperwork this is creating for some agents who I am sure by now think this is heinous.


This article lists specific cases of banks and individuals who have been indicted for US tax fraud. 

Offshore Tax Scorecard: UBS, Credit Suisse, HSBC, Julius Baer - Businessweek

These are not little fishies like we are . . .we can only dream of having money like this. Scroll down past the banks and check out the fortunes being hidden . .and found. The fines typically run at 50% of the assets uncovered. I have no problem with the US nabbing US residents deliberately hiding money and not paying taxes. Oh, and the jail terms must have come as quite a surprise to these white collar fraudsters. They KNEW the rules and unlike us, KNEW they were Americans.


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## Cafreeb12

Arlington said:


> This article lists specific cases of banks and individuals who have been indicted for US tax fraud.
> 
> Offshore Tax Scorecard: UBS, Credit Suisse, HSBC, Julius Baer - Businessweek
> 
> These are not little fishies like we are . . .we can only dream of having money like this. Scroll down past the banks and check out the fortunes being hidden . .and found. The fines typically run at 50% of the assets uncovered. I have no problem with the US nabbing US residents deliberately hiding money and not paying taxes. Oh, and the jail terms must have come as quite a surprise to these white collar fraudsters. They KNEW the rules and unlike us, KNEW they were Americans.


I don't have a problem with them catching the big fish either. Maybe they should spend time sending bankers who committed fraud to court now instead of putting us all through this.


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## Guest

Cafreeb12 said:


> I used to encourage my husband when his company gave him a choice to invest some of his RRSP managing into U.S. companies as I liked he idea for many reasons. One was to help the economy in my home country. I have now told him to contact his company and invest ZERO in U.S. funds of any kind but, to use something else. I wonder if they know how this will hurt the U.S. when others do the same and stop investing in companies there?


I can't lay my hands on the URL references just now, but in the past two weeks I've read articles, I think in Reuters and Financial Post on-line, reporting the following

some, perhaps many, banks in Switzerland, Australia and Japan are closing bank accounts held by anyone who they know is an American, and are turning away any American who applies for a bank account with them, on the grounds that they don't want to put their bank or other other account holders into a position of being hit with expensive administrative costs or risk penalties in the US for not complying with IRS extra-territorial violations of their national privacy and banking laws; as you can imagine, this is making life very difficult for Americans living in those countries, and especially Americans trying to operate businesses in those countries, due to the need to have bank accounts for daily receipts, expense payments, etc.

Investment firms and advisors in Switzerland for certain, and possibly other countries, are advising all clients to sell any US securities they own and not to invest anything in any US-based stocks, bonds or securities, because of what is going on. Imagine what would happen to the US economy if Japan, not to mention China, India or Saudi Arabia, who collectively probably hold about 50% of the current US federal debt, decided to cash all their chips and pull out, or even cash a portion of them, or just advise citizens to stay out of the US economy. 

The IRS penalties proposed against foreign banks operating in the US, if they don't comply with the reporting requirements on Americans in their own countries, are just as draconian on a percentage basis as are the penalties being threatened against people on this web forum. No foreign financial institution operating in the US is going to like being squeezed between facing IRS confiscation of their US assets and being prosecuted at home for invasion of privacy, violation of banking laws, and possibly lawsuits by citizens if they try to confiscate money out of the accounts and remit directly to the IRS as the IRS is asking overseas banks to do (a clear and outrageous violation of other countries' national sovereignty which in some other historical times could have provoked even a declaration of war, certainly a rupture in diplomatic relations). Expect to see some non-US financial institutions pulling entirely out of the US, if they can. The Canadian Bankers Association has been lobbying furiously with the Finance Minister over this issue; not, surprise surprise, so much over concern about individual depositors' privacy etc, but at concern of the estimated hundreds of millions in administrative costs the banks are facing to enforce what the IRS wants, even if they want to and our government will let them (which I strongly hope they won't; if they did, they've handed the opposition one heck of an election issue on a silver platter).

The British Bankers Association is on record as saying the reporting requirements are "unworkable." It doesn't sound like they are going to comply.

And, bless them, our own Canada Revenue Agency has announced through named spokespersons that no penalties or taxes due under these new programs are enforceable under the Canada-US tax treaty and CRA will not collect them on the IRS behalf on Canadian soil, and specifically not against Canadian citizens. Having worked at fairly senior policy levels in the Canadian government in the past, I can guarantee you those statements were not made without the approval of the Finance Minister and indeed the PMO. NO ONE in media relations in the Government of Canada has ever, or would ever, say something like that without approval from the very top, and still be drawing a paycheque the next morning. Not gonna happen.

I don't think the morons, and I use that word very deliberately, in Washington have the slightest conception of what this is going to cost the US in international good will (such as it remains after the previous administration), damage to the US economy, and (I'm sure the policy wonks in Washington couldn't care less) a huge spike in the number of US citizens abroad renouncing their citizenships. If they seriously think there is going to be a net financial benefit from this to the US economy, when the dust settles, I think they are smoking something they shouldn't be smoking.

The fallout onto the world economy, fragile as we all know it is, isn't nice to contemplate either. The idiots in Washington are carrying lit torches in a room full of gasoline drums and don't even seem to realize it. The true irony is the people these laws are supposed to catch, the truly rich tax cheats abroad, are not likely going to get caught in this at all. They pay big bucks for experts to tell them where and how to hide their money. Mostly the only people who will get caught in this are people who no sane, right-thinking person would ever go after; good, honest, hard-working people like everyone on this forum (and their kids and their grandkids too, if we aren't careful). 

Truly the lunatics have taken over the insane asylum. But that's not new; those of you of my generation may recall a Smothers Brothers (or was it Pete Seeger) song about "waist deep in the Big Muddy" back in Vietnam days. The US approach to getting out of a deep hole seems to be to dig the hole even deeper, maybe in hopes eventually they'll dig their way to China and out the other side.

Fight this insanity however and wherever you can.


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## Guest

Calgary411 said:


> Thank you for your supportive words. I promise -- I will take more action.


... and I did. I just sent a letter to my MP, Michelle Rempel, and to Finance Minister Flaherty. Thanks so much for your encouragement!!

Thanks everyone on this forum for the support you give to others. It really does help preserve sanity to communicate with folk who understand what is happening.


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## Cafreeb12

I started fighting by going to Occupy Wall Street the DAY it began to talk to them about this issue. I have many friends in NYC so had a place to stay and I'm way too up in age to sleep on the ground but, I went to talk to them and raise awareness about it. I will be in Toronto too. My experience on that was that the media has portrayed the entire protest as a bunch of young people who have no clue what they want, that was the total opposite of my impression. It was people from all walks of life*met an 87 year old woman and loads of middle aged workers* upset about bailing out criminals and rewarding them with bonuses out of American tax dollars while at the same time proposing cuts on those who can ill afford them. This issue fits in with their concerns so I raised it there. I did so for two reasons, ONE expats are portrayed in the U.S. as nearly traitors for simply "leaving the U.S". and two because we are being treated like criminals while real criminals get rewards which I knew would appeal to their reasoning. 

Secondly, my son did an experience trip for young people in a group he was in. He spent two years in China...there are SIX HUNDRED THOUSAND Americans living in China right now and the numbers are growing. I can't wait to see the U.S. try to bully Chinese banks into this "complying" and penalties. It's going to harm the U.S. economy because China will not be bullied, there will be severe consequences. Severe. 

I too noticed the Canadian bankers objections based on cost to them. Any objection is good for us but, I too got the impression that if fines were relieved for THEM, they'd have no problem turning us over since their concerns did not include what is happening to us as any problem. 

I have written the finance minister and plan this week to speak with my MP and rest assured though it seems extreme to some, my sign at Occupy Toronto will SAY "FATCA and FBAR harming working families in Canada. Ask me how!" In big red letters. Why would I go to something like this? Because despite the fact I am fifty, I know the press will be there. I know this issue has been in the news and I am going to try to do everything in my power to tell my story. It's all I know to do. 

I won't write anyone in Washington, I have ZERO faith they care about us whatsoever. I believe they knew full well the impact this would have and that, was part of the reason to paint us ALL as "over seas tax cheats" in the press at every possible opportunity. It was done to justify in the minds of people living in the U.S. the treatment we are getting. On purpose. 

Even if they fully abolished this now, I would still renounce. I do not trust them any longer to do the right thing by their citizens. 

And yes, people are going to take their money out of U.S. investments. Americans abroad are going to find themselves in a royal mess. I am trying to find out if my local non profit credit union intends to comply with this.


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## Guest

Bravo -- and thanks!!!


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## Expatinca

Cafreeb12 said:


> It's not clear for instance in some cases if I need to report an RRSP that my husband contributes to through his Canadian job , which will go to me if he dies but, which my name is not on?


I believe that the answer is no. If your name isn't on the account and you don't have signing authority, you don't have to report it. You can't be held responsible for money you might possibly inherit someday!

I didn't report my husband's RRSP, nor his TFSA. Those are his only. (And until this all gets resolved, we're only putting money into his RRSP, not mine. At least that way there's something for us to live on if the IRS comes after everything I own...)



Cafreeb12 said:


> The IRS didn't tell me about it during our half hour conversation. No mention of FBAR, nothing. I found out reading a blog online when seeking inheritance tax info!


That's disgraceful! And the worst part is that they say it's our responsibility to know the tax code...



Cafreeb12 said:


> I don't mind going to T.O. a few times if I have to, in order to sort this out.


I imagine that most firms would be willing to work with you long distance, as long as you have access to a fax machine or a scanner.



Cafreeb12 said:


> One person on here said they used H and R Block..I wonder how that worked out?


I am, but we're still in the process of filling everything out. It's pretty simple because I have them do all my taxes anyway (and have since 2003), so they have all my financial records. It costs a bit, but not nearly as much as the thousands I've heard from others. I'll let you guys know as I move along through the system.



Cafreeb12 said:


> I wonder if they know how this will hurt the U.S. when others do the same and stop investing in companies there?


Yes, they do. Even some politicians are freaking out about it, warning that the US economy cannot afford to drive away investors. (Shameless self-promotion: When the economy breaks a leg, shoot it | Expats in Canada)


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## Cafreeb12

Expatinca!! Thank you! Which H and R do you use? My local one was clueless about this and had no one there dealing with international taxes? I'd love to give yours a call. The price they charge is far more reasonable then the other firms I've seen who are also exploiting this situation to the hilt.


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## Expatinca

Cafreeb12 said:


> I too noticed the Canadian bankers objections based on cost to them. Any objection is good for us but, I too got the impression that if fines were relieved for THEM, they'd have no problem turning us over since their concerns did not include what is happening to us as any problem.


That's not entirely true. TD Financial has also expressed concerns that FATCA puts the bank in the impossible position of either obeying US laws and breaking Canadian laws, obeying Canadian laws and breaking US laws, or pulling all their assets out of the US.

In Canada, we have two laws that directly conflict with FATCA: ABBS and PIPEDA. You can read TD's letter to the IRS here: Deloitte|Foreign Account Tax Compliance Act (FATCA)| FATCA Comment Letters to IRS and Responses | April 4, 2011: TD Bank Group



Cafreeb12 said:


> Why would I go to something like this? Because despite the fact I am fifty, I know the press will be there. I know this issue has been in the news and I am going to try to do everything in my power to tell my story. It's all I know to do. [/quote[
> Yes! Thank you! This is the power we have - the power to speak and to spread the word.
> 
> 
> 
> Cafreeb12 said:
> 
> 
> 
> And yes, people are going to take their money out of U.S. investments. Americans abroad are going to find themselves in a royal mess.
> 
> 
> 
> So will Americans in the US. What do you think will happen to their pensions when foreign investors pull out?
Click to expand...


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## Expatinca

Cafreeb12 said:


> Expatinca!! Thank you! Which H and R do you use? My local one was clueless about this and had no one there dealing with international taxes? I'd love to give yours a call. The price they charge is far more reasonable then the other firms I've seen who are also exploiting this situation to the hilt.


I'm in Ottawa. The one I use is at 1867 Carling Avenue. Phone number is 613-728-9735. They have two people on staff who deal with the IRS. My lady is named Frances, but I'm not sure who the other one is.


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## Cafreeb12

Yes, I'm a big Occupy fan now. Use what's there, and besides this was bound to happen with the ridiculous way things have been going. We just happen to fit into that ridiculousness and oppression. 

Investors in the U.S. will also pull out and this entire thing will be framed as people trying to "hide" They will never learn that the more they use this type of framing and misinformation the more frustration they are creating. This is NOT the way to raise revenue, or create jobs. I had to laugh today...thinking how these congress critters are supposed to be so smart. 

No one wants to deal with this intrusion and complexity and penalty for not going along. Truly this entire thing is incredibly anti American. 

I am glad to know TD said something. They are not my bank but, I may talk to them. Our inclination at this point is to go local credit union only after this. More pressure needs to be brought to bear on all sides by us! Thank you for the H and R information!! So much!


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## Guest

Cafreeb12 said:


> I am trying to find out if my local non profit credit union intends to comply with this.


Please let us know.

Even though I have a Certificate of Loss of Nationality, if the banks start asking where you were born (as distinct from are you a US citizen, to that I can honestly answer no I'm not) even I will be caught in a tough spot. Not clear if they will or can do that, it would be a clear violation of ARticle 15 of the Charter if they did, and US tax laws apply to US citizens and resident aliens (green-card holders), not US-borns unless they are still US citizens, as far as I can tell. But if I'm asked where I'm born and refuse to answer on grounds of a) privacy b) Article 15 and c) none of your damn business, the IRS says the bank has to confiscate 30% of the account (I think; if it's interest on the account at the rate I'm getting they're welcome to it, it might buy them a piece of bubble gum at the corner store) and remit as a penalty for not cooperating. I can't believe that could be enforced in Canada, and I'd go to the cops and file theft charges if the bank tried it, but I don't need the hassle.

Sooo ... more seriously, my RRSP was until last month with an investment firm that got bought out by a big chartered Canadian bank I won't name that has lots of US branches. I've just transferred my entire portfolio into my local credit union on the grounds that, as far as I can tell, they don't have US holdings or branches and won't be subject to IRS pressure. Credit union depositors are members, can vote in annual elections, and can go to meetings and raise hell if they need to and the board has to listen, so even if a credit union does comply with IRS on this (which I doubt) one has a chance of turning them around. With a chartered bank, it would be spitting into the wind. Yes they're complaining, but I don't trust chartered banks further than I'd trust a skunk with his tail in the air, so all of my meager holdings are now 100% in a local non-profit Canadian-only credit union. I set that in motion 3 weeks ago, before I even stumbled over this web forum during a Google search.

The banks are going to be hurting over this even with the rumour they might cave in, as my previous investment broker has just discovered the hard way... I didn't even call him or tell him I was doing it, it just hit his desk and he's sucking it up.

I was very observant at the credit union when they completed my forms on their monitor and on paper. They have my SIN and know I'm a Canadian citizen. They don't have a clue where I was born and haven't asked yet. Not sure about the chartered bank, but who cares because the account is closed and my RRSP is where it's as safe as it's likely to be when the crap hits the fan, with a credit union. My wife is contemplating the same move, but she's a little more comfortable because though her adviser is with a chartered bank he also refuses on principle of invest in or handle clients who want to put any money anywhere in the US, he's Canadian-only in his approach and has been for years, which is why she went with him. If the bank pressures him, I suspect he'd move out and take his clients with him, including my wife. I'd be very surprised if he'd be compliant, and we know he has zero exposure in the US personally and is Canadian born, Canadian only and they can't lay a finger on him.:clap2:

Tip: check around quietly where you live and see if you can find an investment broker who is reliable and fits the same profile I just described, then switch your money now, fast as hell. 

It won't take a genius in the banking industry to see this sort of thing that I just described coming down the rails at them like a freight train .. no doubt another reason they're getting twitchy.

I suspect if people start getting messages from banks and other financial institutions asking for US citizenship or place of birth info, we'll see some posts on this forum, I hope so. If it's place of birth, I'll immediately file a complaint with the Privacy Commission under Article 15 and seek legal advice about whether and how I can sue the socks off my credit union if they touch a single penny of my money if I refuse to give them my birthplace. At the end of the day, I don't give a s**t what my bank, the IRS or the Finance Minister says about this reporting stuff, I want to hear what a Canadian federal court judge is going to say about it.

Let's all make this process as difficult, painful and expensive for the IRS and the banks as we possibly can, folks.:boxing: Make 'em wish they'd never heard of us nor tried this stuff. Don't tread on me. We have not yet begun to fight. Etc etc ...

Good luck in Toronto, great idea! It's time the media and the public got the message this isn't just about leftish young folks and aging draft dodgers like me, it's about all of us, we'll all being done over, we're all mad as hell, and we aren't going to take it any more.


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## Expatinca

Schubert said:


> Even though I have a Certificate of Loss of Nationality, if the banks start asking where you were born (as distinct from are you a US citizen, to that I can honestly answer no I'm not) even I will be caught in a tough spot. Not clear if they will or can do that, it would be a clear violation of ARticle 15 of the Charter if they did, and US tax laws apply to US citizens and resident aliens (green-card holders), not US-borns unless they are still US citizens, as far as I can tell.


I think you're safe. ABBS makes it illegal for a bank to refuse you service so long as you can identify yourself. If they add a clause, it will be to establish US citizenship, to which you need only present your certificate. 

I'm so jealous!



Schubert said:


> But if I'm asked where I'm born and refuse to answer on grounds of a) privacy b) Article 15 and c) none of your damn business, the IRS says the bank has to confiscate 30% of the account (I think; if it's interest on the account at the rate I'm getting they're welcome to it, it might buy them a piece of bubble gum at the corner store) and remit as a penalty for not cooperating. I can't believe that could be enforced in Canada, and I'd go to the cops and file theft charges if the bank tried it, but I don't need the hassle.


I believe that failure to comply results in a withholding of ALL US assets, so it's not tied to specific accounts. 



Schubert said:


> Yes they're complaining, but I don't trust chartered banks further than I'd trust a skunk with his tail in the air, so all of my meager holdings are now 100% in a local non-profit Canadian-only credit union. I set that in motion 3 weeks ago, before I even stumbled over this web forum during a Google search.


That's not a bad idea, and I'm considering the same. 

But yes, the banks are grumbling, but I have a feeling that if FATCA ploughs ahead undisturbed, they'd rather "pass the savings onto the costumers" than withdraw their investments from the US.



Schubert said:


> Good luck in Toronto, great idea! It's time the media and the public got the message this isn't just about leftish young folks and aging draft dodgers like me, it's about all of us, we'll all being done over, we're all mad as hell, and we aren't going to take it any more.


You rabble-rouser, you! It's hard not to feel inspired reading your posts!


----------



## Cafreeb12

I am thinking this through and I"m not sure now if my son is American! He was born here, and I'd been here ten years when he was born. His father is Canadian and has never lived or worked in the U.S. My son does not want American citizenship and we talked about it over the years and I left the decision up to him, I thought since I was out of the U.S. for that many years he wasn't "automatically" a citizen without me having to file papers which I did not do. If he IS American by "virtue" of having me as a mother that opens up a whole other world of hurt.


----------



## Peg

Cafreeb12 said:


> I am thinking this through and I"m not sure now if my son is American! He was born here, and I'd been here ten years when he was born. His father is Canadian and has never lived or worked in the U.S. My son does not want American citizenship and we talked about it over the years and I left the decision up to him, I thought since I was out of the U.S. for that many years he wasn't "automatically" a citizen without me having to file papers which I did not do. If he IS American by "virtue" of having me as a mother that opens up a whole other world of hurt.


Is he an adult already? There are others on this forum who are in that situation. It appears that if you lived in the US 5 years with at least 2 of those years after age 14 they consider the child a citizen. There are various ways of dealing with it and if this is your situation I truly feel for you. When I saw the "2 of those years" clause I jumped for joy and told my kids they were not American citizens - the cable guy at my house at the time really wondered...

I think this is yet another area of the US legislation that people need to write to the politicians about as well as their US friends and family to write to the US representatives. And the entire FBAR, FATCA in general. If there are 750,000 of us in Canada, 600,000 in China (someone said that number recently on the forum) and thousands more around the world we must know a LOT of real US citizens! 

The sickening part to me is by this point the US gov knows they have caught us minnows in their net yet haven't changed anything.


----------



## Expatinca

Cafreeb12 said:


> I am thinking this through and I"m not sure now if my son is American! He was born here, and I'd been here ten years when he was born. His father is Canadian and has never lived or worked in the U.S. My son does not want American citizenship and we talked about it over the years and I left the decision up to him, I thought since I was out of the U.S. for that many years he wasn't "automatically" a citizen without me having to file papers which I did not do. If he IS American by "virtue" of having me as a mother that opens up a whole other world of hurt.


The fear I feel in the possibility of my son inheriting my US citizenship makes me feel like I have some kind of genetic disorder - doing tests to see if I've passed it on, making my child's life that little bit harder. It's nowhere near the pain of many actual genetic disorders, of course, but I think the difference is more in magnitude than in kind.

How many years have you lived in the US, and when was your son born?


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## Nononymous

Expatinca said:


> The fear I feel in the possibility of my son inheriting my US citizenship makes me feel like I have some kind of genetic disorder - doing tests to see if I've passed it on, making my child's life that little bit harder. It's nowhere near the pain of many actual genetic disorders, of course, but I think the difference is more in magnitude than in kind.


If he was born in Canada, and doesn't have a US birthplace on his Canadian passport, then I think you can safely ignore this. I don't know for certain whether he's automatically considered a US citizen, or just considered eligible (and would receive it on application). But frankly who cares - how would they ever know?

This one is not worth losing sleep over.


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## Cafreeb12

I have not lived in the U.S. since I was nineteen years old. I am fifty three. My son was born in 1989 and is an adult with several disabilities so he is living at home. I wasn't sure after all the changes and hoops if NOW he would be considered American. Expatinca, yes sadly it is like some genetic mutation now and to think when he was born I was SO thinking of going home to have the baby. I even thought of moving back there then. But didn't because he was born with so many numerous health issues I knew I'd be bankrupt trying to provide medical care for him there so we stayed here. 

I have lupus and this stress has caused it to flare up to no end. If I could sue for that I'd do it. I am still in shock and awe that this is even happening. I just got off the phone with my local MP's office.


----------



## Nononymous

*off to the consulate today*

So I have my renunciation appointment this afternoon. I will report back.

The plan was to have filed five years' quick-n-dirty DIY US taxes (as I've said before, I don't want to spend time or money on this so will do the absolute bare minimum ballpark estimates needed to show I'd owe nothing). However, due to some unforeseen circumstances the last two weeks were a complete blackout, and I will arrive jet-lagged and unprepared. 

So I plan to ask a few questions:


 Can I start the process now and file the taxes soon?
 Will this cause any grief when crossing the border?
 Is this in any way reversible - if my wife had a can't-refuse job offer from the US, could I re-apply based on my birthplace?

Overall, I'm not 100 percent convinced this is the best approach to take, or that I will ultimately go through with it - I think it's more of an emotional reaction than a realistic calculation of risk and reward - but I figure what the hell, I made the appointment, I live a few minutes' bike ride away, I might as well ask for information and just generally register my unhappiness with the whole situation.


----------



## Bevdeforges

Peg said:


> I think this is yet another area of the US legislation that people need to write to the politicians about as well as their US friends and family to write to the US representatives. And the entire FBAR, FATCA in general. If there are 750,000 of us in Canada, 600,000 in China (someone said that number recently on the forum) and thousands more around the world we must know a LOT of real US citizens!
> 
> The sickening part to me is by this point the US gov knows they have caught us minnows in their net yet haven't changed anything.


I've probably mentioned this elsewhere, but just for reference, it's estimated that there are something like 4 to 6 *million* US citizens resident outside the US. The exact number usually depends on what the speaker is trying to prove - but the figure is generally the result of estimates prepared by the various US Consulates around the world.

And what's really sad is that lots of people worked very very hard back in the 1960's and 1970's to change the laws so that US citizens *could* and *would* transmit citizenship to their children born overseas. The same folks have been trying to convince the Congress to drop the tax filing requirement for overseas citizens - but that one falls on deaf ears, in large part because most Congressional Representatives in the US have no idea that they have constituents who live overseas! (Just try to write a Congressman or -woman and get them to respond if your letter is postmarked outside their district! Even on their websites, they ask you for your zip code and if it's not in their district, they won't take your message.)
Cheers,
Bev


----------



## Cafreeb12

Bevdeforges said:


> I've probably mentioned this elsewhere, but just for reference, it's estimated that there are something like 4 to 6 *million* US citizens resident outside the US. The exact number usually depends on what the speaker is trying to prove - but the figure is generally the result of estimates prepared by the various US Consulates around the world.
> 
> And what's really sad is that lots of people worked very very hard back in the 1960's and 1970's to change the laws so that US citizens *could* and *would* transmit citizenship to their children born overseas. The same folks have been trying to convince the Congress to drop the tax filing requirement for overseas citizens - but that one falls on deaf ears, in large part because most Congressional Representatives in the US have no idea that they have constituents who live overseas! (Just try to write a Congressman or -woman and get them to respond if your letter is postmarked outside their district! Even on their websites, they ask you for your zip code and if it's not in their district, they won't take your message.)
> Cheers,
> Bev


You can call their offices directly Bev. I have done so in the past. Stress that you vote. If you are a member of Democrats or republicans abroad then get them involved in the issue too by calling the person who is the top rep in Canada or wherever you are for those parties. I am not a member of either party but, was briefly one year. I left due to seeing a lot of corruption inside the party and thought it was disgusting so choose not to further participate. HOWEVER, when you call the offices of your representative directly you must be persistent. Stress that you vote and you will not vote for someone who will go along with this. Tell your story clearly. Don't give up. I once needed to talk to Howard Dean to voice my "concerns" It took me two weeks of calling but, I DID get him on the phone and talked with him for half an hour. Not only can you call Democrats or Republicans abroad you can call the U.S. head offices of these parties and do the same. They need to be reminded there are six million of us out here. Write AND call both. Having their offices flooded with mail and calls makes a greater impact. Further, write the White House if you want to. This entire thing is ridiculous and they need to realize it and do something about it a.s.a.p.


----------



## Expatinca

I believe that's called taxation without representation. I seem to remember certain fathers being rather miffed by the concept...


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## Cafreeb12

Chapter Chairs for democrats abroad 
https://spreadsheets.google.com/pub...NEtNU2R0aS1oNFE&single=true&gid=0&output=html

Executives for Republicans Abroad *they only list email addresses that I see but, poke around the site a bit for phone numbers* Note their top executive is a tax attorney! good god.
Rebublicans Abroad Canada: Executives: Mark Feigenbaum


----------



## Peg

Cafreeb12 said:


> I have lupus and this stress has caused it to flare up to no end. If I could sue for that I'd do it. I am still in shock and awe that this is even happening. I just got off the phone with my local MP's office.


Have you contacted The Taxpayer Advocate Service is Your Voice at the IRS! ? Perhaps they could provide assistance.

If your son does not have significant financial assets or income perhaps the taxpapers advocate could find someone who could help with the paperwork and then he could renounce. I understand that what I am saying is not simplistic but I am thinking of the long run. Or if he never goes to the USA does he even need to do that? The CRA will not collect penalties for the US gov but would help the IRS to collect taxes.

I am going to my doctor today because my health has deteriorated in the past month and partly due to this mess. I wish you well. Please continue to post as there are incredibly helpful people here with great information and great suggestions.


----------



## Peg

Cafreeb12 said:


> You can call their offices directly Bev. I have done so in the past. Stress that you vote.


But I don't vote because I don't consider myself an US Citizen :confused2:


----------



## Cafreeb12

Peg said:


> Have you contacted The Taxpayer Advocate Service is Your Voice at the IRS! ? Perhaps they could provide assistance.
> 
> If your son does not have significant financial assets or income perhaps the taxpapers advocate could find someone who could help with the paperwork and then he could renounce. I understand that what I am saying is not simplistic but I am thinking of the long run. Or if he never goes to the USA does he even need to do that? The CRA will not collect penalties for the US gov but would help the IRS to collect taxes.
> 
> I am going to my doctor today because my health has deteriorated in the past month and partly due to this mess. I wish you well. Please continue to post as there are incredibly helpful people here with great information and great suggestions.


My son doesn't have anything. His grandmother did open an RESP for him but, he is not attending school and it is donated to now by my husband only as I never had my name on it. it was originally in my mother in laws name and on her accounts. So I don't think I will tell them it even exists. The amount in it is not significant since my son was so ill most years we spent our money on expensive meds, tutors, etc. etc. etc. etc. 

I'm sorry this has affected your health too and I know there are many, many in that boat as it is a proven fact that stress aggravates many medical conditions. How sad this all is.


----------



## Peg

Cafreeb12 said:


> Chapter Chairs for democrats abroad
> https://spreadsheets.google.com/pub...NEtNU2R0aS1oNFE&single=true&gid=0&output=html
> 
> Executives for Republicans Abroad *they only list email addresses that I see but, poke around the site a bit for phone numbers* Note their top executive is a tax attorney! good god.
> Rebublicans Abroad Canada: Executives: Mark Feigenbaum


Lucrative to be a tax attorney specializing in US-Canada... If I only read the newspaper articles I would have been running into a specialist's office and begging them to handle all of my paperwork quickly so I would not owe the $120,000 that I thought I would from reading the newspaper articles (more like $6,000). But I will not pay that 'penalty' that I never knew about!


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## 416

Nononymous said:


> If he was born in Canada, and doesn't have a US birthplace on his Canadian passport, then I think you can safely ignore this. I don't know for certain whether he's automatically considered a US citizen, or just considered eligible (and would receive it on application). But frankly who cares - how would they ever know?
> 
> This one is not worth losing sleep over.


I agree, and one of my frustrations with this whole tax mess is that if I hadn't applied for a US passport in the early 90s (I was born in Canada, one USC parent) I'd be able to ignore the entire thing as a practical matter.


----------



## Peg

Cafreeb12 said:


> My son doesn't have anything.


If he has no income then does he even have to file tax returns? If he has no financial accounts then no FBARs. Wonder if it could possibly be a simple process to renounce his citizenship.


----------



## Nononymous

416 said:


> I agree, and one of my frustrations with this whole tax mess is that if I hadn't applied for a US passport in the early 90s (I was born in Canada, one USC parent) I'd be able to ignore the entire thing as a practical matter.


Why can't you continue to ignore it? If you were born in Canada, and the only record of you the US has is a passport from the 1990s, I would immediately stop paying any attention to this unless you are potentially dealing with a US estate at some point in the future.


----------



## Vangrrl

Nononymous said:


> Why can't you continue to ignore it? If you were born in Canada, and the only record of you the US has is a passport from the 1990s, I would immediately stop paying any attention to this unless you are potentially dealing with a US estate at some point in the future.


Agreed. Lets not give the IRS more credit than it deserves. They don't have a crystal ball and they can't mind read. Unless you identify yourself to them as a US citizen (either with a US birthplace, or a US passport), they are not going to find out about you. 

Nononymous - I look forward to hearing your update. Good luck!


----------



## Bevdeforges

Cafreeb12 said:


> You can call their offices directly Bev. I have done so in the past. Stress that you vote. If you are a member of Democrats or republicans abroad then get them involved in the issue too by calling the person who is the top rep in Canada or wherever you are for those parties. I am not a member of either party but, was briefly one year. I left due to seeing a lot of corruption inside the party and thought it was disgusting so choose not to further participate. HOWEVER, when you call the offices of your representative directly you must be persistent. Stress that you vote and you will not vote for someone who will go along with this. Tell your story clearly. Don't give up. I once needed to talk to Howard Dean to voice my "concerns" It took me two weeks of calling but, I DID get him on the phone and talked with him for half an hour. Not only can you call Democrats or Republicans abroad you can call the U.S. head offices of these parties and do the same. They need to be reminded there are six million of us out here. Write AND call both. Having their offices flooded with mail and calls makes a greater impact. Further, write the White House if you want to. This entire thing is ridiculous and they need to realize it and do something about it a.s.a.p.


Like Peg, I don't vote back there. Have no idea what Congressional district I am in - and it's only because the same Congresswoman has been re-elected for years that I even attempted to contact her at one point. (Not mentioning, of course, the fact that I have given up on voting back there.) Still had to look up my old address (20 years ago) and zip code for that. (And I think the people now living in what used to be my house must have gotten all sorts of mailings from their Congresswoman after I finally got through to her.)

I was a member of AARO for several years - and they work closely with both Democrats and Republicans Abroad, though mostly the lawyers in the crowd insist that Congress will never drop the overseas resident filing requirements. They do an annual trip to Washington with the ACA to lobby for these kinds of issues. Have done so for years, but so far little progress.
Cheers,
Bev


----------



## Guest

Nononymous said:


> So I have my renunciation appointment this afternoon. I will report back.
> 
> The plan was to have filed five years' quick-n-dirty DIY US taxes (as I've said before, I don't want to spend time or money on this so will do the absolute bare minimum ballpark estimates needed to show I'd owe nothing). However, due to some unforeseen circumstances the last two weeks were a complete blackout, and I will arrive jet-lagged and unprepared.
> 
> So I plan to ask a few questions:
> 
> 
> Can I start the process now and file the taxes soon?
> Will this cause any grief when crossing the border?
> Is this in any way reversible - if my wife had a can't-refuse job offer from the US, could I re-apply based on my birthplace?
> 
> Overall, I'm not 100 percent convinced this is the best approach to take, or that I will ultimately go through with it - I think it's more of an emotional reaction than a realistic calculation of risk and reward - but I figure what the hell, I made the appointment, I live a few minutes' bike ride away, I might as well ask for information and just generally register my unhappiness with the whole situation.


I'm not a lawyer, but I've spent a lot of time looking into this issue on behalf of some close friends who are affected by ambiguities as to whether they're US citizens in the eyes of the US (none of them are in their own eyes). It doesn't affect me personally, I'm not gloating here just alerting you that I have a certain personal detachment from the issue, at least on my own account.

Google "7 FAM 1260" and you will get a PDF downloadable copy of the latest procedures manual that tells US consular officials how the State Department requires them to handle renunciation cases. Also Google renunciationguide and you will get an excellent website someone has mounted on some exhaustive research they've done on renunciation. Again, not lawyers, but sometimes lawyers aren't the best people to speak with. Read both sites carefully.

My interpretation is that the consular officers, who are NOT IRS employees but Foreign Service employees, can NOT require you to submit tax returns to them in order to renounce. In fact, renounceguide says there have been cases of consular officers refusing to accept IRS return forms, saying "that's not my department, those go to IRS not us, I don't want to see any of this." If you make a declaration of renunciation in front of a consular officer, the US law requires that you SHALL lose your nationality. The consular officer will tell you, IF (s)he thinks you are renouncing for tax reasons, that you must complete IRS form XYZ and may be denied entry into the US if your taxes aren't brought up to date. But this is something you CAN do after renouncing and is NOT supposed to affect your getting a Certificate of Loss of Nationality.

Your renunciation declaration gets signed by the consular officer or the Vice-Consul in Ottawa and then goes to the Passport Office of the State Department in Washington for approval. They check to see whether you hold a current US passport; if you do, and if you didn't surrender it at your consular appointment, you will NOT get a Certificate until you surrender your passport. If you have surrendered it or you don't have one, they approve your Certificate and after a processing delay of about three months you'll get yours in the mail. When they send it to you, THEN they pass it to the IRS so the IRS can a) list you in the Federal Register as part of an absurd and pathetic "name and shame" process for whatever they think that's worth  and b) they will decide whether to contact you and chase you for tax returns, insofar as they think they can do that (they can't do it under the Canada-US Tax Treaty if you're already a Canadian citizen, and no one is going to advise you to renounce without first becoming a Canadian because then you're a stateless person and that's legal space where you REALLY don't want to go). If you don't comply with the IRS stuff, you may not be able to cross the border again, either for being turned away or maybe being arrested but they'd need a warrant for that and I doubt they have the time, staff or inclination for that these days, but who knows?

When I got my Certificate in early 1977 (it was approved by the State Dept in December 1976 after I'd written to Kissinger on July 4, 1976 telling him to take my US citizenship and ram it where the sun doesn't shine, after having been a Canadian already for eight months). The approval process described above is what was done in my case. I never heard a peep from the IRS, though until 1976 I'd filed IRS returns (no taxes owing) every year until I became a Canadian, just to avoid any possible extradition. As far as I can tell from my internet searches, that after-the-fact forwarding to IRS is the only change to the State Department procedures that's occurred since 1977. Some time after 1986, not sure exactly when, a law was passed in the US declaring that if the IRS thinks you renounced for tax reasons (and there are specific income-tax-payable and net-worth limits that trigger this assumption) then you are liable for US taxes for ten years after the adjudication of your renunciation, i.e. the issuance of your Certificate. But that is ALL done after the fact, NOT before. See also the Bureau of Immigration and Naturalization Services PDF file on-line "Advice about Possible Loss of US Citizenship and Dual Nationality" which spells out these things and also provides a PL (public law) reference for the act establishing the tax and net worth limits, which you can also google. Also please carefully read the procedures manual for Consular officers referenced above, it has a separate section on taxation issues. Read both documents carefully for what they say AND for what they don't say, then tell the IRS to go take a flying leap, if you don't mind never crossing the US border again.

No do NOT renounce if you think your wife might want to take a dream job in the US afterwards, they'll never let you back in except maybe on a green card, and that's entirely at their discretion it's not your right. Once renouncing your birth certificate isn't going to get you a job or permanent residence in the US, as far as I know. Few if any countries are going to take lightly people who treat their citizenship like a change of underwear, notwithstanding what Conrad Black might wish (now there's a REAL tax cheat and boy am I happy the US nailed his butt to the wall; however sadly our government did let him back into the country after he renounced, so he could buy a mansion in Toronto, but as a conviced felon without Canadian citizenship I don't think even if they wanted to they can legally let him back into Canada).

So far, though I've crossed the border maybe 40-50 times since 1978, always on my Canadian passport which identifies my US birthplace, I have never yet been hassled nor told I needed a US passport. I do carry a copy of my Certificate with me now this taxation stuff is coming up, in case they do ask. But the stark reality is the DHS goons can deny anyone entry into the US for any reason they want to, unless and until you take them to US court or get a Congressperson to intervene. Good luck with that if you renounce under the current situation, I suspect ...

The bottom line is how much do you really care if you never see the US again? I made that decision in 1969 for draft reasons, since Carter's amnesty I can go back to see my family and I will continue to do that as long as I can, but bottom line I can always have my family visit me in Canada. For the past number of years I just hate being in the US, it's nothing like the country I grew up in and initially loved as a child and young man, until Vietnam. They can rot in hell and stew in their own national debt for all I care. But that's my perspective and not everyone else's ...

I hope this long post is of some help to you and others on this thread. It repeats some stuff on the separate renunciation thread on this forum, sorry for that, but the latter doesn't get as many "hits" and may be overlooked by some folks so I've repeated some of this.


----------



## Nononymous

Schubert said:


> I hope this long post is of some help to you and others on this thread. It repeats some stuff on the separate renunciation thread on this forum, sorry for that, but the latter doesn't get as many "hits" and may be overlooked by some folks so I've repeated some of this.


Thanks - that was useful. 

I think in my case the pain of doing five years' taxes (as ever, very much a ballpark DIY approach) is fairly minimal, and never going to the US would be an inconvenience both professionally and personally, so I would try to be a good soon-to-be-ex-citizen and become compliant.


----------



## 416

Nononymous said:


> unless you are potentially dealing with a US estate at some point in the future.


That could be the case at some hopefully far distant point.


----------



## Peg

416 said:


> That could be the case at some hopefully far distant point.


Highly unlikely that I will get an US inheritance but am concerned that if I get Canadian inheritance (or lottery winnings  ) then the Estate Tax could cause problems in the future.


----------



## Expatinca

Peg said:


> If he has no income then does he even have to file tax returns? If he has no financial accounts then no FBARs. Wonder if it could possibly be a simple process to renounce his citizenship.


FBARs are required whenever you have $10,000 or more in assets. The requirements are wholly unrelated to whether you need to file a tax return or not.



Nononymous said:


> If he was born in Canada, and doesn't have a US birthplace on his Canadian passport, then I think you can safely ignore this. I don't know for certain whether he's automatically considered a US citizen, or just considered eligible (and would receive it on application). But frankly who cares - how would they ever know?
> 
> This one is not worth losing sleep over.


I'm losing sleep because I have a US passport that I've used for ID, so I'm going to get caught in FATCA if I don't turn myself in now.

As far as my son is concerned, you seem to be very cavalier about this. That's great for you, but he's my son. If I don't get things right, if he turns out to be a US citizen, and anyone ever finds out (and, frankly, who knows what lengths the IRS will go to given recent history), he could lose a great deal. If he's young, it could mean his education fund. If he's further along in his life, he could lose his savings or even, potentially, face jail time.

While I'm not losing sleep per se, because he is a born-Canadian and therefore eligible for all the protection the Canadian government can possibly afford him, I still do not want to leave any loose ends that might, potentially, come back to harm him. He's my son, my every instinct is to protect him. And right now, it looks a whole lot like there's a foreign country he has no attachment to that would absolutely love to come in and ruin him (to the extent that they aren't already trying to do so with his RESP - which has my name attached to it).


----------



## Nononymous

Expatinca said:


> FBARs are required whenever you have $10,000 or more in assets. The requirements are wholly unrelated to whether you need to file a tax return or not.
> 
> 
> I'm losing sleep because I have a US passport that I've used for ID, so I'm going to get caught in FATCA if I don't turn myself in now.
> 
> As far as my son is concerned, you seem to be very cavalier about this. That's great for you, but he's my son. If I don't get things right, if he turns out to be a US citizen, and anyone ever finds out (and, frankly, who knows what lengths the IRS will go to given recent history), he could lose a great deal. If he's young, it could mean his education fund. If he's further along in his life, he could lose his savings or even, potentially, face jail time.
> 
> While I'm not losing sleep per se, because he is a born-Canadian and therefore eligible for all the protection the Canadian government can possibly afford him, I still do not want to leave any loose ends that might, potentially, come back to harm him. He's my son, my every instinct is to protect him. And right now, it looks a whole lot like there's a foreign country he has no attachment to that would absolutely love to come in and ruin him (to the extent that they aren't already trying to do so with his RESP - which has my name attached to it).


These are the horror stories that turned up in the newspapers a few months ago, and have made some lawyers and accountants profitably busy. It's very clear that Canada won't collect any of these fines or penalties on behalf of the US. The RESP is safe.

I have a daughter in a similar position, born in Germany 11 years ago, for whom I obtained US citizenship at the time (oops). At this point there's nothing to be done, she doesn't have income so is not required to file a return, doesn't have a US birthplace so it's not an issue crossing the border with a Canadian passport, and happily the grandparents took care of the RESP so it's not in my name. I can't renounce on her behalf - it's her decision when she's 18. Unless things have changed dramatically by then, I rather doubt that a few files in some State Department consular archive are going to suddenly lead the IRS to her door here in Canada.

In your case I would certainly research whether he is automatically considered a citizen, or merely eligible to automatically receive citizenship upon application. That would be worth knowing.


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## Expatinca

Nononymous said:


> These are the horror stories that turned up in the newspapers a few months ago, and have made some lawyers and accountants profitably busy. It's very clear that Canada won't collect any of these fines or penalties on behalf of the US. The RESP is safe.


Unless we travel to the US, and we still have a lot of family there. If the IRS claims from his RESP, it will put me in the position of having to choose whether he gets an education or grandparents.



Nononymous said:


> In your case I would certainly research whether he is automatically considered a citizen, or merely eligible to automatically receive citizenship upon application. That would be worth knowing.


I've sent a letter in to the department of consular services asking for clarification. I hope to hear back soon.


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## 416

Nononymous said:


> I can't renounce on her behalf - it's her decision when she's 18.


If memory serves a minor can renounce US citizenship, and then has a six-month window after her 18th birthday to reclaim it if she wants to. 


see http://www.state.gov/documents/organization/120538.pdf


("7 FAM 1290 MINORS, INCOMPETENTS, PRISONERS, PLEA BARGAINS, CULTS AND OTHER SPECIAL CIRCUMSTANCES" - good times!) 



> i. Renunciation of U.S. citizenship and minors:
> (1) Consult CA/OCS/ACS: Whenever you receive a request to renounce from a minor you immediately must contact CA/OCS/ACS. CA/OCS/ACS will not approve a Certificate of Loss of U.S. Nationality (CLN) for a minor without the concurrence of CA/OCS/PRI, and appropriate consultation with L/CA;
> (2) Voluntariness and intent: Minors who seek to renounce citizenship often do so at the behest of or under pressure from one or more parent. If such pressure is so overwhelming as to negate the free will of the minor, it cannot be said that the statutory act of expatriation was committed voluntarily. The younger the minor isat the time of renunciation, the more influence the parent is assumed to have. Even in the absence of any evidence of parental inducements or pressure, you and CA must make a judgment whether the individual minor manifested the requisite maturity to appreciate the irrevocable nature of expatriation. Absent that maturity, it cannot be said that the individual acted voluntarily. Moreover, it must be determined if the minor lacked intent, because he or she did fully understand what he or she was doing. Children under 16 are presumed not to have the requisite maturity and knowing intent;
> (3) Interviewing a minor: When conducting the initial interview with a minor and during the renunciation procedure, you should have at least one other person present. The parents and guardians should not be present. As noted, the interview should take place in the presence of the consular officer and a witness, preferably another consular officer, another Foreign Service officer (nonconsular) or locally employed staff (LE staff). You should also explain that upon reaching the age of 18, the minor has a six-month opportunity to reclaim U.S. nationality. See 7 FAM Exhibit 1292, A Sample Letter to Accompany CLN for Minor Renunciants, which should be provided to minor renunciants together with an approved CLN;
> (4) Consular officer’s opinion: You should fully document every interaction with the minor and explain in your consular officer’s opinion the reasons you believe that the minor is, or is not, mature enough and sufficiently knowing to renounce.


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## Nononymous

Expatinca said:


> Unless we travel to the US, and we still have a lot of family there. If the IRS claims from his RESP, it will put me in the position of having to choose whether he gets an education or grandparents.


If the RESP is in your name, then you have to deal with it, just like an RRSP or TFSA. If you can make a non-US spouse the sole signatory, that may simplify matters. I'm not sure about this, but I think that until the child is 18 the RESP is reported by the contributor, not the beneficiary.

I suppose it's theoretically possible that I could be asked why my daughter doesn't have a US passport if she's traveling with me and my US citizenship (or lack thereof) comes up, but if that's an issue I can get her a passport without any trouble because she's tax compliant by virtue of not having income or assets and therefore doesn't need to file a return.


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## Bevdeforges

It looks like you've done quite a bit of research on this. Just a couple clarifications to your post...



Schubert said:


> My interpretation is that the consular officers, who are NOT IRS employees but Foreign Service employees, can NOT require you to submit tax returns to them in order to renounce.


As I understand it, State and the IRS are not supposed to exchange information under the various tax privacy laws. So while State can "advise" you that you are "supposed to" file taxes or whatever, they don't have access to any information about what you have or haven't filed. And they definitely can't accept your tax returns to forward to their IRS "buddies."



> If you don't comply with the IRS stuff, you may not be able to cross the border again, either for being turned away or maybe being arrested but they'd need a warrant for that and I doubt they have the time, staff or inclination for that these days, but who knows?


There was a rumor a few years back that whenever you renewed your US passport overseas, they would run your social security number (which you have to give when you renew your passport these days) to see if you had filed your taxes - at least for the latest year for which they were due. I renewed my passport the year after I legitimately didn't file US income taxes (because I didn't have any income that year). I never got the "letter" several fancy pants tax attorneys here swore I would get - asking me why I hadn't filed for the previous year. I really think this is an urban legend concocted by the tax attorneys.

I've also never heard of anyone being stopped, questioned or denied entry to the US for tax reasons - unless there was a warrant out for their arrest, which meant they had been audited and had gone through the whole process and had every reason to know the Feds were looking for them.



> When I got my Certificate in early 1977 (it was approved by the State Dept in December 1976 after I'd written to Kissinger on July 4, 1976 telling him to take my US citizenship and ram it where the sun doesn't shine, after having been a Canadian already for eight months). The approval process described above is what was done in my case. I never heard a peep from the IRS, though until 1976 I'd filed IRS returns (no taxes owing) every year until I became a Canadian, just to avoid any possible extradition. As far as I can tell from my internet searches, that after-the-fact forwarding to IRS is the only change to the State Department procedures that's occurred since 1977. Some time after 1986, not sure exactly when, a law was passed in the US declaring that if the IRS thinks you renounced for tax reasons (and there are specific income-tax-payable and net-worth limits that trigger this assumption) then you are liable for US taxes for ten years after the adjudication of your renunciation, i.e. the issuance of your Certificate.


That all happened in 1996, when they got concerned about zillionaires renouncing their citizenship "for tax reasons." There is also a clause in there stating that the Attorney General _*may*_ deny a visa to anyone who had renounced their US citizenship "for tax reasons" (as determined by the IRS, not the individual who had renounced). But for any of us on this forum, how likely is it that your visa application would come to the attention of the Attorney General of the US as part of the approval process?

Those who are at the biggest risk of running afoul of the IRS with all this FUBAR and FATCAT stuff are those with financial accounts (bank accounts and/or investment accounts) in the US. It's really rare that the IRS can go after someone resident overseas without having to go for an extradition order and all that.

So maybe a few folks out there can sleep a bit easier.
Cheers,
Bev


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## Nononymous

*yikes!*

Just received a letter from the Ministry of Finance. I thought, oh no, now I'm in trouble with the Canadians about something too.

But no, it was just a polite acknowledgement that my angry-citizen letter had been forwarded to the minister.


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## Nononymous

Bevdeforges said:


> There was a rumor a few years back that whenever you renewed your US passport overseas, they would run your social security number (which you have to give when you renew your passport these days) to see if you had filed your taxes - at least for the latest year for which they were due. I renewed my passport the year after I legitimately didn't file US income taxes (because I didn't have any income that year). I never got the "letter" several fancy pants tax attorneys here swore I would get - asking me why I hadn't filed for the previous year. I really think this is an urban legend concocted by the tax attorneys.


The passport renewal form as it now stands requires you to submit an SSN and sign a statement agreeing that you are tax compliant, on pain of a $500 fine for perjury. No idea if that has ever been followed up on, of course. Probably not. 

In general though, I agree, there's far too much paranoia out there. I'm potentially renouncing because I can't be arsed to deal with the ongoing hassle and future uncertainty (plus a healthy measure of crankiness). I certainly have no anxiety about bad men coming in the night to take away my life savings, such as they are, or being thrown in jail at the border, or any of that.


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## Guest

Bevdeforges said:


> this FUBAR and FATCAT stuff


:clap2::clap2::clap2: GOOD ONES! Gosh I wish I'd seen those. Well done!

Right up there with CRA's original acronym (I won't tell you how I know this) for their telephone "help" system for small businesses, originally to be called Automated Business Information System, or ABIS as in very close to ABYSS -- which is a good description if you've ever tried it, I spent five minutes pressing telephone keys and ended up after five minutes right back where I'd started  Sadly someone in the Minister's office twigged to the potential media problem with the acronym before it got approved, but I personally know a couple of people down in the CRA bureaucracy who spotted it right away and kept their mouths shuts, silently praying it would get approved


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## Vangrrl

Nononymous said:


> If the RESP is in your name, then you have to deal with it, just like an RRSP or TFSA. If you can make a non-US spouse the sole signatory, that may simplify matters. I'm not sure about this, but I think that until the child is 18 the RESP is reported by the contributor, not the beneficiary.


I wanted to follow-up with something I asked earlier regarding TFSAs. I asked my accountant about TFSAs (I don't have one, but would like to open one if it is beneficial to me)

His answer was: _" I'm not so sure you would need to report the tax deferred interest in the US. I've always treated similar retirement accounts for other nationalilites such as the UK the same as I would treat the Roth here in the states -- report income when withdrawan from the account at retirement age."_

I'm fairly certain he is incorrect. Everything I have read would indicate that you do report TFSA interest. That said, he's also been preparing exclusively ex-pat tax returns for 5+ years and this is an issue have never come back to him or his clients from the IRS. You can infer from that what you will...

Any one of these accounts will be reported on your fbar, so its not like you are hiding them anyways. We just transferred the RESP to my husband's name.


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## Vangrrl

Nononymous said:


> I suppose it's theoretically possible that I could be asked why my daughter doesn't have a US passport if she's traveling with me and my US citizenship (or lack thereof) comes up, but if that's an issue I can get her a passport without any trouble because she's tax compliant by virtue of not having income or assets and therefore doesn't need to file a return.


The way I see it, this will only ever come up while the kid is travelling with the US born parent (I'm assuming the mother is Canadian). And the answer to the question is "No she's not a citizen, I didn't live there long enough to pass along citizenship". Really, are they going to insist you pull out your grad school transcripts at the border and figure out on the spot whether you are telling the truth or not?

I know we all want to be law-abiding and honest, but I'm sorry, if the IRS/US govt is not playing fairly, then I'm not about to make their job easier for them.


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## Nononymous

Vangrrl said:


> The way I see it, this will only ever come up while the kid is travelling with the US born parent (I'm assuming the mother is Canadian). And the answer to the question is "No she's not a citizen, I didn't live there long enough to pass along citizenship". Really, are they going to insist you pull out your grad school transcripts at the border and figure out on the spot whether you are telling the truth or not?
> 
> I know we all want to be law-abiding and honest, but I'm sorry, if the IRS/US govt is not playing fairly, then I'm not about to make their job easier for them.


Exactly. Since citizenship is only conferred if a US-born parent lived in the use for 5 years (2 over age 14) then the fact of my having a US birthplace does not mean she should automatically be a US citizen. 

However, if directly asked, I would have to say yes she is (because I registered the birth and got her a passport) or I'd be lying and, at that point, be subject to extraordinary rendition, waterboarding, or at very least a stern talking-to.


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## Ladyhawk

Peg said:


> Highly unlikely that I will get an US inheritance but am concerned that if I get Canadian inheritance (or lottery winnings  ) then the Estate Tax could cause problems in the future.


This raises an issue that I am concerned about.
I am a dual citizen, married to a Canadian with no US ties. As a US citizen, will I be subject to US estate tax if my husband dies first?
Will the situation be different if our money and assets (like the property we own - 100 acre farm) are in both our names? I know I would have to report the bank accounts through F(U)BAR, but that is only a reporting requirement, it does not mean they can tax that money. Wouldn't joint ownership mean that I am NOT inheriting the assets of the marriage? But that if only his name is on the deed, and he died first, I WOULD inherit, and then would I be liable for US estate taxes?


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## Guest

*Conversation with office of new NDP foreign affairs critic*

Further to an email I sent to Paul Dewar, then the NDP foreign affairs critic in the House of Commons, a little more than two weeks ago, I have been in touch both by email and by telephone today with the office of Hélène LAVERDIÈRE, who has taken over Dewar’s job as NDP foreign affairs critic. This is my understanding from my contacts today.

Let me say first how pleased I was at the service I got to my query, even though I’m not one of Mme. Laverdière’s constituents (I am however one of Dewar’s). I called the parliamentary offices early this afternoon, spoke with several very pleasant and helpful people in both offices, forwarded the email I’d sent to Dewar (since it seemed it never was passed on to the new critic, or at least her office had no record of it), and at suppertime I got a call and had a nice talk with one of Mme. Laverdière’s staff, which I summarize below, obviously in my words not hers.

The NDP has received, not surprisingly, a very large number of emails and phone calls about FATCA, FBAR and the whole sorry mess. The leadership and caucus are very aware of this issue. They are aware of what the Conservative government is doing and saying about this, but they are concerned the government is not nearly as aware and active as they should be on this issue. The NDP is aware that between 600,000 and a million Canadians potentially are affected by this issue.

The interim leader of the NDP and her foreign affairs critic met with the US ambassador to Canada a day or two ago. They raised this issue with the ambassador, among other issues. The ambassador is very aware of concerns about what is happening under FATCA and FBAR, saying the embassy has received a lot of email, mail and telephone calls over this. He is having discussions within the US government to try to address some of the concerns, but he said he isn’t particularly hopeful that things are going to change in terms of the regulations and actions. The NDP expressed support for the idea of going after genuine tax criminals, but said there are a lot of people being affected by this who are no kind of tax criminal. The NDP is also aware there are some vexing issues about certain people who technically are US citizens without knowing this, ever having been aware of it until recently, or particularly wanting it, therefore haven’t been filing returns, and this has to be taken into consideration. That message was delivered, though whether or how much it was heard isn’t clear to me.

I also was told that the BC caucus of the NDP is writing to Jim Flaherty on this issue and will be holding a press conference next week releasing their letter to him and making some public statements about this issue. I asked for a time and date for the press conference; my contact doesn’t have that yet but promised she’d email it to me once she knows. Once I get that, I will post that information on this forum as soon as I can. Otherwise, keep your eyes and ears peeled. Those of you from Vancouver and area might want to contact your MP if he/she is NDP and see if you can scoop me on the timing. If I get a PDF of the letter, which I think I was promised, I’ll post it on one of those free download links or post a link to it if it’s on an NDP site, assuming I can by then get this website to let me post links.

We didn’t go into great depth on the following, and these are my words and not the NDP’s, but as you know we have a majority government right now, and there isn’t much the NDP can do other than continue to bring public pressure to bear on the government. There also realistically isn’t much the government can do to change the US policy or approach on this issue. One would hope however that our government will take appropriate steps to ensure that our Canadian sovereignty, not to mention also banking and privacy laws, are respected throughout this. At the end, those of you who are citizens of Canada have a right, I would say a responsibility, to vote in the next federal election, and to weigh what happens on this issue very heavily in your voting decision. And to impress that upon your friends and neighbours. I am not necessarily saying vote NDP, or don’t vote Conservative; what I will do and recommend come election time will be affected by what the government and the opposition parties (including the Liberals) do and say on this issue. 

I am cross-posting this on both threads. I haven’t approached the Privacy Commissioner yet, as I’m fighting off a nasty cold, but I hope to make my first approach to them tomorrow. I will keep you posted on that as well.


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## Nononymous

Ladyhawk said:


> This raises an issue that I am concerned about.
> I am a dual citizen, married to a Canadian with no US ties. As a US citizen, will I be subject to US estate tax if my husband dies first?
> Will the situation be different if our money and assets (like the property we own - 100 acre farm) are in both our names? I know I would have to report the bank accounts through F(U)BAR, but that is only a reporting requirement, it does not mean they can tax that money. Wouldn't joint ownership mean that I am NOT inheriting the assets of the marriage? But that if only his name is on the deed, and he died first, I WOULD inherit, and then would I be liable for US estate taxes?


This is where you probably need some professional advice...


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## Nononymous

*reconnaissance at the consulate*

So I just returned from the consulate.

I did not in fact decide to renounce, at least not yet. It didn't make a lot of sense - would have been an emotional, not rational, decision. At this point in time it's far more trouble to renounce than to simply file three 1040s and an FBAR and renew my passport and be done with it. There are implications in terms of future travel, I still could derive some benefit from US citizenship, and at least for now the reporting requirements for me are not so onerous. So I will wait until Christmas when I have a planned meeting with my parents around estate planning, and possibly take their lawyer's advice. The consulate will keep the file for a year, if I change my mind I can pop down and sign the forms and take the oath and be done with it.

In other words, I didn't let moral outrage get the better of me. Realistically, given that I'm a small fish who doesn't and likely won't ever owe US taxes, renunciation is probably overkill. As for my parents' estate I'm assuming it could be a problem down the road, but I don't in fact know that, so it makes sense to get a professional opinion before tearing up the passport.

What happens:

This has been described elsewhere. First up you bring to the window your documents and the questionnaire they e-mail you ahead of time. They take a few minutes to prepare the forms, you read them, then wait to speak to a consular official (i.e. diplomat rather than support staff). Then the consul essentially gives you a sales pitch on why the citizenship will still be useful to you. After which you sign the forms and the process begins. Or you do not, in which case you get your passport back. In the latter event they do not act as though you have wasted their time, quite the opposite.

Overall it was very friendly and pleasant (I have some foreign service connections - we had mutual acquaintances). I said that my coming down and taking up half an hour of his time was my way of registering my unhappiness about this situation, which he fully understood and accepted. I had a few questions about future travel after I renounced and he answered them as best he could.

What I learned:

The State Department probably isn't very happy with the IRS right now. This is taking up a lot of their time. I was not the first appointment of this nature, nor the last. They really don't know how the FATCA and FBAR situation will play out, and in a rather wink-and-nod (or just wishful thinking) way suggested that these laws might not be implemented quite so severely as is currently feared, given all the resistance.

They are both shocked and touched that Canadians are so decent and honest. This would not be a problem in Italy, he felt - everyone would keep their citizenship and continue lying and life would be far simpler for the embassy.

Once you have renounced, in theory you should not be treated any differently than any other Canadian citizen. However, border crossings and airlines are not always predictable, and like it or not, having that US birthplace will always cause questions to be asked, even if you carry a letter or certificate.

You absolutely do not need to have done your taxes first. The renunciation form simply states that you agree to contact the IRS and get it squared away at some point. Presumably you don't receive the certificate of renunciation until the returns have all been processed, so there's an incentive to do it in a timely fashion.

Also you don't pay the $450 up front!


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## AmTaker

Ladyhawk said:


> This raises an issue that I am concerned about.
> I am a dual citizen, married to a Canadian with no US ties. As a US citizen, will I be subject to US estate tax if my husband dies first?
> Will the situation be different if our money and assets (like the property we own - 100 acre farm) are in both our names? I know I would have to report the bank accounts through F(U)BAR, but that is only a reporting requirement, it does not mean they can tax that money. Wouldn't joint ownership mean that I am NOT inheriting the assets of the marriage? But that if only his name is on the deed, and he died first, I WOULD inherit, and then would I be liable for US estate taxes?


No, the tax is on the estate. If you inherit from a non US person, there is no tax, although there is a reporting requirement. An estate tax (if one exists at that time) would be levied on your estate when you pass away.


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## Cafreeb12

AmTaker said:


> No, the tax is on the estate. If you inherit from a non US person, there is no tax, although there is a reporting requirement. An estate tax (if one exists at that time) would be levied on your estate when you pass away.


So if my husband dies before me, and I'm left our home I report that along with any other assets he leaves me, when after that time I die, if I leave the home and assets to my Canadian son he is obliged to be taxed by the United States on any of that inheritance from me? Is that correct. If that's the case then this is the main reason for me to renounce to protect his future in any way I can. I'm sickened by this entire thing.


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## AmTaker

Cafreeb12 said:


> So if my husband dies before me, and I'm left our home I report that along with any other assets he leaves me, when after that time I die, if I leave the home and assets to my Canadian son he is obliged to be taxed by the United States on any of that inheritance from me? Is that correct. If that's the case then this is the main reason for me to renounce to protect his future in any way I can. I'm sickened by this entire thing.


Yes, exactly. Although there may be no tax (depends on the estate tax level at that time). Also, some of this could be avoided if your husband to set up a trust for your son for his share of the property. But I do agree that this is a good reason to renounce for someone who has few to no US ties.


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## Nononymous

Cafreeb12 said:


> So if my husband dies before me, and I'm left our home I report that along with any other assets he leaves me, when after that time I die, if I leave the home and assets to my Canadian son he is obliged to be taxed by the United States on any of that inheritance from me? Is that correct. If that's the case then this is the main reason for me to renounce to protect his future in any way I can. I'm sickened by this entire thing.


Again, I would get professional advice before making any decisions. Currently I don't think the estate tax kicks in until it's worth over $5 million, so maybe not an issue, but of course that limit could come down in the future. And whatever they may think he'd owe, the ability of the US to tax Canadian assets being inherited by a Canadian is probably very limited.


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## Peg

Cafreeb12 said:


> So if my husband dies before me, and I'm left our home I report that along with any other assets he leaves me, when after that time I die, if I leave the home and assets to my Canadian son he is obliged to be taxed by the United States on any of that inheritance from me? Is that correct. If that's the case then this is the main reason for me to renounce to protect his future in any way I can. I'm sickened by this entire thing.


That is my understanding but I'm not a lawyer. 

Many years ago I was told that if husband and wife die in the same accident then the older one is deemed to die first which in our case would be the Canadian thus leaving an even bigger estate for the American citizen to then be taxed by the US gov before going to our children. If we get any inheritances from our Canadian relatives before we die then by going into my estate that could then be taxed too!

When we redid our wills last year, the lawyer told us to watch if the US drops the minimum for estate taxes to apply because if they did we would need to consider estate planning to get around that. I will be glad to be able to send him a copy of my loss of citizenship certificate when I get it!

We have earned 100% of our monies in Canada. I left the USA when I was 9. To think that their laws could take money from my Canadian born and raised children is infuriating.

I'll be booking my plane ticket soon for my renunciation appointment!


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## Cafreeb12

Yes Peg that is the scenario I'm worried about. As I said my son has disabilities and there's no way I want him having to deal with my death AND the IRS. We're not going to be able to leave him much as it is. He is a foreign person and like you nothing we ever made was in the U.S. My son has made it very clear that he does not want American citizenship. He is a Canadian kid through and through. I guess I really need to talk to a lawyer and it may not be as severe but, the question remains in my mind what will the do in the future. There is no promise they won't say he is an American for life based on "new rules" and no promise there will not be future penalties placed upon him made retroactive. Due to the draconian nature of FBAR and all of us being lumped in with "tax cheats" and "criminals" I don't trust what they might do going forward from here should the U.S. have any reason to need "extra funds"


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## Arlington

Nononymous said:


> So I just returned from the consulate.
> 
> I did not in fact decide to renounce, at least not yet. In other words, I didn't let moral outrage get the better of me.
> 
> After which you sign the forms and the process begins. Or you do not, in which case you get your passport back. In the latter event they do not act as though you have wasted their time, quite the opposite.
> 
> Overall it was very friendly and pleasant (I have some foreign service connections - we had mutual acquaintances). I said that my coming down and taking up half an hour of his time was my way of registering my unhappiness about this situation, which he fully understood and accepted.
> 
> The State Department probably isn't very happy with the IRS right now. This is taking up a lot of their time.
> 
> They are both shocked and touched that Canadians are so decent and honest. This would not be a problem in Italy, he felt - everyone would keep their citizenship and continue lying and life would be far simpler for the embassy.


Nonymous . . I loved your post. The people you met with sound very nice which restores my beliefs about Americans as individuals. I liked that you weren't wasting your time, I liked that they were annoyed with FATCA and FBAR. I liked that they like Canadians. It sounds like a pleasant and reassuring afternoon with real people instead of faceless bureaucrats.

I'm also pleased that you didn't renounce immediately but are thinking it over carefully. Each one of us will have our own reasons for making that decision. Of course, it's a little bit like being a virgin. We're going to have to continually decide whether or not to take that step . . until we do. And then there is no going back.


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## Peg

Nononymous - thanks for your detailed description. Great to hear that it was a good experience. I will be there mid-November to renounce - and then off to Canmore for a long-awaited getaway with my husband


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## Nononymous

Arlington said:


> Nonymous . . I loved your post. The people you met with sound very nice which restores my beliefs about Americans as individuals. I liked that you weren't wasting your time, I liked that they were annoyed with FATCA and FBAR. I liked that they like Canadians. It sounds like a pleasant and reassuring afternoon with real people instead of faceless bureaucrats.
> 
> I'm also pleased that you didn't renounce immediately but are thinking it over carefully. Each one of us will have our own reasons for making that decision. Of course, it's a little bit like being a virgin. We're going to have to continually decide whether or not to take that step . . until we do. And then there is no going back.


There was some joking that he was getting paid commission every time someone changed their mind. It was actually rather earnest and sweet, and it's not a bad thing to be reminded of the gravity of the decision and the potential consequences. 

In many cases on this board it's probably the obvious course of action to shed the citizenship, but for me having the passport is sometimes handy for work travel, and for now the short-term cost of keeping it is far lower than getting rid of it. 

Also it's worth remembering that there is a lot of hysteria out there about things that will never happen - the IRS will not come and clean out half your child's RESP in the dead of night. Seriously, it won't. For most of us, clearing the bar for minimal compliance probably isn't that tough if you aren't too fussy about the exact numbers (however, not a good project if you're OCD). As I've said before, a US expat friend just writes two numbers on a 1040 (total Canadian income, tax owing zero) and staples it to a copy of his Canadian return and mails it off every year and they haven't arrested him yet.


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## Ladyhawk

Nononymous said:


> Again, I would get professional advice before making any decisions. Currently I don't think the estate tax kicks in until it's worth over $5 million, so maybe not an issue, but of course that limit could come down in the future. And whatever they may think he'd owe, the ability of the US to tax Canadian assets being inherited by a Canadian is probably very limited.


Good point, I forgot that the estate tax at least for now is for people a lot richer than me. 
We can't predict what will happen in the future though. 
The IRS may decide to redefine "rich". 
Or I could end up with a pantload of money!


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## Peg

Ladyhawk - we aren't near the threshold now but if they lower it a few more times it could be an issue. I want to renounce now so that they can't say I did it to avoid taxes since I'm clearly not right now!

Very different if I were to die first since my husband is Canadian and it would all just pass to the kids. But if we both died at the same time our joint insurance policy pays out a lot more - add our home and retirement savings to the insurance and it would make me sick for that to go to the US gov. It really concerned me as well when I thought my kids were US citizens as well since I wondered if the US could take a chunk each time!


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## Ladyhawk

Here's another article in a US publication that describes what is going on here, provides a few arguments against the IRS's behaviour which I had not heard, and adds some of the unintended consequences of FATCA and the abuses by the IRS.
Just in case anyone here hasn't heard enough yet....

Archived-Articles: When Government Turns Predator


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## Peg

Ladyhawk said:


> Here's another article in a US publication that describes what is going on here, provides a few arguments against the IRS's behaviour which I had not heard, and adds some of the unintended consequences of FATCA and the abuses by the IRS.
> Just in case anyone here hasn't heard enough yet....
> 
> Archived-Articles: When Government Turns Predator


Ladyhawk - that is an excellent find. I greatly appreciate you sharing that one! I will be using some of the items in my Opt Out of the OVDI letter.

By the way, now with FUBAR and FATCAT - any wordsmiths care to share one for OVDI?


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## Fifi_in_Victoria

Peg said:


> By the way, now with FUBAR and FATCAT - any wordsmiths care to share one for OVDI?


OVerDone Idiocracy?


----------



## Bevdeforges

Ladyhawk said:


> This raises an issue that I am concerned about.
> I am a dual citizen, married to a Canadian with no US ties. As a US citizen, will I be subject to US estate tax if my husband dies first?
> Will the situation be different if our money and assets (like the property we own - 100 acre farm) are in both our names? I know I would have to report the bank accounts through F(U)BAR, but that is only a reporting requirement, it does not mean they can tax that money. Wouldn't joint ownership mean that I am NOT inheriting the assets of the marriage? But that if only his name is on the deed, and he died first, I WOULD inherit, and then would I be liable for US estate taxes?


Basically, no. Estate taxes (at least in the US) are levied against the estate of the deceased, not against the heirs. As long as your husband is resident in Canada when he dies, the US tax laws don't come into play at all, at least not for the disposition of the estate.

As you mention, you would have to report the accounts on your FBAR forms going forward, as well as reporting the interest or other income from the assets once they are in your name. 
Cheers,
Bev


----------



## Bevdeforges

Nononymous said:


> There was some joking that he was getting paid commission every time someone changed their mind. It was actually rather earnest and sweet, and it's not a bad thing to be reminded of the gravity of the decision and the potential consequences.
> 
> In many cases on this board it's probably the obvious course of action to shed the citizenship, but for me having the passport is sometimes handy for work travel, and for now the short-term cost of keeping it is far lower than getting rid of it.
> 
> Also it's worth remembering that there is a lot of hysteria out there about things that will never happen - the IRS will not come and clean out half your child's RESP in the dead of night. Seriously, it won't. For most of us, clearing the bar for minimal compliance probably isn't that tough if you aren't too fussy about the exact numbers (however, not a good project if you're OCD). As I've said before, a US expat friend just writes two numbers on a 1040 (total Canadian income, tax owing zero) and staples it to a copy of his Canadian return and mails it off every year and they haven't arrested him yet.


You know, in the case of your friend, I'd advise NOT to send a copy of the Canadian return to the IRS, since that basically grants them permission to go compare numbers with the Canadian tax authorities. (Frankly, unless we're talking LOTS of money in potential taxes here, it's unlikely they'd bother with that - but why give them "permission". Make them beg for it. )

As long as you file something, it's usually ok - just take the earned income exclusion (if you're working) and declare the interest from your bank accounts (duly declared on the FBAR form) and as long as the end result is 0 taxes, the IRS is happy. If you've got major investments, it's a different story - but for "regular folks" like most of us, you're off the hook and you can sleep at night.
Cheers,
Bev


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## AmTaker

Peg said:


> Ladyhawk - that is an excellent find. I greatly appreciate you sharing that one! I will be using some of the items in my Opt Out of the OVDI letter.
> 
> By the way, now with FUBAR and FATCAT - any wordsmiths care to share one for OVDI?


I read the article (which is good, although the rest of the website is a little kooky), but I would advise against using some of the editorial comments in the article about the unfairness of the law. 

I think any opt out letter should focus on your non existent tax liability, lack of connections to the US, lack of US source income or assets, compliance with Canadian tax law, your lack of awareness of this part of US laws (pointing out how it differs from Canadian laws could be helpful), and how as a law abiding person, you sought to rectify by filing as soon as you learned about this requirement. 

Maybe a comment about how you joined OVDI in the mistaken belief that this was the only way to catch up on past filings, but now realize that it is nor appropriate for a person in your situation. 

[ I don't know if all of the above apply to you, strike out what doesn't apply ]

I'm not sure if a comment about possible renunciation might help -- it might make the IRS realize that they have very little hold over you, so make them willing to let go.


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## Peg

AmTaker said:


> I read the article (which is good, although the rest of the website is a little kooky), but I would advise against using some of the editorial comments in the article about the unfairness of the law.
> 
> I think any opt out letter should focus on your non existent tax liability, lack of connections to the US, lack of US source income or assets, compliance with Canadian tax law, your lack of awareness of this part of US laws (pointing out how it differs from Canadian laws could be helpful), and how as a law abiding person, you sought to rectify by filing as soon as you learned about this requirement.
> 
> Maybe a comment about how you joined OVDI in the mistaken belief that this was the only way to catch up on past filings, but now realize that it is nor appropriate for a person in your situation.
> 
> [ I don't know if all of the above apply to you, strike out what doesn't apply ]
> 
> I'm not sure if a comment about possible renunciation might help -- it might make the IRS realize that they have very little hold over you, so make them willing to let go.


You're right - I *want* to write a letter that expresses my anger and frustration but won't since it won't help them leave me alone...


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## Bevdeforges

Peg said:


> You're right - I *want* to write a letter that expresses my anger and frustration but won't since it won't help them leave me alone...


If you want to write a letter to someone, don't write it to the IRS - to a certain extent they are "only following orders." The people you want to write the nasty letters to are the members of the US Congress, preferably the ones representing the district in which you would be able to vote if you bothered to. (Don't mention that you don't vote to them - you're entitled to.)

Officially, as a US citizen, you have the right to vote in the district in which you lived before leaving the US - even if you were only 2 years old when you left! In a few states, you have the right to vote using the address that your parents use to vote.

It's the Congress (who don't seem to be able to get it together to do much lately) who created and passed these insane laws requiring all the FBAR and FATCA reporting (as well as the law requiring all US citizens to file, no matter where in the world they live). They are the ones who can undo the damage they've caused. 

But at the moment, it seems kind of unlikely they can agree on much of anything, much less get a law passed to fix something like this. However, harassing them with mail and phone calls might at least be kind of satisfying.
Cheers,
Bev


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## Ladyhawk

Peg said:


> You're right - I *want* to write a letter that expresses my anger and frustration but won't since it won't help them leave me alone...


Peg, you could write also to the nearest US consulate. Based on Nonymous's visit there (ref page 73 of this ever-expanding thread!), they are being deluged with complaints and are not happy with the IRS.
Remember that the F(U)BAR (where we report our accounts ourselves) has been in place for decades but has not been enforced until now, but that FATCA(T) (foreign financial institutions must report our accounts to the IRS) is the brainchild of Senator Carl Levin, who stuck it into the HIRE Act as an amendment at the last minute (NO discussion on the Senate floor!). You could write to him too. He and Geithner are getting a lot of flack over FATCA from overseas. According to Forbes, both Japan and Australia have refused to enforce it.

BTW, here's an interesting factoid I hadn't realized: 
"The U.S. government has long had two minds on tax competition. Politicians routinely complain about so-called tax havens and support the bullying of smaller, low-tax jurisdictions. It seems that enforcement-über-alles is the rallying cry, with no thought for international comity, cost-benefit analysis, or pro-growth tax policy.

"At the same time, the U.S. is the biggest tax haven in the world and is very dependent on a steady stream of foreign investment. As a general rule, non-resident foreigners are not taxed on interest or capital gains, and there is no reporting regime, thus making it rather difficult for foreign governments to tax the income. Moreover, American states such as Delaware and Nevada have very friendly corporation laws that protect the privacy of non-resident foreigners."
http://www.schweizermonat.ch/artikel/the-janus-face-of-us-tax-policy

So here's the solution - invest your money in the USA - the only tax haven the IRS won't touch! (OK, I know I know...they'll get around to it when the money runs out again).


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## CanadianHoosier

Ladyhawk said:


> Peg, you could write also to the nearest US consulate. Based on Nonymous's visit there (ref page 73 of this ever-expanding thread!), they are being deluged with complaints and are not happy with the IRS.
> Remember that the F(U)BAR (where we report our accounts ourselves) has been in place for decades but has not been enforced until now, but that FATCA(T) (foreign financial institutions must report our accounts to the IRS) is the brainchild of Senator Carl Levin, who stuck it into the HIRE Act as an amendment at the last minute (NO discussion on the Senate floor!). You could write to him too. He and Geithner are getting a lot of flack over FATCA from overseas. According to Forbes, both Japan and Australia have refused to enforce it.


Here is a link to Senator Carl Levin and FATCA. Reinforces the message that we are not the targets, just innocent victims. 

Carl Levin - United States Senator for Michigan: Newsroom - Press Releases


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## Expatinca

I wrote to Levin a couple days ago, but he requires a zip code. I just picked one at random, but I don't think he reads anything from out of state.


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## Peg

CanadianHoosier said:


> Here is a link to Senator Carl Levin and FATCA. Reinforces the message that we are not the targets, just innocent victims.
> 
> Carl Levin - United States Senator for Michigan: Newsroom - Press Releases


If I could I would "Like" that post 100 times! :clap2: What better information to go in the Opt Out - Don't Penalize Me letter :boxing:


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## Peg

Expatinca said:


> I wrote to Levin a couple days ago, but he requires a zip code. I just picked one at random, but I don't think he reads anything from out of state.


My girlfriend may live in his riding - I will send my letter to her and have her mail it


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## Bevdeforges

Ladyhawk said:


> "At the same time, the U.S. is the biggest tax haven in the world and is very dependent on a steady stream of foreign investment. As a general rule, non-resident foreigners are not taxed on interest or capital gains, and there is no reporting regime, thus making it rather difficult for foreign governments to tax the income. Moreover, American states such as Delaware and Nevada have very friendly corporation laws that protect the privacy of non-resident foreigners."
> Schweizer Monat - The Janus Face of US Tax Policy
> 
> So here's the solution - invest your money in the USA - the only tax haven the IRS won't touch! (OK, I know I know...they'll get around to it when the money runs out again).


Haven't read the article you cited, but I will take slight issue with the notion of the US as a tax haven. In this last round of tax and reporting legislation, they have pretty much made it universal that the US takes 30% withholding on most financial transactions for foreign persons. 

My husband has a small investment account (due to his having worked for a US company that gave out stock options a long time ago) and every year he gets a withholding statement from the account, saying that they have withheld $10 or $12, no more. (Shows you how little income is involved.) When we got married, I looked into what it would take to get that back since he really does owe no taxes to the US, but among other things, he'd have to apply for an ITIN (International Taxpayer Identification Number) which would put him on the IRS tracking system. It's worth it to both of us to just let them have the $10 a year to stay out of his financial situation.

When I was looking into moving my US retirement funds, I found that I can tell them what I want them to withhold when I do take out my funds. But if I were NOT a US citizen, they must withhold 30% on all withdrawals. Needless to say, that greatly affects my thoughts on renunciation. I admit that I owe US tax on my retirement money when I withdraw it (that's how the retirement fund works in the US), but I'll be nowhere near the 30% tax level when I do. So, I'll leave my retirement money where it is for the time being and see what the situation is when I start to need to withdraw it.
Cheers,
Bev


----------



## Vangrrl

Nononymous said:


> Also it's worth remembering that there is a lot of hysteria out there about things that will never happen - the IRS will not come and clean out half your child's RESP in the dead of night. Seriously, it won't. For most of us, clearing the bar for minimal compliance probably isn't that tough if you aren't too fussy about the exact numbers (however, not a good project if you're OCD).


Amen. I can't believe that its only been 6 week since I even found out about this whole reporting issue but as I finally mailed out my returns/fbars yesterday, I actually don't feel too bad about the whole thing any more. In my personal case, I did benefit from my accidental citizenship (I went to a Ivy League school on a full-scholarship). So I'm willing to make a reasonable attempt to make this work out. And I feel like with proper awareness and minimal effort going forward (especially with a foreign spouse for tax planning purposes), we can go back to life as normal now.

My son is American, and like your daughter will know the rules from the get-go and won't be caught off-guard like we were. 

I really truly don't believe that we will be hit with FBAR fines. ALL countries, Canada included, have draconian laws on the books for that "just in case" moment. It doesn't mean they are going to enforce them. And lets face it, how many of us would have even known about this taxation issue with the IRS hadn't waved around that big stick? 

With regards to the "estate tax". I read in the Globe and Mail that the Canadian gov't is thinking of instituting one as well.


----------



## Vangrrl

Bevdeforges said:


> Basically, no. Estate taxes (at least in the US) are levied against the estate of the deceased, not against the heirs. As long as your husband is resident in Canada when he dies, the US tax laws don't come into play at all, at least not for the disposition of the estate.
> 
> As you mention, you would have to report the accounts on your FBAR forms going forward, as well as reporting the interest or other income from the assets once they are in your name.
> Cheers,
> Bev


I was concerned about the estate tax as well. I'm the only American in my family - my parents are Canadian, so I was worried about receiving my inheritance. It looks like there is a form 2208 where you report "Gift from Foreign Sources" which would include an inheritance. It would not be taxed.


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## Expatinca

Vangrrl said:


> My son is American, and like your daughter will know the rules from the get-go and won't be caught off-guard like we were.


The kicker for me is that both my parents knew about all of this and have, apparently, been filing for years. They just never thought to tell me...


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## Peg

Expatinca said:


> The kicker for me is that both my parents knew about all of this and have, apparently, been filing for years. They just never thought to tell me...


Similar for us - a tax lawyer we know well forgot we were from the USA .


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## Cafreeb12

Expatinca said:


> The kicker for me is that both my parents knew about all of this and have, apparently, been filing for years. They just never thought to tell me...


Expatinca, I contacted the place you gave me. Have an appointment next Friday! Thanks for the information. Guess I'll move forward then.


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## Zaccheus

Greetings All: 

Could only read through half these pages today, started getting buggy-eyed!
Thanks especially to Bev and Pathologic (and others) for their calm, sensible insights.

Husband is Canadian, I am dual, Canadian born children are dual. Living in Cananda 29 years.

I'm a little intimidated to attempt filing back 1040s on my own...know of any reasonably priced accountants in the Pembroke/Renfrew/Ottawa area who would be savvy on cross-border issues? Don't want to spend lots. Due to long-term illness and its implications, whatever money we do have, we need to be frugal, retirement is on the horizon.

Is Ottawa's H&R Block a reputable way to go?

One specific question for dear child #1: she received $20,000K from an irrevocable US trust when she turned "of age" (her U.S. grandpa is now passed on) - How is that to be recorded on a 1040? She's a dual (through my US citizenship), living with us in Canada. Her work income has been low, thus far. Other children will also get varying amounts when they come of age. Until of age, these remaining funds are held in the U.S. Brother is trustee, pays U.S. taxes on them.

For older child was this just considered "inheritance" as far as Canadian taxation purposes? I'm wondering if she needs to go back and amend.

Thanks!

Zaccheus


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## Cafreeb12

Zaccheus said:


> Greetings All:
> 
> Could only read through half these pages today, started getting buggy-eyed!
> Thanks especially to Bev and Pathologic (and others) for their calm, sensible insights.
> 
> Husband is Canadian, I am dual, Canadian born children are dual. Living in Cananda 29 years.
> 
> I'm a little intimidated to attempt filing back 1040s on my own...know of any reasonably priced accountants in the Pembroke/Renfrew/Ottawa area who would be savvy on cross-border issues? Don't want to spend lots. Due to long-term illness and its implications, whatever money we do have, we need to be frugal, retirement is on the horizon.
> 
> Is Ottawa's H&R Block a reputable way to go?
> 
> One specific question for dear child #1: she received $20,000K from an irrevocable US trust when she turned "of age" (her U.S. grandpa is now passed on) - How is that to be recorded on a 1040? She's a dual (through my US citizenship), living with us in Canada. Her work income has been low, thus far. Other children will also get varying amounts when they come of age. Until of age, these remaining funds are held in the U.S. Brother is trustee, pays U.S. taxes on them.
> 
> For older child was this just considered "inheritance" as far as Canadian taxation purposes? I'm wondering if she needs to go back and amend.
> 
> Thanks!
> 
> Zaccheus



You are in a similar situation to me. I am in Kingston and no one here does this sort of thing so I am going to Ottawa and yes, using H and R. It's too confusing and no one else in my family are American except me so I'm a lot irritated about FBAR since I stay at home and my Canadian husband works..so I guess I am reporting my husband who is not even American to the IRS OR I'm in future not supposed to have "signing authority" over any of our accounts. So be a pauper, or report your Canadian family. I think H and R will be reasonable. I talked to them today and they were VERY understanding about this issue and quite nice.

As far as the inheritance goes, I won't know how that works until next year. My mother passed away in Feb. this year so won't report on that to the IRS until next year. I am completely lost as to how that is taxed and hope they won't ding me too much on it.


----------



## Zaccheus

Thanks, Cafreeb! Let me know how it goes in Ottawa! I still have to gather up all my paperwork. Dear Canadian husband thinks that Uncle Sam is so out of control, and this is so ridiculous, that I hate to bother him too much to round up years of statements, etc. He's the one that has to find my old Canadian forms. (One of my banks, however, is willing to send me several years of statements without charge! And they were nice about it, too! We haven't been the most organized ( Well, that will change pronto. I hope you will post more.
BTW: We are basically small-fry -- it's really nice to have the support of others.
Best, Zaccheus


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## Zaccheus

Cafreeb -- 
BTW: Sorry about your loved one ... I was told that in Canada, all inherited monies are tax free ... someone in the "know" will have to confirm.
Zaccheus


----------



## Cafreeb12

Zaccheus said:


> Cafreeb --
> BTW: Sorry about your loved one ... I was told that in Canada, all inherited monies are tax free ... someone in the "know" will have to confirm.
> Zaccheus



Thank you. In Canada all inheritance may be tax free but, it remains to be seen what will happen with the U.S. She was American and did a transfer of deed upon death with her house which we sold and divided the proceeds three ways. She also had a life insurance policy we did the same with and she has an IRA that sits in my sisters name not cashed out at all and won't be for some time till we figure out what to do with this mess. We've had five family members pass this year and I was in hospital twice myself so there's good reason I did NOT know a thing about FBAR! We've been running around dealing with issues to do with family for over a year. Now this. I just want this out of my hair and I hope to god the penalties don't apply to me as I did not owe them anything but, may next year...that is if they take tax on what my mother left us. It wasn't a whole lot divided three ways but, it was some. It's the only time in my life I ever will come into any money and I sure hope the IRS won't take too big of a bite as we need it to pay off medical debt for my son. I put what I got in a different account and haven't touched it. I won't until I see after January what the U.S. will do with this money. The life insurance policy was set up to be divided the three ways upon her death too. No will, just had everything ready to be transferred and I'm not sure what that is going to require. I'll get any back issues solved with FBAR even though I only had one year with enough to even have me required to file FBAR. I'm going to give them three years and all my tax returns filled with "zero" since I owed them nothing and wasn't even required to file as I do not work but, I'm sending it anyway. Next year I will have had income from the inheritance...

Inheritance is another area the U.S. differs from Canada. What do they deem inheritance is an issue I will have to get into since we sold the house ourselves as it came to us after her death or the day of. Everything else was set up that way and not under a will but, a transfer situation. She did this to relieve us of having to deal with probate as we are spread all over North America. What a mess!!


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## 416

Expatinca said:


> The kicker for me is that both my parents knew about all of this and have, apparently, been filing for years. They just never thought to tell me...


My mother has been filing for years, too, and can remember going to the US consulate in Toronto in the early '70s, where there were apparently a line of IRS agents in tax season helping expats with their returns (to date this, they were using adding machines.) 

Apparently she thought she had to file overseas returns b/c she had US income, not b/c she was a citizen as such. So it didn't occur to anybody that I should be filing returns as well. 

My uncle on the US side is a tax accountant (of all things) who had the idea that I automatically renounced my US citizenship when I became a Canadian officer in the 1990s, and didn't have to worry about US taxes. Which would have been true back in the day, before various court decisions. 

Gentle reader, it is what it is.


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## Cafreeb12

416 said:


> My mother has been filing for years, too, and can remember going to the US consulate in Toronto in the early '70s, where there were apparently a line of IRS agents in tax season helping expats with their returns (to date this, they were using adding machines.)
> 
> Apparently she thought she had to file overseas returns b/c she had US income, not b/c she was a citizen as such. So it didn't occur to anybody that I should be filing returns as well.
> 
> My uncle on the US side is a tax accountant (of all things) who had the idea that I automatically renounced my US citizenship when I became a Canadian officer in the 1990s, and didn't have to worry about US taxes. Which would have been true back in the day, before various court decisions.
> 
> Gentle reader, it is what it is.


Both my father and one of my uncles repeatedly mentioned to me how I was no longer a U.S. citizen since the beginning of when I took landed status in Canada. Americans living in the U.S. are completely clueless about this issue all round. It's not their fault. The government and the press demonizes people who no longer live in the U.S. and paint us all with the same brush.


----------



## Bevdeforges

OK, on the inheritance issues - if you are receiving a US inheritance (i.e. the deceased was resident in the US at the time of their death) then any and all inheritance taxes for the US are paid by the estate before the estate is distributed.

Your US citizen kids are not on the hook for US taxes for amounts directly inherited from Grandma, Grandpa, etc. The executors of the estate are supposed to settle the US taxes before any of the heirs are paid out. If you're bringing the funds into Canada, make sure you have a copy of the death certificate and a probate certificate from the state that handled the probate. (The executor of the estate should be able to provide you with copies.) But that should be sufficient to keep the Canadian tax folks happy. (At least that's how it works over here in France.)

For trust funds, you need to check with the trustee. If the trustee has been paying US taxes on the funds (and depending a bit on precisely what sort of fund was established), there may well be no tax liability as far as the US is concerned. I have no idea how Canada views these things.
Cheers,
Bev


----------



## Cafreeb12

Bevdeforges said:


> OK, on the inheritance issues - if you are receiving a US inheritance (i.e. the deceased was resident in the US at the time of their death) then any and all inheritance taxes for the US are paid by the estate before the estate is distributed.
> 
> Your US citizen kids are not on the hook for US taxes for amounts directly inherited from Grandma, Grandpa, etc. The executors of the estate are supposed to settle the US taxes before any of the heirs are paid out. If you're bringing the funds into Canada, make sure you have a copy of the death certificate and a probate certificate from the state that handled the probate. (The executor of the estate should be able to provide you with copies.) But that should be sufficient to keep the Canadian tax folks happy. (At least that's how it works over here in France.)
> 
> For trust funds, you need to check with the trustee. If the trustee has been paying US taxes on the funds (and depending a bit on precisely what sort of fund was established), there may well be no tax liability as far as the US is concerned. I have no idea how Canada views these things.
> Cheers,
> Bev


Thank you Bev, there was no "executor" everything was set up to automatically pass directly over to us, in our names upon her death. Everything paid out automatically when she died as our names were on those accounts the second she passed away. There was no need for an executor so no certificate. There is a death certificate, a transfer of deed upon death document, and the insurance company has it documented on the life insurance policy. Other than that NO executor and no will. This was done to avoid probate by a lawyer. Edward Jones handled the life insurance and still has the IRA *never use them btw, they hadn't a clue what to do about transferring to me and sent me a form for a foreign person which I did not sign. as I am American* It's complicated and I'm not sure how we will be hit. We lost money on her house in this economy so that one may not be a problem at all. It's the other accounts that are the issue. I'm seeking advice as my situation is different than those with a straight forward "will" and "executor" A handful of states allow transfer of deed upon death.


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## Expatinca

Cafreeb12 said:


> Expatinca, I contacted the place you gave me. Have an appointment next Friday! Thanks for the information. Guess I'll move forward then.


Good luck!

I've been with them for years, but only with Canadian taxes. I'm crossing my fingers that everything goes okay for both of us 



Zaccheus said:


> I'm a little intimidated to attempt filing back 1040s on my own...know of any reasonably priced accountants in the Pembroke/Renfrew/Ottawa area who would be savvy on cross-border issues? Don't want to spend lots. Due to long-term illness and its implications, whatever money we do have, we need to be frugal, retirement is on the horizon.
> 
> Is Ottawa's H&R Block a reputable way to go?


They're great for Canadian taxes, but untested as far as the American ones go. They are a bit like the McDonald's of the tax preparation world in that they aren't as good as an accountant, but generally a whole lot cheaper. 

I spoke with my financial planner today and explained the situation. He's going to put feelers our for a cross-border certified accountant to help us going forward and should be getting back to me next week. I can pass that name on when I get it, but with the caveat that I won't have dealt with them yet.


----------



## Cafreeb12

Expatinca said:


> Good luck!
> 
> I've been with them for years, but only with Canadian taxes. I'm crossing my fingers that everything goes okay for both of us
> 
> 
> They're great for Canadian taxes, but untested as far as the American ones go. They are a bit like the McDonald's of the tax preparation world in that they aren't as good as an accountant, but generally a whole lot cheaper.
> 
> I spoke with my financial planner today and explained the situation. He's going to put feelers our for a cross-border certified accountant to help us going forward and should be getting back to me next week. I can pass that name on when I get it, but with the caveat that I won't have dealt with them yet.



I understand H and R are like McD, in this realm and cheaper too but, I am counting on the fact that are flooded with these documents, my passed years requirement to even file was ZERO and I'm doing it anyway. Going forward and having to file schedule "D" will be interesting and I'm giving the woman at H and R heads up on that one so she can take every deduction I'm entitled to with regard to filing this document. In the future if I renounce and dad leaves me anything I'll be taxed at a higher rate but, I don't even care at this point. I'm sick and tired of dealing with this. Maybe some don't feel that way but, my life is complicated enough without having to pay someone to do this for the rest of my life. Having RA is going to make it increasingly hard for me to travel and get this stuff sorted out with a competent international tax preparer and there are none where I live. Best to just get it over with and stop being American even though that's a tough choice. As I said I don't trust what they will do in the future. Especially with Timmy bragging in the press about this stellar "achievement" at every opportunity. Such a lie.


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## Zaccheus

Cafreeb:
There were IRA's in my Dad's estate. I had the heads-up years ago that there is a substantial withholding tax if distributed to me as a Canadian resident), so my brother agreed to take that on in the US & pay the taxes, and I would get the equivalent amount out of Dad's other resources, minus my share of the taxes. (a way to reimburse him) It was just a lot simpler. Now that's how he was advised to do it by his financial advisors...you would need to see if this is an option, legally, with your siblings. Zaccheus.


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## Cafreeb12

Zaccheus said:


> Cafreeb:
> There were IRA's in my Dad's estate. I had the heads-up years ago that there is a substantial withholding tax if distributed to me as a Canadian resident), so my brother agreed to take that on in the US & pay the taxes, and I would get the equivalent amount out of Dad's other resources, minus my share of the taxes. (a way to reimburse him) It was just a lot simpler. Now that's how he was advised to do it by his financial advisors...you would need to see if this is an option, legally, with your siblings. Zaccheus.


Thanks! The IRA was rolled over to my sister's name only and she has chosen to wait until the next tax season to cash it out. I'm not sure she would agree to a situation where she pays the taxes and I pay her or something like that. She is seeking legal advice on how to disperse. My understanding was the substantial hit would come if I took the money as a foreigner rather than a U.S. non resident. However, it's complicated and as I won't even see these funds till perhaps Feb or March of 2012, who knows how the rules will work then. The IRA is holding me up renouncing because if I take it as a foreign citizen the taxes are a LOT Higher. Thirty percent! So I'm hoping if she chooses to roll over her portion and my brother and I take our portion each there will be some graduated rate. It IS inheritance. Who knew an IRA left to kids was such a liability if they don't want to keep the funds in there. I hate Edward Jones *where the IRA is* and do NOT want them holding funds for me. blech. They have pulled so many weird things that I think they got me assigned without my permission a foreign tax I.D.!! I am not a foreigner and they did not have my permission to file the form for me. Good gosh. 

Anyway, thanks for your input. With regard to the IRA as I cannot renounce till this is all settled I think I might just see what my sister wants to do about it and go from there. She will disperse fairly I have no doubt but, she is quite surly to deal with at times preferring to "do what's best for me" with little regard to my brother's tax situation or mine. I won't be asking her for any "special" help. I do think though that it may be to HER benefit to allow my brother and I to just pay the tax owing to her directly. That way she gets a bigger chunk. 

Lesson learned,don't leave your kid with an IRA to deal with.


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## Bevdeforges

Cafreeb12 said:


> My understanding was the substantial hit would come if I took the money as a foreigner rather than a U.S. non resident. However, it's complicated and as I won't even see these funds till perhaps Feb or March of 2012, who knows how the rules will work then. The IRA is holding me up renouncing because if I take it as a foreign citizen the taxes are a LOT Higher. Thirty percent!


Let me just clarify something - the 30% is the withholding rate for non-US citizens on distribution of an IRA or any other investment. 

Because of the way the IRA works - no tax was paid on the money that was put into the IRA originally, with the idea that tax would be paid on the full amount as it was withdrawn during retirement - when you "inherit" an IRA, you basically pay full income tax on the whole amount you get. If that is less than 30% of the sum, then you file an income tax form to get the over-withholding back. The idea is that an IRA is not supposed to be used to accumulate funds to pass on to your kids, but rather to see you through your old age.

You are right, however, in that the inheritance taxes may well be higher on distributions to a "foreign person" rather than a US citizen. However that depends on the size of the estate - and estates under a couple million are exempt, at least from Federal inheritance tax.
Cheers,
Bev


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## Mona Lisa76

But what I don't understand, Bev, is how my future inheritance from my parents (US citizens) might be affected if I chose to renounce. I understand that if they left me $300,000 that I wouldn't be taxed as a US citizen and that it would only be the estate itself that might face death duties if over whatever the limit is (I think currently two million bucks). But if I relinquished my citizenship would I lose 30% of my US inheritance as punishment?


Bevdeforges said:


> Let me just clarify something - the 30% is the withholding rate for non-US citizens on distribution of an IRA or any other investment.
> 
> Because of the way the IRA works - no tax was paid on the money that was put into the IRA originally, with the idea that tax would be paid on the full amount as it was withdrawn during retirement - when you "inherit" an IRA, you basically pay full income tax on the whole amount you get. If that is less than 30% of the sum, then you file an income tax form to get the over-withholding back. The idea is that an IRA is not supposed to be used to accumulate funds to pass on to your kids, but rather to see you through your old age.
> 
> You are right, however, in that the inheritance taxes may well be higher on distributions to a "foreign person" rather than a US citizen. However that depends on the size of the estate - and estates under a couple million are exempt, at least from Federal inheritance tax.
> Cheers,
> Bev


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## Cafreeb12

Bevdeforges said:


> Let me just clarify something - the 30% is the withholding rate for non-US citizens on distribution of an IRA or any other investment.
> 
> Because of the way the IRA works - no tax was paid on the money that was put into the IRA originally, with the idea that tax would be paid on the full amount as it was withdrawn during retirement - when you "inherit" an IRA, you basically pay full income tax on the whole amount you get. If that is less than 30% of the sum, then you file an income tax form to get the over-withholding back. The idea is that an IRA is not supposed to be used to accumulate funds to pass on to your kids, but rather to see you through your old age.
> 
> You are right, however, in that the inheritance taxes may well be higher on distributions to a "foreign person" rather than a US citizen. However that depends on the size of the estate - and estates under a couple million are exempt, at least from Federal inheritance tax.
> Cheers,
> Bev



Thanks again, it's well under one million by far and split three ways at that. I'd hold it there but, I'm renouncing and don't want anything left tying me down to the IRS. It's an interesting concept because almost everyone who has one will have money left in them when they pass away. It's got to go somewhere then so it's interesting there isn't as much leeway as to what is done with them at the time of your passing without big penalty. The IRA is a bit more complicated than any other asset left behind you.


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## Guest

I came across the site of the Association of Americans Resident Overseas and found good information that might interest some others.

From among the 2011 Position Papers of the AARO, there is an interesting chart showing differences of U.S. Citizens in the U.S. vs U.S. Citizens Abroad 2011 Position Papers 

Summary of 2011 Position Papers: Overall Goals 
Overseas Americans are estimated to be similar in number to the population of Minnesota – the 21st most populous state. Easily forgotten because they are scattered across the globe, they face a number of particular obstacles. Over the years, Congress has systematically made it more difficult for Americans to live and work overseas. We urge Congress and the Administration to rethink certain policies that restrict their effectiveness as ambassadors for American interests abroad.

Regards to all.


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## Peg

*Anyone know how to offset the Self-Employment tax? *

It is payable once self-employment earnings are over $400 (2006&2007). Mine is nominal at under $100 each year but it appears that I cannot offset my Foreign tax credit and therefore must pay it. 

I am doing my forms squeaky clean so that they cannot come at me for anything... 

If I cannot offset it, can I send in the forms and see if they ask for the $100? Or do I have to send it in??

The Self-employment tax for me is about 14% tax on top of regular IRS income taxes (which are all offset by foreign tax credit).


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## Cafreeb12

Calgary411 said:


> I came across the site of the Association of Americans Resident Overseas and found good information that might interest some others.
> 
> From among the 2011 Position Papers of the AARO, there is an interesting chart showing differences of U.S. Citizens in the U.S. vs U.S. Citizens Abroad 2011 Position Papers
> 
> Summary of 2011 Position Papers: Overall Goals
> Overseas Americans are estimated to be similar in number to the population of Minnesota – the 21st most populous state. Easily forgotten because they are scattered across the globe, they face a number of particular obstacles. Over the years, Congress has systematically made it more difficult for Americans to live and work overseas. We urge Congress and the Administration to rethink certain policies that restrict their effectiveness as ambassadors for American interests abroad.
> 
> Regards to all.


Yes, they have some great info there! And yes, they have made it harder for Americans who live outside the country. They are gearing legislation to those who take jobs out of the country but, once again not caring about people who move away due to family issues. Most of us have nothing to do with being a drain on their economy. Most of the legislation is so ham fisted it's ridiculous but, they don't feel they have to consider us at all. And yes, we make up as many people as one state.


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## Peg

Cafreeb12 said:


> Yes, they have some great info there! And yes, they have made it harder for Americans who live outside the country. They are gearing legislation to those who take jobs out of the country but, once again not caring about people who move away due to family issues. Most of us have nothing to do with being a drain on their economy. Most of the legislation is so ham fisted it's ridiculous but, they don't feel they have to consider us at all. And yes, we make up as many people as one state.


Would love to see how much money they are wasting reviewing IRS forms and FBAR forms for honest tax-paying-in-their-country-of-residence US citizens who owe nothing in US taxes!


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## Cafreeb12

Peg said:


> Would love to see how much money they are wasting reviewing IRS forms and FBAR forms for honest tax-paying-in-their-country-of-residence US citizens who owe nothing in US taxes!


That's a great point!! The other thing that I find really objectionable is that the U.S. rewarded the big banks on Wall Street that committed FRAUD with huge bail outs and bonuses but, if we didn't know about an FBAR paper and still owed no taxes we're "tax cheats and criminals" Don't worry about how many man hours this is taking. The W.H. will come out and say that thanks to HIRE the government is putting people back to work going after "over seas tax cheats and criminals" That's exactly how this will be framed there. So see? Putting all of us through this will be spun as a good thing. Not one of our stories will make it in any news org there print or television. You can't tell me they didn't know and didn't do this on purpose to fund raise. It's not about "taxes"


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## Zaccheus

Peg: I just printed out the SE instructions today. There is a statement about "exceptions" on page 2 ... having to do with "social security" agreements. Actually re-reading columns one and two are very confusing. Hmmm. It states "Under these agreements, you must generally pay social security and Meidcare taxes to only the country you live in." There are phone numbers to call. Good heavens. Good luck.


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## Peg

Zaccheus said:


> Peg: I just printed out the SE instructions today. There is a statement about "exceptions" on page 2 ... having to do with "social security" agreements. Actually re-reading columns one and two are very confusing. Hmmm. It states "Under these agreements, you must generally pay social security and Meidcare taxes to only the country you live in." There are phone numbers to call. Good heavens. Good luck.


I read the same and did not think it applied because I did not pay CPP on my self-employment earnings. And I imagine that paying the $175 over the two years could be less work than getting statements from CRA...


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## Bevdeforges

Peg said:


> *Anyone know how to offset the Self-Employment tax? *
> 
> It is payable once self-employment earnings are over $400 (2006&2007). Mine is nominal at under $100 each year but it appears that I cannot offset my Foreign tax credit and therefore must pay it.
> 
> I am doing my forms squeaky clean so that they cannot come at me for anything...
> 
> If I cannot offset it, can I send in the forms and see if they ask for the $100? Or do I have to send it in??
> 
> The Self-employment tax for me is about 14% tax on top of regular IRS income taxes (which are all offset by foreign tax credit).


You should check through the instructions again (publication 54, in particular). I thought it has always been the case that if you are paying social insurances on your self-employment income in your country of residence then you do not owe self-employment tax (i.e. social security). From pub 54 (Chapter 3 Self-employment):

"As a general rule, self-employed persons who are subject to dual taxation will only be covered by the social security system of the country where they reside."

If you're covered where you live, you don't owe the tax to the US.
Cheers,
Bev


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## Peg

Bevdeforges said:


> You should check through the instructions again (publication 54, in particular). I thought it has always been the case that if you are paying social insurances on your self-employment income in your country of residence then you do not owe self-employment tax (i.e. social security). From pub 54 (Chapter 3 Self-employment):
> 
> "As a general rule, self-employed persons who are subject to dual taxation will only be covered by the social security system of the country where they reside."
> 
> If you're covered where you live, you don't owe the tax to the US.
> Cheers,
> Bev


Thanks Bev. While I do contribute to my Canada Pension Plan from my employment income, I did not do it for my self-employment income as it was piddly (under $1,000 each year as it was just a hobby). The instructions to the IRS Schedule SE say that "you generally pay social security to only the country you live in". plus: _If your self-employment income is exempt from SE tax, you should get a statement from the appropriate agency of the foreign country verifying that your self-employment income is subject to social security coverage in that country._

There is my dilemma: I did not pay CPP on those earnings yet I am renouncing in a month and will never claim social security. I don`t want to pay it to the IRS yet I just want this mess to go away! In the two years with self-employment earnings I used the foreign tax credit and still had plenty of 'credit' left over that would more than cover the SE tax if I was allowed to use it.

Oh, what a lovely way to spend a sunny day... :ranger:


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## Zaccheus

Peg: I am in a very similiar situation. Some SE (piddly) 2007. Other years SE (piddly) plus reg. Canadian employment. I tried calling IRS today regarding "the statement" required, but the gal is away until next week (Oct. 20)...her message offered another phone number in the meantime, only a message could be left (I didn't leave a message.) I will keep trying when home from work. The info. in the SE instruction sheet is very ambiguous regarding "Italy and Canada." Why the heck would they need a statement from Canada, when the whole world knows there are social insurances here? Please let us know if you find out anything more! Zaccheus.


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## Peg

Wonder if we pay into US Social Security and then renounce our citizenship if they would still pay us when we retire...

My problem is that I paid taxes but not CPP on my Self-Employment income --- I honestly do not know what they consider to be the Canadian equivalent of US Social Security payments. Since we can get an Old Age Pension does that just come from income taxes? And therefore I paid it with my SE??


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## Cafreeb12

Peg said:


> Wonder if we pay into US Social Security and then renounce our citizenship if they would still pay us when we retire...
> 
> My problem is that I paid taxes but not CPP on my Self-Employment income --- I honestly do not know what they consider to be the Canadian equivalent of US Social Security payments. Since we can get an Old Age Pension does that just come from income taxes? And therefore I paid it with my SE??



I don't know Peg, I hope someone can find the answer for you. I hadn't intended to collect Social Security and in fact never changed my name after marriage here on that. I was so young when I married and came to Canada I did not think I would qualify to collect SS anyway. I only paid into SIN not the U.S. system. I felt I had no right to the SSN anyway..hadn't planned to claim any because I only held a few jobs there until I was twenty and didn't think it was "right" to claim that money even if I could. What I get for my moral decision now is being framed as a "tax cheat" by the U.S. press.


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## Guest

Peg said:


> Wonder if we pay into US Social Security and then renounce our citizenship if they would still pay us when we retire...
> 
> My problem is that I paid taxes but not CPP on my Self-Employment income --- I honestly do not know what they consider to be the Canadian equivalent of US Social Security payments. Since we can get an Old Age Pension does that just come from income taxes? And therefore I paid it with my SE??


This may be helpful information...

Giving Up US Citizenship : Expat Info Desk
Relinquishing Citizenship and Passport Surrender : Relinquishing US Citizenship : 5 Common Misconceptions About Giving Up US Citizenship


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## 416

Calgary411 said:


> This may be helpful information...


This is useful. I would add 2(a), you're exempted from the exit tax if you became a citizen of another country at birth. 

Although USC born abroad aren't expatriates in any real sense.


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## Cafreeb12

Some of you might be interested in this FB page if you have FB, getting the word out to people who have never left the U.S. and who just don't get it is easier on FB where all your contacts can see what is going on with your page and the groups you joined.
Log In | Facebook


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## Cafreeb12

SignOn.org Beta This petition requires fifty signatures to go to the POTUS. Please sign it and pass it along to other forums on here if you can. They are two short. Read the stories on there too. It sounds like a litany of oppression to me. Someone in Malaysia on a pension...people like us here. I may forward that list of stories to someone like Amy Goodman.

Also, this site is getting some attention from those who could raise the profile on this issue. Is there *with all due respect to the OP* a way to change the title of the thread with regards to "too lazy to file" Nearly all of us owed no U.S. taxes and didn't even know we needed to file in a such a case. I just heard about it recently and the FBAR even more recently. I think the title gives the impression we didn't file on purpose and I don't think that represents the majority here. It certainly would help to gain media understanding and empathy from fellow citizens not in this situation and not living outside the U.S. Thanks!


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## Guest

Cafreeb12 said:


> SignOn.org Beta
> Also, this site is getting some attention from those who could raise the profile on this issue. Is there *with all due respect to the OP* a way to change the title of the thread with regards to "too lazy to file" Nearly all of us owed no U.S. taxes and didn't even know we needed to file in a such a case. I just heard about it recently and the FBAR even more recently. I think the title gives the impression we didn't file on purpose and I don't think that represents the majority here. It certainly would help to gain media understanding and empathy from fellow citizens not in this situation and not living outside the U.S. Thanks!


Couldn't agree more. :clap2::clap2::clap2: No one on this thread is lazy; everyone I've read pays taxes (at higher rates than in the US) to Canada. It is medieval, I'm tempted to say neo-Nazi, certainly comparable to what the US colonists claimed the Brits were doing to them in 1776, for the US to be going after the life savings and incomes of people who don't live in the US and haven't earned a cent of income in the US for years, in some cases decades, and many of whom don't consider themselves Americans no matter what the overpaid Washington lawyers and congress folks say and think.

PLEASE change the heading, or maybe start a new thread and migrate all the posts over there. The heading is an insult to most of us, probably all of us, who are posting on this thread.


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## Cafreeb12

Schubert said:


> Couldn't agree more. :clap2::clap2::clap2: No one on this thread is lazy; everyone I've read pays taxes (at higher rates than in the US) to Canada. It is medieval, I'm tempted to say neo-Nazi, certainly comparable to what the US colonists claimed the Brits were doing to them in 1776, for the US to be going after the life savings and incomes of people who don't live in the US and haven't earned a cent of income in the US for years, in some cases decades, and many of whom don't consider themselves Americans no matter what the overpaid Washington lawyers and congress folks say and think.
> 
> PLEASE change the heading, or maybe start a new thread and migrate all the posts over there. The heading is an insult to most of us, probably all of us, who are posting on this thread.



Yes, the U.S. press has demonized us especially since 1996 and now it's so much worse it's bizarre and Orwellian. Maybe they can round us all up after having demonized us like they did the Japanese. I put nothing past them given the way they have sold and marketed this "Hire" legislation without regard for any truth whatsoever. I also think it would be helpful to tell the story of your family when speaking to press. I mean your AMERICAN family. My family was in the U.S. since the revolution, has worked for women's rights *my g.g. was a suffragist who got beaten for her efforts and wrote every day to President Kennedy in her old age, he wrote her back too*, civil rights, we lived in Memphis when Dr. King was there, served in the military, heads of the DAV for our state..and on and on. For me to be called a criminal and a tax cheat by my own country is beyond the pale here. ALL so they can cover their butts while pulling the real *wool* outcome of this legislation over the eyes of the American public. And they call us cheats? As I said Orwellian indeed. :boxing:


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## Peg

At a NHL game tonight I could not bring myself to sing the US anthem. I proudly sang Oh Canada!


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## Mona Lisa76




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## Bevdeforges

OK - it took a little fancy footwork, but I've managed to change the thread header for you all. Also had to cut the reproduction of the page from another website. Links are ok, but to reproduce something in full like that runs into copyright issues for the forum owner here. (Actually, copyright is another one of those issues where the US tends to run roughshod over everyone else in the world, too. It's not just expats they're "after" - or so it seems.)

"Going after" non-residents is a long-established terror tactic for the IRS (and other US government agencies). It's easy for them because non-residents don't vote, don't contribute to political campaigns and these days, aren't joining the Tea Party or any of the other noisy groups who like to hi-jack the news.

Though they talk big, they don't really have the time, the money or the manpower to actually seize assets or prosecute overseas residents for these overreaching laws they like to pass. For those without big investments overseas, laying low may be the simplest and easiest approach - though the matter of banks overseas "refusing" to open accounts for those with US passports is more than an inconvenience. I'm not going to criticize anyone for taking what they feel to be appropriate measures to protect themselves and their families from what is clearly OTT zealotry on the part of the US government. But you may want to consider passive resistance before you take the big step of renunciation.
Cheers,
Bev


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## Cafreeb12

Thank you Bev! That's wonderful!


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## AmTaker

Bevdeforges said:


> "Going after" non-residents is a long-established terror tactic for the IRS (and other US government agencies). It's easy for them because non-residents don't vote, don't contribute to political campaigns and these days, aren't joining the Tea Party or any of the other noisy groups who like to hi-jack the news.
> 
> Though they talk big, they don't really have the time, the money or the manpower to actually seize assets or prosecute overseas residents for these overreaching laws they like to pass. For those without big investments overseas, laying low may be the simplest and easiest approach - though the matter of banks overseas "refusing" to open accounts for those with US passports is more than an inconvenience. I'm not going to criticize anyone for taking what they feel to be appropriate measures to protect themselves and their families from what is clearly OTT zealotry on the part of the US government. But you may want to consider passive resistance before you take the big step of renunciation.
> Cheers,
> Bev


 I also think the 'threat' for long term expats is greatly exaggerated. I have not heard to date of a single prosecution of a long term expat (excluding big time tax evaders who take residence in tax havens). I doubt there are even many civil audits of long term overseas expats (excluding those with US source income, but undisclosed foreign income on non US assets etc.).


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## CanadianHoosier

AmTaker said:


> I also think the 'threat' for long term expats is greatly exaggerated.


I respect your opinion and I hope for all of us that you are correct. 

However...

I have gained considerable knowledge and comfort from the information gathered thru this forum and related posts. I don't think me and the missus are gonna have our retirement plans mauled by the IRS anymore.

Yet I am not convinced that the "threat" is greatly exaggerated. I have no idea what the likes of Carl Levin and Timothy Geitner might do next week.

Additional taxes on top of what I've paid in Canada is irksome to say the least.

Giving detailed financial information on myself and my wife to the US is the "shot across the bow" that convinces me that this abuse will continue.

FATCA reinforces that belief and the "threat".


----------



## justbrowsing

CanadianHoosier said:


> I respect your opinion and I hope for all of us that you are correct.
> 
> However...
> 
> I have gained considerable knowledge and comfort from the information gathered thru this forum and related posts. I don't think me and the missus are gonna have our retirement plans mauled by the IRS anymore.
> 
> Yet I am not convinced that the "threat" is greatly exaggerated. I have no idea what the likes of Carl Levin and Timothy Geitner might do next week.
> 
> Additional taxes on top of what I've paid in Canada is irksome to say the least.
> 
> Giving detailed financial information on myself and my wife to the US is the "shot across the bow" that convinces me that this abuse will continue.
> 
> FATCA reinforces that belief and the "threat".


With no desire to live or work in the US, and having lived in Canada for 45 years, the added complexity and unknown future plans of the irs made the decision for renunciation pretty clear for me. I too, am not convinced the threat is greatly exaggerated.


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## Mona Lisa76

AmTaker said:


> I also think the 'threat' for long term expats is greatly exaggerated. I have not heard to date of a single prosecution of a long term expat (excluding big time tax evaders who take residence in tax havens). I doubt there are even many civil audits of long term overseas expats (excluding those with US source income, but undisclosed foreign income on non US assets etc.).


The more I sniff around, the more I believe both you and Bev...I have done much soul searching (and despite even having my family's tacit blessing to renounce), there is an irrational part of me that simply can't bear to go through with it.

If I become a martyer, then so be it; but I've concluded that there has to still be a degree of trust in the system. It should suffice that I have made a complete disclosure and am doing all I humanly can to be fully compliant going forward...have paid back all I owe, will budget probably a couple thousand pounds per year for the rest of my life for my specialized expat accountant.

The way I see it is this: no one made me come to England; I chose to make a new life there but while the UK is the love of my life, the USA is nonetheless my mother and thus 'blood will always be thicker than water'. I screwed up with my negligence and am doing all I can to put it right...though I am enraged, I nonetheless feel it is my duty to fully comply and pay if need be...but I also would like to think there's still a bit of common decency left over there (of which I think there still is).


Perhaps part of why I feel as I do happens to be because my mother's father had served as the Chief Judge of the US Tax Court and he was a thoroughly honorable man...and through his legacy, I have inherited an obligation to be honourable too. In his memory...

I signed the petition though and have uploaded to FB, etc. I truly empathize with the Canadian accidental Americans, especially due to all the fear this has caused


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## Guest

*IRS Email Tax Law Assistance (OR NOT)*



Bevdeforges said:


> OK - it took a little fancy footwork, but I've managed to change the thread header for you all.


Thanks for your work on this, Bev. That is more respectful title for this thread.

Thought I would pass this along: I just got this message from the IRS EMail Tax Law Assistance...

There should be someone in the IRS U.S. expats are able to get "expert" answers from in making life-impacting decisions. To be safe, at least for the questions I ask, I need to hire professional help. This is cost-prohibitive for many / most.

_From: [email protected] 
Sent: Tuesday, October 18, 2011 8:18 AM 
Subject: IRS Email Tax Law Assistance 




NOTE: Thank you for your inquiry. Our response to your tax law question appears below. I hope this information has been helpful. If you have a follow-up question or another general tax law question, please return to our web site at: Internal Revenue Service. 

Please do not use your "reply" button to respond to this message. More helpful information is provided at the end of this message.


Your Question Was:
In determining if I DO NOT meet the qualifications for the EXIT TAX if I renounce my U.S. citizenship, how are the following valued?

1)The value of my home (gain since purchase?)

2)The value of my Canadian Defined Benefit Company Pension (present value or a value in the future?)

Thanks very much for this needed information.


The Answer To Your Question Is:
Thank you for your inquiry of October 13, 2011. 

Unfortunately, your question regarding the valuation of assets for the purposes of determining your responsibilities regarding expatriation is beyond the scope of the service we intend to provide, due to its highly complex nature. The Internal Revenue Service's tax law service is intended to work in partnership with the professional tax preparation community. Thus, we refer taxpayers to that resource when their questions involve complex issues and situations. You may want to seek the services of a tax attorney, certified public accountant or other tax professional. You may also find assistance in Publication 519, U.S. Tax Guide For Aliens, and in the instructions for Form 8854, Initial and Annual Expatriation Statement. We're sorry for the inconvenience. 

You can find all U.S. forms and publications on our website Internal Revenue Service. If you need further clarification of these questions or you would like to ask additional questions you can submit another email or you can call the international help line Monday through Friday, at 267-941-1000 from 6:00 am to 11:00 pm EDT. This is a toll call. From inside the U.S. you can call 1-800-829-1040.
We hope this answer is helpful to you. Thank you for using our service. 



IRS forms and publications may be accessed on our web site at the following address: Internal Revenue Service or ordered through our toll-free forms line at: 800-829-3676
Expect delivery within 10 business days.

Other useful toll-free numbers include:
800-829-1040 IRS Tax Help Line for Individuals
800-829-4933 Business and Specialty Tax Help Line
800-829-1954 Refund Hotline
866-562-5227 Disaster Relief Toll-Free Number, Monday 
through Friday, 7 am to 10:00 pm local time

We are interested in your opinion and providing the best possible service to you. Please take a moment to answer our survey at: Customer Satisfaction Survey

This answer is based on our understanding of the facts you presented in your question. Omission of facts may affect the answer given. 

Here's a tip for navigating the IRS web site. Use the "search" button at the right side of the web page. Enter key words or phrases for your topic in the entry box. 

For security reasons and to protect taxpayer privacy, the IRS does not address taxpayer account-related issues for which personal, identifying information would be needed through e-mail. 

Our basic Electronic Tax Law Assistance service is designed to assist the general public in complying with their Federal tax obligations by helping them with questions they have about the tax law and procedural issues. Our goal is to provide complete and accurate responses to as many taxpayers as possible. 

If you have additional questions, you may contact us either by phone at 1-800-829-1040 or by email through our web site Internal Revenue Service.


EMPLOYEE ID: 1000198461 Mr. Cahill Tel.:English--(267) 941-1000 Spanish--(800)-829-1040 msg#: 1860903_


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## Guest

_*"The Answer To Your Question Is:
Thank you for your inquiry of October 13, 2011. 

Unfortunately, your question regarding the valuation of assets for the purposes of determining your responsibilities regarding expatriation is beyond the scope of the service we intend to provide, due to its highly complex nature."*_

Thanks, Calgary411, for sharing that response with us. I was given a similar response when I called the IRS (long distance charges applied, of course, since there is no toll-free from here) with a question regarding Form 1116 - Foreign Tax Credit. I was told by the agent on the phone that "we don't get involved with that Form because it is too complicated." I asked who would be able to help me and was then told "probably no one, you'll have to work it out for yourself." Simply unbelievable. What hope do we have if the IRS can't figure it out? I forwarded the agent's number and response to the taxpayer's advocate, but haven't heard a peep from them. Guess they don't have a clue either.

I've noted the lull in the media about this issue and the lack of any new information or comments (other than on this website). Don't know what to make of it, but given the sense of impending doom and paranoia we now live with, it doesn't feel good.


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## justbrowsing

Yup, just got off the phone and all of the questions I asked were met with a reading of the "too complex for us to answer on the phone" response. The suggestion, as you were told, was to keep browsing the irs web site or hire someone. That is really frustrating and a waste of time since the questions were pretty basic.


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## Cafreeb12

Mona Lisa76 said:


> The more I sniff around, the more I believe both you and Bev...I have done much soul searching (and despite even having my family's tacit blessing to renounce), there is an irrational part of me that simply can't bear to go through with it.
> 
> If I become a martyer, then so be it; but I've concluded that there has to still be a degree of trust in the system. It should suffice that I have made a complete disclosure and am doing all I humanly can to be fully compliant going forward...have paid back all I owe, will budget probably a couple thousand pounds per year for the rest of my life for my specialized expat accountant.
> 
> The way I see it is this: no one made me come to England; I chose to make a new life there but while the UK is the love of my life, the USA is nonetheless my mother and thus 'blood will always be thicker than water'. I screwed up with my negligence and am doing all I can to put it right...though I am enraged, I nonetheless feel it is my duty to fully comply and pay if need be...but I also would like to think there's still a bit of common decency left over there (of which I think there still is).
> 
> 
> Perhaps part of why I feel as I do happens to be because my mother's father had served as the Chief Judge of the US Tax Court and he was a thoroughly honorable man...and through his legacy, I have inherited an obligation to be honourable too. In his memory...
> 
> I signed the petition though and have uploaded to FB, etc. I truly empathize with the Canadian accidental Americans, especially due to all the fear this has caused


Indeed this is a highly individual and personal decision. In my case I really didn't "choose" Canada so much as come here so my husband would not be thousands of miles away from his very ill and elderly parents. As it turned out his mother lived a very long time and his father did not but, at that time my parents were twenty years younger than his. It's not so much no one made me move here, as I made a moral choice then and could not have lived with myself had I done otherwise. Further, I don't have two thousand a year to budget so rather feel forced into this and my personal level of trust for the treasury dept who did a pretty shady deal for banks with TARP and then turned around and did this to all of us, it practically nil. I really put nothing past them now and even if I did have a level of trust left, I could not afford what they are requiring. My husband objects to having his personal life gone through by U.S. authorities and god knows going forward I can't afford to have them going after our one measly RRSP. We're barely going to make it as it is and will have to move from where we live now to manage. I'm glad some do feel they are forced to renounce but, in some cases we just don't have that much leeway with regard to family or finances. If I had any faith that some of this would be scaled back to target only those who are criminals then I'd give it some time but, as it is regarding how treasury has behaved in many matters in the last few years, I cannot see them being fair or honest.


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## Cafreeb12

justbrowsing said:


> Yup, just got off the phone and all of the questions I asked were met with a reading of the "too complex for us to answer on the phone" response. The suggestion, as you were told, was to keep browsing the irs web site or hire someone. That is really frustrating and a waste of time since the questions were pretty basic.


They're not going to advise or help us to do this or anything else. We don't matter period. Then when we fill that form out "wrong" somehow they will determine we are still "American for tax purposes" for the ten years instead of letting us go.


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## Mona Lisa76

CanadianAtHeart said:


> _*"The Answer To Your Question Is:
> Thank you for your inquiry of October 13, 2011.
> 
> Unfortunately, your question regarding the valuation of assets for the purposes of determining your responsibilities regarding expatriation is beyond the scope of the service we intend to provide, due to its highly complex nature."*_
> 
> Thanks, Calgary411, for sharing that response with us. I was given a similar response when I called the IRS (long distance charges applied, of course, since there is no toll-free from here) with a question regarding Form 1116 - Foreign Tax Credit. I was told by the agent on the phone that "we don't get involved with that Form because it is too complicated." I asked who would be able to help me and was then told "probably no one, you'll have to work it out for yourself." Simply unbelievable. What hope do we have if the IRS can't figure it out? I forwarded the agent's number and response to the taxpayer's advocate, but haven't heard a peep from them. Guess they don't have a clue either.
> 
> I've noted the lull in the media about this issue and the lack of any new information or comments (other than on this website). Don't know what to make of it, but given the sense of impending doom and paranoia we now live with, it doesn't feel good.


It utterly stinks how we're forced by default into relying on professionals. I was fortunately able to pay for specialized help but realize many here can't (or won't on principle). To say I feel bitterly angry is an understatement but all I can pray for is that they will show some compassion. i can honestly say I wouldn't blame Canada from wanting to declare war over this...scary times indeed

But all I can say is that it has been implied to me that people like us will not be clobbered. They are more likely pointing out their nuclear option. Have never heard of a single American over here in aLondon being directly hassledby them...they just want us to file and report everything properly.


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## Guest

Bevdeforges said:


> OK - it took a little fancy footwork, but I've managed to change the thread header for you all.


Thanks Bev. It's really nice to find a website where the moderators and webmasters actually listen to the posters and respond appropriately. :clap2:


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## Guest

Mona Lisa76 said:


> It utterly stinks how we're forced by default into relying on professionals. I was fortunately able to pay for specialized help but realize many here can't (or won't on principle). To say I feel bitterly angry is an understatement but all I can pray for is that they will show some compassion. i can honestly say I wouldn't blame Canada from wanting to declare war over this...scary times indeed
> 
> But all I can say is that it has been implied to me that people like us will not be clobbered. They are more likely pointing out their nuclear option. Have never heard of a single American over here in aLondon being directly hassledby them...they just want us to file and report everything properly.


Hi MonaLisa76!
Yes, indeed, it is my objective to file and report everything properly until such time as that will no longer apply. However, it would seem, we don't have a snowball's chance in you-know-where of being able to file properly because the IRS cannot even provide clarification. Unfortunately, tax layers, accountants, and professionals are faced with the same lack of clarity, lack of support and information, despite the IRS directing us to use these expensive options. I'm not sure where we go from here, or if there is even anywhere we can go. Clearly, the information is being amassed for some purpose, since the U.S. is willing to risk the ire of the world through implementing FATCA on top of everything else they have already done. And whether or not we are targets or merely collateral damage, the results will be the same. I have also contacted my bank with regards to FATCA, especially the reporting requirements for Canadian-only citizens caught in joint-account situations, and the possible closing of accounts held by U.S. Permanent Residents or Dual citizens. Their response? Similar to the IRS, in that it is too complicated right now for them to provide any information or comments. Yikes!


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## AmTaker

Calgary411 said:


> Your Question Was:
> In determining if I DO NOT meet the qualifications for the EXIT TAX if I renounce my U.S. citizenship, how are the following valued?
> 
> 1)The value of my home (gain since purchase?)
> 
> 2)The value of my Canadian Defined Benefit Company Pension (present value or a value in the future?)


1) no, its the total value of the home. However, if you are covered, then you have to do a mark to market calculation of gain and then exclude 600K, so even if covered, you would not pay any tax on the gain. 

2) This is quite complicated. I think you need to do a calculation of the present value of accrued benefit for defined benefit plans. I saw an IRS revenue procedure describing how to do this in detail. I haven't gone over the procedure in detail, because I know I'm 'covered'.


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## Guest

Bevdeforges said:


> Though they talk big, they don't really have the time, the money or the manpower to actually seize assets or prosecute overseas residents for these overreaching laws they like to pass. For those without big investments overseas, laying low may be the simplest and easiest approach - though the matter of banks overseas "refusing" to open accounts for those with US passports is more than an inconvenience. I'm not going to criticize anyone for taking what they feel to be appropriate measures to protect themselves and their families from what is clearly OTT zealotry on the part of the US government. But you may want to consider passive resistance before you take the big step of renunciation.
> Cheers,
> Bev




I appreciate that there are those who for financial or family reasons wish to continue to cross the border into the US. Even at the risk of losing half or more of their life savings if the IRS actually were to hit them with all the penalties they have on the books.

For those of you who never care if you set foot again inside that train-wreck of a country south of our border, bear in mind that none of these penalties or reporting requirements are enforceable on Canadian soil. The IRS has no jurisdiction in our country. There is a Canada-US tax treaty. As two cross-border experts have said in print on the Financial Post website, see below, none of this is enforceable under that treaty. 
Americans in Canada: Q and A | News | Financial Post

I don’t recommend trying to read the treaty text itself, it’s written by lawyers for lawyers and almost makes the IRS instruction forms look like a model of concise and clear English prose, it’s that bad. Here’s the link if you want it.
Convention Between Canada and the United States of America*With Respect to Taxes on Income and on Capital
There is a slightly more recent version that incorporates a couple of minor changes, but it’s even harder to read and navigate because the chapter headings tell you absolutely nothing about the chapter contents. Whoever wrote that latest version should be taken out into a field somewhere and shot, to put the rest of humanity out of his misery.

In my non-legal interpretation, here are the key points to bear in mind in the treaty. All of the following explain why even Canada Revenue Agency officials have stated in public they won’t enforce any of this IRS nonsense on our soil, particularly not against Canadian citizens.

First off, the treaty says that any enforcement actions in Canada with respect to US taxes can only be conducted by Canada (CRA) at US request and consistenly with the articles in the treaty.

See Article 25, which says essentially that Canada can’t be compelled by the US to enforce taxes or penalties against Canadians that are more burdensome than the taxes or penalties that would be enforced against Americans or anyone else living in the US.

Article 26a explicitly says that CRA can’t be compelled to collect anything for the IRS if the tax liability was incurred by someone who lives in Canada and was a Canadian citizen at the time the alleged liability was incurred. That means if you became a Canadian citizen before 2003, which is as far back as IRS can go under FATCA and FBAR, they can’t lay a finger on you in Canada.

Article 27 says that Canada can’t be compelled to collect and report information that would not otherwise be obtainable under Canada’s privacy laws and other legislation. The Privacy Act essentially says your bank can’t provide account information to anyone other than CRA without your written permission. Article 27 also says essentially that in collecting information or conducting enforcement actions, Canada can’t be compelled to act in any administrative way that contradicts or contravenes Canadian law or normal administrative practices in Canada.

Another Article, I forget which but it’s there, says that any disputes over the interpretation of the treaty with respect to any individual must be held before a tribunal in the individual’s country of residence. Both countries have a person on the tribunal, if they can’t agree, it goes to binding arbitration by someone they both pick. I’d argue, not sure how successfully, that Article 8 of the Charter of Rights and Freedoms entitles me to a fair public trial before an impartial tribunal, and any tribunal containing an IRS representative or someone selected with IRS consent is not impartial and violates my charter rights, so I want my case heard in Canadian federal court before a Canadian judge who is not a dual citizen with any other country whatsoever.

I could go on, but I think you and CRA get the point. If you have doubts and are already paying a lawyer to go over your options with you, I suggest you point the lawyer to the above treaty website and ask him/her to have an articling clerk figure out what the latest badly-organized and badly-written update says, if anything, that contradicts the above points.

Guess why the IRS is going to pressure Canadian banks to provide account information to them directly, end-running our government and our sovereignty, on the threat of confiscation of the banks’ US assets if they don’t comply? Because that’s the only way they can possibly get your account information, the Government of Canada can’t legally collect it for them and give it to them, unless Parliament changes the law or our government signs a treasonous sell-out modification to the treaty. (Keep your eyes peeled, I don’t trust Stephen Harper much more than I trust the IRS; however, so far anyway I have more trust in Jim Flaherty.)

Even if the IRS gets your account info from the bank, they can’t collect directly from the bank if it’s on Canadian soil and your accounts are all in Canada. They can’t collect from you if you don’t set foot on US soil and are prepared to be denied entry into the US if you are a US citizen and not travelling on a US passport. To get or renew a passport I believe you now have to certify you’re paid up with IRS, or at least provide your SSN and TIN on your passport application form. (Actually, if IRS had half a brain in their collective heads, they’d go after overseas US citizens via their passports not via their bank accounts, it will have the same net effect on anyone who wishes to retain US citizenship, without creating diplomatic furor over foreign attacks on banks and violating other countries’ sovereignty. Not to mention making US citizens living in certain countries pariahs in the eyes of the local banks, unable to open or keep an account with the bank. Including legitimate business people trying to run a US-citizen-owned business overseas to help exapnd America's economy and reach abroad. As I said in another post, this is an utter gong show; whoever advised somebody on the design of these programs needs to have his/her head sharply shaken.)

Enough ranting from me. Think about the above and bear it in mind, use it as you see fit. God Bless, and don't let the b******s grind you down. Grind them down instead.:boxing:


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## AmTaker

AmTaker said:


> 1) no, its the total value of the home. However, if you are covered, then you have to do a mark to market calculation of gain and then exclude 600K, so even if covered, you would not pay any tax on the gain.
> 
> 2) This is quite complicated. I think you need to do a calculation of the present value of accrued benefit for defined benefit plans. I saw an IRS revenue procedure describing how to do this in detail. I haven't gone over the procedure in detail, because I know I'm 'covered'.


For 1), I meant, you would pay MTM tax ONLY on the gain.


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## Guest

AmTaker said:


> 1) no, its the total value of the home. However, if you are covered, then you have to do a mark to market calculation of gain and then exclude 600K, so even if covered, you would not pay any tax on the gain.
> 
> 2) This is quite complicated. I think you need to do a calculation of the present value of accrued benefit for defined benefit plans. I saw an IRS revenue procedure describing how to do this in detail. I haven't gone over the procedure in detail, because I know I'm 'covered'.


Thanks for this information that athe IRS "help" people could not provide! 

I want to meet the qualifications to be NOT COVERED and be able to relinquish my U.S. citizenship (once again) as I don't meet the other two qualifications to be COVERED for the exit tax. And, hopefully, my adult children will qualify under the exemptions. How much healthier it would be for my family to be ONLY the proud Canadians I became and they are by birth. It would greatly simplify our lives and allow us to live without the nightmare the U.S. has given to expats. 

I am prepared to deal with crossing-the-border issues that might arise, but I am not prepared to deal with the uncertainty of what future legislation the U.S. will dream up and the insane administrative obligations for the rest of my life / and that of any executor having to deal with these issues after I'm gone.


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## Mona Lisa76

CanadianAtHeart said:


> Hi MonaLisa76!
> Yes, indeed, it is my objective to file and report everything properly until such time as that will no longer apply. However, it would seem, we don't have a snowball's chance in you-know-where of being able to file properly because the IRS cannot even provide clarification. Unfortunately, tax layers, accountants, and professionals are faced with the same lack of clarity, lack of support and information, despite the IRS directing us to use these expensive options. I'm not sure where we go from here, or if there is even anywhere we can go. Clearly, the information is being amassed for some purpose, since the U.S. is willing to risk the ire of the world through implementing FATCA on top of everything else they have already done. And whether or not we are targets or merely collateral damage, the results will be the same. I have also contacted my bank with regards to FATCA, especially the reporting requirements for Canadian-only citizens caught in joint-account situations, and the possible closing of accounts held by U.S. Permanent Residents or Dual citizens. Their response? Similar to the IRS, in that it is too complicated right now for them to provide any information or comments. Yikes!


The more I think about all this, the more hopeful I feel. When in a grey issue, they will have to give to give the filer the 'benefit of the doubt' because it would only take a few court cases to determine that the fines in question were unconstitutional. I am a lot more optimistic as a result. America is still ultimately a force for good even if it's thuggish at times. I have my family's honour at stake here; I will not forsake my country.

I am indeed an anomaly because I swore allegience to the Queen. If pushed into a corner, I will defend Her Majesty, for they may regard me as an abomination though I am still more optimistic that a lot of it is bluff.


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## 416

U.S. ambassador ‘sympathetic’ to Canadians affected by tax crackdown - The Globe and Mail



> The U.S. ambassador to Canada is vowing to find a way to “accommodate” the thousands of Canadians caught up in a tax crackdown on Americans who stash their money offshore.
> 
> David Jacobson said he and the head of U.S. Internal Revenue Service are “sympathetic” to the plight of the many Canadians unwittingly caught up in the U.S. sweep.
> 
> “My message on this one is to sit tight,” Mr. Jacobson said in remarks prepared for a speech to the Canadian Club of Ottawa Tuesday. “We are not unreasonable. We are not unsympathetic. We are not irresponsible.”


Rest at the link.


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## 416

I wonder if "My message on this one is to sit tight" is code for "Don't renounce until you see how this plays out."


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## 416

And here's the whole thing:

18 October 2011: Ambassador Jacobson's Remarks To The Canadian Club | Embassy of the United States Ottawa, Canada


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## Mona Lisa76

CanadianAtHeart said:


> Hi MonaLisa76!
> Yes, indeed, it is my objective to file and report everything properly until such time as that will no longer apply. However, it would seem, we don't have a snowball's chance in you-know-where of being able to file properly because the IRS cannot even provide clarification. Unfortunately, tax layers, accountants, and professionals are faced with the same lack of clarity, lack of support and information, despite the IRS directing us to use these expensive options. I'm not sure where we go from here, or if there is even anywhere we can go. Clearly, the information is being amassed for some purpose, since the U.S. is willing to risk the ire of the world through implementing FATCA on top of everything else they have already done. And whether or not we are targets or merely collateral damage, the results will be the same. I have also contacted my bank with regards to FATCA, especially the reporting requirements for Canadian-only citizens caught in joint-account situations, and the possible closing of accounts held by U.S. Permanent Residents or Dual citizens. Their response? Similar to the IRS, in that it is too complicated right now for them to provide any information or comments. Yikes!


The more I think about all this, the more hopeful I feel. When in a grey issue, they will have to give to give the filer the 'benefit of the doubt' because it would only take a few court cases to determine that the fines in question were unconstitutional. I am a lot more optimistic as a result. America is still ultimately a force for good even if it's thuggish at times. I have my family's honour at stake here; I will not forsake my country.

I am indeed an anomaly because I swore allegience to the Queen. If pushed into a corner, I will defend Her Majesty, for they may regard me as an abomination though I am still more optimistic that a lot of it is bluff.


----------



## Guest

AmTaker said:


> 2) This is quite complicated. I think you need to do a calculation of the present value of accrued benefit for defined benefit plans. I saw an IRS revenue procedure describing how to do this in detail. I haven't gone over the procedure in detail, because I know I'm 'covered'.


I haven't paid any attention to FBAR or FATCA details because as someone who is no longer a US citizen it doesn't affect me personally. But am I reading this correctly? Does this present-value for defined benefit plans include public sector as well as private sector? If so, that means any US-born Canadian citizen who is living on a public service pension, or a Canadian military pension, or an RCMP pension, and who doesn't have a certificate of loss of nationality, has to pay penalties on that pension?

Maybe my government doesn't consider this grounds for a declaration of war, but I do.lane: If it's true. That's money owing to Canadian servants of the Canadian public, paid out of Canadian tax dollars. The IRS and by extension US citizens should have no rights to one penny of that money. Dual citizenship or no. To hell with that.:boxing:

(Personally I don't think dual citizens of any country have any business in my public service, armed forces, police or judiciary, because if they do, how do I know where their ultimate loyalty will lie in case of any sort of conflict between the two countries. But that's another issue. Though it is one of many reasons why I relinquished my US citizenship by becoming a Canadian, before joining the federal public service in this country, from which I'm now retired. And there's no way in hades I'll ever surrender one penny of my pension to the US.)


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## Guest

416 said:


> I wonder if "My message on this one is to sit tight" is code for "Don't renounce until you see how this plays out."


My interpretation of the code, whether or not it's his, would also be "don't file anything or pay a cent until you see how this plays out." Particularly if you talked yourself into or got suckered into filing under OVDI ... if there's any way of opting out of that now with ruining yourself, consider it. Or at least, drag out the paperwork and delay all filing and replies to follow-up calls from the IRS as long as you possibly can. Don't answer your phone, take your time returning messages, ... And if you haven't started filing yet, DON'T.

Hey, you're only following the official, public advice of the US Ambassador to Canada. The Fearless Leader of Americans in Canada has spoken. Aye, ready sir! Yessir! 

Remember that if anyone in IRS complains about why you aren't more forthcoming.:boxing: And if he didn't mean that, it's his problem not yours.:clap2:

Peg, and others on this board who did file under OVDI: think about quoting this speech to your IRS contact and asking them to suspend any further actions on your case until the Ambassador, preferably jointly with our Finance Minister, declares some kind of compromise or victory of common sense over bureaucratic zealotry, in the press.


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## Mona Lisa76

I quietly suspect that the IRS are not that evil; it's the damn media and tax attorneys/accountants who make a living from our vulnerability...but the fact is, they're all in bed with each other. One has to have one's wits about her to ascertain what is really being said...I'm just so glad I held off and didn't fall for the OVDI trap, though am more hopeful that the Tax Advocate will look after people such as Peg who unwittingly entered into the programme.

I think something will be worked out.


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## Guest

Schubert said:


> I haven't paid any attention to FBAR or FATCA details because as someone who is no longer a US citizen it doesn't affect me personally. But am I reading this correctly? Does this present-value for defined benefit plans include public sector as well as private sector? If so, that means any US-born Canadian citizen who is living on a public service pension, or a Canadian military pension, or an RCMP pension, and who doesn't have a certificate of loss of nationality, has to pay penalties on that pension?


I'll as my tax account tomorrow. Why can't the IRS communicate these things to us in plain English (and/or French) or have someone to answer relevenat questions? Why, why, why??? And, no, they should not be able to glom onto any kinds of pension earned in another country that is meant to see us through our later years. We are not in the continental U.S. to collect Medicare or any type of pension there.


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## Guest

Haste makes waste. I'll ASK my tax accountANT tomorrow when I shell out some more dough.


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## AmTaker

Schubert said:


> I haven't paid any attention to FBAR or FATCA details because as someone who is no longer a US citizen it doesn't affect me personally. But am I reading this correctly? Does this present-value for defined benefit plans include public sector as well as private sector? If so, that means any US-born Canadian citizen who is living on a public service pension, or a Canadian military pension, or an RCMP pension, and who doesn't have a certificate of loss of nationality, has to pay penalties on that pension?



This is not about FBAR or FATCA. The question was about estimating current value of defined benefit pension plans for the purposes of determining whether one is a 'covered' expatriate.


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## Guest

Schubert said:


> My interpretation of the code, whether or not it's his, would also be "don't file anything or pay a cent until you see how this plays out." Particularly if you talked yourself into or got suckered into filing under OVDI ... if there's any way of opting out of that now with ruining yourself, consider it. Or at least, drag out the paperwork and delay all filing and replies to follow-up calls from the IRS as long as you possibly can. Don't answer your phone, take your time returning messages, ... And if you haven't started filing yet, DON'T.
> 
> Hey, you're only following the official, public advice of the US Ambassador to Canada. The Fearless Leader of Americans in Canada has spoken. Aye, ready sir! Yessir!
> 
> Remember that if anyone in IRS complains about why you aren't more forthcoming.:boxing: And if he didn't mean that, it's his problem not yours.:clap2:
> 
> Peg, and others on this board who did file under OVDI: think about quoting this speech to your IRS contact and asking them to suspend any further actions on your case until the Ambassador, preferably jointly with our Finance Minister, declares some kind of compromise or victory of common sense over bureaucratic zealotry, in the press.


My edit time limit expired, so I'm adding this:

Peg, and others on this board who did file under OVDI: think about quoting this speech to your IRS contact and asking them to suspend any further actions on your case until the Ambassador, preferably jointly with our Finance Minister, declares some kind of compromise or victory of common sense over bureaucratic zealotry, in the press. The Ambassador says the head of the IRS shares his sympathy (boy have I got prime swamp real estate to sell you with that one ...) -- that's your IRS' contact's boss. Yoo hoo. Your boss is quoted by our ambassador saying we should sit tight, doesn't that mean your IRS goons should also sit tight until this gets sorted out?

Go for it. What is there for you to lose at this point?:boxing:

(see why my union brothers and sisters kept electing me to our union's national executive?)


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## Guest

AmTaker said:


> This is not about FBAR or FATCA. The question was about estimating current value of defined benefit pension plans for the purposes of determining whether one is a 'covered' expatriate.


In my opinion that makes no difference. It's still none of their damn business.:boxing: But then I'm not filing and don't have to, so that's easier for me to say. But I still believe it.


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## Guest

416 said:


> And here's the whole thing:
> 
> 18 October 2011: Ambassador Jacobson's Remarks To The Canadian Club | Embassy of the United States Ottawa, Canada


For those of you who, like me, have become extremely disgusted and disappointed in the quality of CBC News coverage of late, check out the CBC's coverage of Ambassador Jacobson's speech:
'Buy American' good for Canada, U.S. envoy says - Politics - CBC News

Don't hurt your eyes looking for any mention of the FATCA/FBAR/HIRE extravaganza nor of what the Globe and Mail reported about the same speech. You won't find a word of it in the CBC story.

Thank God the Globe and Mail and Financial Post have our concerns on their radar; CBC our national tax-supported broadcaster is nowhere to be seen on this issue. The only story I've found about the issue was a few weeks ago, in the New Brunswick news page, focusing on the plight of New Brunswickers who were born in Maine because when Mom went into labour the nearest hospital was in the US, thereby the babies became US citizens in US eyes and are subject to having the IRS down their throat today, decades later. Nice CBC-NB covered that, but you'll probably never see a story about this on CBC unless you check the NB news. I now do every day, I don't live in NB but I figure they wrote a story there once, the reporter who wrote that story is probably the only CBC staffer or stringer who knows or cares, maybe if anything pops up it will there. Probably a waste of my time; I should give up on CBC news and spend more time on the FP and G&M, unless/until this IRS stuff settles down or (in my dreams) goes away.

I've given up complaining to CBC about their lousy news coverage since they redesigned their website and The National format. It's all infotainment, little or no news any more. They aren't listening to the likes of me any more. (Don't get me started on what they did to music programming on Radio Two ...)


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## Zaccheus

Bev --

Since you kow a lot about where to find information, my daughter falls into an unusual circumstance. She is a dual, born in Canada, working in Canada, as a certified care-giver for the elderly of a bonafide, recognized religioius community. She works part-time, earning what are called "apostolatic wages": translates into some wages (less than Canadian minimum) -- so it's partly volunteer. What forms and publications should she use to file for U.S.? (This will be for 2011. In 2010, she was with some religious sisters for a while in the U.S., and did not work the rest of the year). In 2009, there was a combination of working in a nursing home and also doing the part-wage, part-volunteer thing. Any advice would be much appreciated.

Best, Zaccheus


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## Guest

*Globe and Mail American readers' plans re tax grab*

The Globe and Mail on-line has posted a poll of readers asking those who are Americans what their plans are for dealing with the tax grab, in connection with the article about the US Ambassador's speech in Toronto yesterday.
Vote: Are you worried about the U.S. tax crackdown? - The Globe and Mail

They gave four choices. As of a few minutes ago, they had about 2600 replies. The choices were :
I applied under OVDI (not worded this way but that's what it meant) - 8%
I am consulting a financial professional about what to do - 9%
I'm considering my options (but presumably not paying for advice yet) - 23%
Nothing, how will they find me? - 60%

Yep, 60%. :clap2: Well, if you include that and the 23% as "sitting tight," I guess the Ambassador was preaching to the choir stalls. 83% were already waiting and seeing, or have decided they're going to do nothing. (Maybe some of those haven't fully grasped what that might mean if they try to cross the border on a Canadian passport with US place of birth and the DHS starts getting tough about the "you must have a US passport" rule. On the other hand maybe some respondents hadn't heard or thought about this until they read the story and posted a poll response, who knows?)

No idea how representative this sample is of Americans in Canada, nevermind American expats elsewhere (are the other boards discussing this? this affects Americans living everywhere not just here). But if we take it as a reasonable sample, absent better information, it doesn't sound like OVDI was exactly a rip-roaring success, does it? Unless it really was intended to catch real tax cheats with big bucks and that makes up most of the folks it caught, which I very much doubt.

FWIW most of the 150+ blog posts to the original story (see some of the posts earlier today on this thread if you don't know what story I'm referring to) are sympathetic to affected US-born Canadians and distinctly hostile both to the US and to the Ambassador.

I've no doubt some embassy spinmeister will figure out some way to paint this as another "mission accomplished" for US diplomacy.:spit: Not sure whether or how I'd care to guess which way that 23% will split out once they stop considering their options and decide to do something (or nothing), but based on this sample it doesn't sound like the IRS terror campaign is going to be much more of a success than OVDI was. As one blogger to the story said, "how much of US tourism income comes from Canada? Do they have any idea what this is going to cost them in terms of Canadians visiting the US and spending money there? Have they tried weighing that in their calculation of whether this is really worth the grief it will cause them?" My summary, not an exact quote, but you get the point.

And the Gong Show continues.:ranger:


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## Arlington

Schubert said:


> The Globe and Mail on-line has posted a poll of readers asking those who are Americans what their plans are for dealing with the tax grab, in connection with the article about the US Ambassador's speech in Toronto yesterday.
> Vote: Are you worried about the U.S. tax crackdown? - The Globe and Mail
> 
> They gave four choices. As of a few minutes ago, they had about 2600 replies. The choices were :
> I applied under OVDI (not worded this way but that's what it meant) - 8%
> I am consulting a financial professional about what to do - 9%
> I'm considering my options (but presumably not paying for advice yet) - 23%
> Nothing, how will they find me? - 60%
> 
> :


I didn't answer. They didn't have anything for silent disclosure . .which is what I have done.


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## Cafreeb12

Schubert said:


> For those of you who, like me, have become extremely disgusted and disappointed in the quality of CBC News coverage of late, check out the CBC's coverage of Ambassador Jacobson's speech:
> 'Buy American' good for Canada, U.S. envoy says - Politics - CBC News
> 
> Don't hurt your eyes looking for any mention of the FATCA/FBAR/HIRE extravaganza nor of what the Globe and Mail reported about the same speech. You won't find a word of it in the CBC story.
> 
> Thank God the Globe and Mail and Financial Post have our concerns on their radar; CBC our national tax-supported broadcaster is nowhere to be seen on this issue. The only story I've found about the issue was a few weeks ago, in the New Brunswick news page, focusing on the plight of New Brunswickers who were born in Maine because when Mom went into labour the nearest hospital was in the US, thereby the babies became US citizens in US eyes and are subject to having the IRS down their throat today, decades later. Nice CBC-NB covered that, but you'll probably never see a story about this on CBC unless you check the NB news. I now do every day, I don't live in NB but I figure they wrote a story there once, the reporter who wrote that story is probably the only CBC staffer or stringer who knows or cares, maybe if anything pops up it will there. Probably a waste of my time; I should give up on CBC news and spend more time on the FP and G&M, unless/until this IRS stuff settles down or (in my dreams) goes away.
> 
> I've given up complaining to CBC about their lousy news coverage since they redesigned their website and The National format. It's all infotainment, little or no news any more. They aren't listening to the likes of me any more. (Don't get me started on what they did to music programming on Radio Two ...)



I don't know whether to laugh or cry! I just saw that "Buy America" article...not on your life buddy. Not on your life. Maybe when they give the finance minister what he asked for which was an exemption for Canada under FBAR and FATCA. Until then I will continue to withdraw every penny we ever had invested in the U.S. "economy" Besides did you catch that it would improve Canada's economy with it? Canada was never in as bad of shape as the US. was and I think Canada could survive just fine investing elsewhere. They know Canada is not the Cayman Islands. Canada well deserves an exemption that they asked for.


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## Peg

Heard on the radio today that in the US the ratio of CEO to worker is 325:1 whereas Canada was cited as much, much lower. 

Even more disgusting is the information about 25 of the highest paid CEOs --- their companies barely paid US income taxes and yet got money from the Feds. 

Yet another reason to renounce. I truly think the USA is going to get a lot worse before it improves...


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## northof60

Schubert said:


> For those of you who, like me, have become extremely disgusted and disappointed in the quality of CBC News coverage of late, check out the CBC's coverage of Ambassador Jacobson's speech:
> 'Buy American' good for Canada, U.S. envoy says - Politics - CBC News
> 
> Don't hurt your eyes looking for any mention of the FATCA/FBAR/HIRE extravaganza nor of what the Globe and Mail reported about the same speech. You won't find a word of it in the CBC story.


There is a CBC story from October 18 addressing the FUBAR/FATCAT issue at Americans in Canada told not to fear IRS - Canada - CBC News 

Schubert, love your posts. I nominate you for Canadian ambassador to the US.


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## Guest

northof60 said:


> There is a CBC story from October 18 addressing the FUBAR/FATCAT issue at Americans in Canada told not to fear IRS - Canada - CBC News
> 
> Schubert, love your posts. I nominate you for Canadian ambassador to the US.


Yep CBC finally got around to it. Wonder if my post to their first story helped? (Hint: FedUpInOttawa and his wife live with a brown and white male tabby cat with a musical voice, named after a 19th century European composer known for his string quartets and his songs for solo voice and piano )

Jeez, I hope you have a concrete bunker in your back yard if I ever get picked as our ambassador to the US! Be careful about what you wish for! 

Not to worry, I'm retired and have no interest in going back into the labour force, never mind having to suffer through the tedium of going to cocktail parties pretending to like, or at least to tolerate the presence of and be quasi-polite to, people representing other countries that I loathe -- and the US isn't the only one of those... Though one does like to dream of how much we might like our government's representatives to tell representatives of certain other countries what we really think of them. But our Canadian Forces would need some substantial staff and equipment upgrades to be able to deal with the fallout, possibly literally 
Thx for the sentiment nonetheless.


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## Pacifica

I have a friend in the US, so I called her to tell her about the IRS/FBAR/FATCA mess. Though she follows the news, she had never heard anything about it. We discussed it on the phone and she asked me if I could recommend some Canadian newspaper articles. So I sent her links to three G&M and FP articles.

To my surprise and delight, she e-mailed me a few hours later to say that she had written a letter and forwarded the links to her Congressman Paul Tonko and two upstate NY State Senators.

Yesterday, she received a phone call from Congressman Tonko's Washington office. The staffer told her that they were checking into it and planned to bring it up with the congressional Northern Border States Caucus.


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## Guest

Pacifica said:


> I have a friend in the US, so I called her to tell her about the IRS/FBAR/FATCA mess. Though she follows the news, she had never heard anything about it. We discussed it on the phone and she asked me if I could recommend some Canadian newspaper articles. So I sent her links to three G&M and FP articles.
> 
> To my surprise and delight, she e-mailed me a few hours later to say that she had written a letter and forwarded the links to her Congressman Paul Tonko and two upstate NY State Senators.
> 
> Yesterday, she received a phone call from Congressman Tonko's Washington office. The staffer told her that they were checking into it and planned to bring it up with the congressional Northern Border States Caucus.


Excellent -- good for you for passing the information along and to her for following up and taking action. The "northern border states" are likely to be most affected by Canadians, U.S. citizens or not, shopping on weekend journeys into their states. I think they are more aware of Canada and Canadian issues than many other states and know the cost of bad relations.


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## McLovin

Thank you to all who have posted, this was excellent reading.

My father recently told me about what he had heard in the media regarding the proposed bills, and at first I told him he was nuts. After seeing it on CBS news a few days ago (and spending all day reading the last 50+ pages of this blog), I quickly realized it is more than just hype.

My entire family (and wife) are Canadian citizens and everyone but me still lives in Canada. In 2003 my father obtained his US citizenship through his parents (both deceased). I have lived and worked in the US since 2000, and am currently in the late stages of the Emp.-Based PERM process (~1.5 more yrs) as well as the Family-Based track (through my father). 

In lieu of the recent news, my father has elected to file past returns and FBAR as-of 2003. I feel horrible he is being subjected to it and the fact he has to expose such private information; especially because he did it to try and improve my chances of getting a Green Card. Although they have no plans to live in the US, they don't want to jeopardize the option to spend winters in the US once they retire; so for them the non-compliance route is probably not worth the risk. 

It almost made me sick when I realized that this mistake (getting his US czp) may end up costing my parents tens of thousands of dollars. Meanwhile I pay taxes to the very same Government that would be taking it from them. Ironic hey?


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## Cafreeb12

McLovin said:


> Thank you to all who have posted, this was excellent reading.
> 
> My father recently told me about what he had heard in the media regarding the proposed bills, and at first I told him he was nuts. After seeing it on CBS news a few days ago (and spending all day reading the last 50+ pages of this blog), I quickly realized it is more than just hype.
> 
> My entire family (and wife) are Canadian citizens and everyone but me still lives in Canada. In 2003 my father obtained his US citizenship through his parents (both deceased). I have lived and worked in the US since 2000, and am currently in the late stages of the Emp.-Based PERM process (~1.5 more yrs) as well as the Family-Based track (through my father).
> 
> In lieu of the recent news, my father has elected to file past returns and FBAR as-of 2003. I feel horrible he is being subjected to it and the fact he has to expose such private information; especially because he did it to try and improve my chances of getting a Green Card. Although they have no plans to live in the US, they don't want to jeopardize the option to spend winters in the US once they retire; so for them the non-compliance route is probably not worth the risk.
> 
> It almost made me sick when I realized that this mistake (getting his US czp) may end up costing my parents tens of thousands of dollars. Meanwhile I pay taxes to the very same Government that would be taking it from them. Ironic hey?



I am sorry for your parents situation. So many of us are caught in it. Meanwhile in the U.S. media this was portrayed as a good thing and people like your parents were portrayed as "tax cheats" The W.H. wants everyone to think "Hire" was fantastic legislation with this hidden in it. Truly it is heinous. One thing you CAN do is let people south of the border know what is really going on with this. How it's costing middle class and poor families money they do not have even when they owed no taxes. How it's a penalty grab. It's really awful how people are being treated.


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## Peg

Cafreeb12 said:


> I am sorry for your parents situation. So many of us are caught in it. Meanwhile in the U.S. media this was portrayed as a good thing and people like your parents were portrayed as "tax cheats" The W.H. wants everyone to think "Hire" was fantastic legislation with this hidden in it. Truly it is heinous. One thing you CAN do is let people south of the border know what is really going on with this. How it's costing middle class and poor families money they do not have even when they owed no taxes. How it's a penalty grab. It's really awful how people are being treated.


And let them know that most of us do not owe any taxes so the IRS is using manpower on us for nothing!


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## CanadianHoosier

Peg said:


> And let them know that most of us do not owe any taxes so the IRS is using manpower on us for nothing!


As I am heading downtown to the US Embassy this afternoon, I made a photo copy of the updated US passport for future reference. I received it last December, my old one had expired, as it was issued about 14 years ago. 

Other than signing it, I had never looked thru it. 

Today I flipped thru the new pages, graphics, interesting historic quotes and then on the last page, paragraph D.

"*U.S. Taxes* All US citizens working and residing abroad are required to file and report on their worldwide income. Consult IRS publication 54, Tax Guide for US Citizens and Resident Aliens Abroad, available at http://irs.gov/p54/index.html

Gee, I guess I shoulda read the manual....


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## Cafreeb12

CanadianHoosier said:


> As I am heading downtown to the US Embassy this afternoon, I made a photo copy of the updated US passport for future reference. I received it last December, my old one had expired, as it was issued about 14 years ago.
> 
> Other than signing it, I had never looked thru it.
> 
> Today I flipped thru the new pages, graphics, interesting historic quotes and then on the last page, paragraph D.
> 
> "*U.S. Taxes* All US citizens working and residing abroad are required to file and report on their worldwide income. Consult IRS publication 54, Tax Guide for US Citizens and Resident Aliens Abroad, available at http://irs.gov/p54/index.html
> 
> Gee, I guess I shoulda read the manual....



If it's there it is in very fine print. I wear glasses that are stronger than 250 reading power right now and even with them fine print is hellish for me. When I did my last passport nobody said a peep for me to read it all over. I hadn't checked that. I never used a passport until after 9/11 when they started to require them. Likely, wouldn't have bothered with one. We always just drove across and flew out of Syracuse. Driving across didn't require a passport as soon as flying did. I still think they could have done a better job telling us since I personally called the IRS four times since I've lived here and all four times including up to April 2011 I was told I had not met the requirement to have to file and no mention was made of an FBAR at all. Had they said anything I'd have filed that thing for sure.


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## Guest

FYI -- Below is my MP's (office) response to my email to her -- and my return response. Att's referred to do not give any new information than we already have, but I can provide the contents of both (I don't know how to attach the actual att's to the email):

Sent: Thursday, October 20, 2011 8:47 AM
To: Michelle Rempel, MP

Thank you very much for your response and providing your FACT Sheet and the op-ed from Minister Flaherty. 

Actually, I am very up-to-date on my U.S. tax responsibilities and I have paid an enormous sum (for me) for immigration law consultation as well as engaging cross-border tax accountants to bring me in compliance with back taxes for six years – from the time I got knowledge of what I thought to be my responsibilities. I am also up-to-date on media coverage, including the op-ed by Minister Flaherty, as well as October 18th comments regarding this subject and “Buy American” in Ottawa by the U.S. Ambassador to Canada, David Jacobsen. 

What I (and others) would be interested in is what will be my (our) MP's actions on this subject and any future progression on same. That is the information I’d like to have.

My regards,
From:Michelle.Rempel
Sent: Thursday, October 20, 2011 5:59 AM

Subject: RE: Asking for your support for U.S. Citizens in Canada, many of whom are in Calgary...



On behalf of Michelle Rempel, MP, Calgary Centre-North, thank you for copying our office on your email to Minister Flaherty. I have been advised that his office will respond as well. In the meantime, I wanted to provide you with a FACT Sheet provided to constituency offices in regards to US tax obligations. Our office would encourage you seek the advice of an independent tax professional skilled in both Canada/US tax relations. 



Finally, I have also attached an op-ed by Minister Flaherty below for your knowledge. It ran on September 16th.



Most respectfully,



William



________________________

William Broome

Manager, Constituency Affairs

Michelle Rempel, M.P., Calgary Centre-North

Parliamentary Secretary, Environment


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## Mona Lisa76

My understanding is that the IRS will not automatically impose fbar fines for merely civil offences; they would need to pursue these fines through a court case which would most certainky not be enforced through a foreign court. Thus, they resorted to their official ovdi 'amnesty programme' to get gullible usc's to effectively sign away their rights which enabled the IRS to use the draconian 5-25% penalties on the victim's highest aggregate balance in their non-US accounts betwwen 2003-2010. The partipants also had to sign away their rights to what is normally a six year statute of limitations for civil fbar investigations (and 5 year statute for criminal). Sneaky tactics...so glad I did a silent disclosure instead.

If you owe no taxes then any penalty for failure to report should at present time still be eligible for waiver even if imposed, especially as Jim Flarity said that Canada's tax authorities will not impose these draconian fines...if back taxes are owed and paid back with interest (as I did) then that should be the end of it as long as I comply with the correct reporting going forward....thus no need to renounce.


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## AmTaker

Mona Lisa76 said:


> My understanding is that the IRS will not automatically impose fbar fines for merely civil offences; they would need to pursue these fines through a court case which would most certainky not be enforced through a foreign court. Thus, they resorted to their official ovdi 'amnesty programme' to get gullible usc's to effectively sign away their rights which enabled the IRS to use the draconian 5-25% penalties on the victim's highest aggregate balance in their non-US accounts betwwen 2003-2010. The partipants also had to sign away their rights to what is normally a six year statute of limitations for civil fbar investigations (and 5 year statute for criminal). Sneaky tactics...so glad I did a silent disclosure instead.


Yes, I believe the IRS asked for an extension to assess FBAR penalties (although not on the criminal penalties) for participants in OVDI. I'm not even sure that statutes of limitations can be extended for criminal cases. But given that in theory even one year's FBAR max penalty (50%) would be far higher than the OVDI penalty, its not necessarily a bad deal for US residents with unreported foreign income.


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## Guest

Mona Lisa76 said:


> The partipants also had to sign away their rights to what is normally a six year statute of limitations for civil fbar investigations (and 5 year statute for criminal). Sneaky tactics...so glad I did a silent disclosure instead.


This is the first I've heard of this, though I have a friend who came forward under OVDI but I haven't spoken with him since I heard he went forward.

It's more than sneaky, it's outrageous. I hope my friend or his lawyer told them to get stuffed when they saw the rights/statute of limitations waiver.

So very stupid of IRS. No one hearing this will ever come forward if they ever announce another amnesty, how could anyone ever trust them after this?

Some friends are hoping for an amnesty of some kind after the Ambassador's speech in Toronto two days ago. My advice to them is have a team of lawyers go through the paperwork with a microscope before even thinking of signing them. 

Again easy for me to say given my Certificate (which exempts me because I'm no longer a US citizen nor resident nor have any financial holdings in the US) and family situation, but if I heard of an amnesty I think I'd ignore it, just never cross the US border again, and live out the rest of my life in peace, order, good government, and nothing to do with the US or anyone in it except family who agree to come up here to visit me.

Different strokes for different folks, but seriously folks, would you buy a used car from these people? Especially from an ambassador who tells everyone who has been so horribly stressed out and spent wads of money on accountants and lawyers "sit tight, trust your friendly IRS" and by the way buy American, it's good for Canada? What is that man smoking and where can I buy some? And how stupid does he think Canadians are? :spit:

If this is "change you can believe in" I'm a monkey's rear end. You thought Dubya was bad? You really think this is any better? Why?


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## Mona Lisa76

AmTaker said:


> Yes, I believe the IRS asked for an extension to assess FBAR penalties (although not on the criminal penalties) for participants in OVDI. I'm not even sure that statutes of limitations can be extended for criminal cases. But given that in theory even one year's FBAR max penalty (50%) would be far higher than the OVDI penalty, its not necessarily a bad deal for US residents with unreported foreign income.


Yes, for US residents with unreported foreign income; but seems unreasonable for people like myself who have made my life since early adulthood in UK. Ninety percent of my assets are in England and I've been reporting and paying taxes on my worldwide income to the UK...had only been filing nominal US tax returns until this year because had believed I was protected from double taxation through the tax treaty. Obviously, I have learned that I was gravely mistaken but surely I should have reasonable cause to have thought as I did.

Plus the fact that I have made a full and honest disclosure to IRS and paid a specialized preparer a five figure sum to put everthing right by paying what for me on my modest income was a hefty tax bill due to anomalous taxation on UK mutual funds (pfic taxation on phantom gains which were TAX FREE in UK). Completely unfair in my view.


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## Arlington

It's headlines like this that really irk me: .........U.S. expats in Canada cower as American tax collectors chase evaders with foreign assets

U.S. expats in Canada cower as American tax collectors chase evaders with foreign assets | Daily Brew - Yahoo! News

Cower? Really? I find it quite insulting. I did, however, like the outrage of those that commented. Jane Doe's comment: Why can't the idiot US government go after companies like Tyco with their head offices in tax free Bermuda? They should be ashamed of themselves..Total misuse of Power

Good . . I like outraged Americans.


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## Vangrrl

Out of curiousity, who processes our tax returns? We all mail them to the office in Texas but are they then sent back to IRS agents in our local country? Are there IRS agents at our local consulates? 

Are the returns from Canada handled by someone who has expertise in that area?


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## Cafreeb12

Arlington said:


> It's headlines like this that really irk me: .........U.S. expats in Canada cower as American tax collectors chase evaders with foreign assets
> 
> U.S. expats in Canada cower as American tax collectors chase evaders with foreign assets | Daily Brew - Yahoo! News
> 
> Cower? Really? I find it quite insulting. I did, however, like the outrage of those that commented. Jane Doe's comment: Why can't the idiot US government go after companies like Tyco with their head offices in tax free Bermuda? They should be ashamed of themselves..Total misuse of Power
> 
> Good . . I like outraged Americans.


The language they use in all their articles is demeaning, lying and really insulting. Not one article has told the truth or told our stories. We don't owe them any "taxes" and our "foreign assets" in a lot of cases are our foreign spouses and childrens, earned on foreign soil by people who are not even American.


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## AmTaker

Vangrrl said:


> Out of curiousity, who processes our tax returns? We all mail them to the office in Texas but are they then sent back to IRS agents in our local country? Are there IRS agents at our local consulates?
> 
> Are the returns from Canada handled by someone who has expertise in that area?


They are likely entered into the computers at Texas. At that point, they can be accessed anywhere by IRS agents. Likely, the large majority are just processed as is, while some are flagged for audit. If they go for audit, they could go to an agent who is trained in foreign tax issues, maybe even with country specific expertise. There are IRS agents who have expertise in foreign tax issues and treaties and the like, and I understand that more are being trained. But this is difficult and complicated enough that such agents may be in demand and would likely not be bothered with audits unless there is tax due. Also, there are largely automated programs that kick out notices via matching. 

For FBARs, they go to Detroit, then are entered into a system there. I think that system is more widely accessible (i.e to other US government agencies as well). I have no idea how they flag FBARs for audit, how they match with tax forms etc. I suppose delinquent FBARs without a good explanation, especially when there is some tax due may be vetted manually by an IRS agent at some point. 

Some of this is pure speculation on my part ...


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## Mona Lisa76

Vangrrl said:


> Out of curiousity, who processes our tax returns? We all mail them to the office in Texas but are they then sent back to IRS agents in our local country? Are there IRS agents at our local consulates?
> 
> Are the returns from Canada handled by someone who has expertise in that area?


Can't speak for Canadians but all I can say is that it's been insinuated to me that the IRS office here in London at the US Embassy are largely responsible with how cases such as mine will be treated...and it's been implied that they will be merciful, especially as because my noncompliance had been unintentional, especially as I've made concerted steps to put it all back right.

It wouldn't be in the United States' interest to clobber longterm expats and accidental Americans. I think that there has been too much paranoia, including my own...there has to be some trust and decency left in this world, me thinks.

If the **** hits the fan, I will do the necessary name-dropping and raise Hell, even going to the Supreme Court if necessary. But I suspect they'd want to settle out of court if it really came to that. I'd imagine that most of you who opt out of OVDI should be treated similarly to those of us who made silent disclosures. You'd just pay back what you owed if anything and then comply going forward.

In some ways all this has turned out to be a blessing in disguise because I had to sell off most of my investments in the UK (back in Spring/early Summer) but in so doing, avoided the stock market falls that occurred shortly thereafter; I then moved my funds into a dual UK/US compliant portfolio managed by an investment house who will produce the required annual 1099s and UK tax certificates to satisfy both the IRS and HMRC. 

The portfolio is a fairly sensible mixture of high-graded bonds and blue chips which just so happens to be how I'd be comfortable to be invested anyway! So hopefully this will all turn out to have a happy ending by moving into what will be a much more transparently charged portfolio as well as greatly simplifying my annual reporting requirements for both jurisdictions. And what what I will have had to pay out in accounting fees/investment advice and back taxes might have been turned out to be less than I would have lost in value in my investments during this bear market had I done nothing. How ironic.

The IRS can directly levy fines for unpaid taxes owed but I understand they have to go through a court order via the Treasury to enforce FBAR penalties for civilian lack of reporting...at the present time, they are apparently only enforcing criminal penalties on who were obvious tax evaders. People like us are merely caught up in the net but are not their actual targets, though agree the official OVDI 'amnesty' was a de facto cash grab. And yet, there are still opt out options. I would still harbour some hope here, especially with the Canadian outcry.

However, where I do think the IRS will become tough is in the future after they've introduced their upcoming FATCA 8938 form which will require full disclosure of maximum balances in foreign accounts and stocks. This is how they'll nab people who haven't complied: via this son of FBAR form which will probably be introduced sometime in 2012 but will have to be retroactively filed for the 2011 tax year.
This is why I believe that as long as delinquent FBARs have been filed, with a letter of explanation, that they won't impose the harsh penalties unless they actually believed that blatant criminal evasion was taking place.


But due to the retrospective reporting that the 8938 will require from the 2011 tax year onwards, I concluded that I had to escape from thus making a full disclosure about my past lack of reporting of my foreign unearned income. And especially as I had more than 25 accounts and was thus able to send in simplified FBARs, they'll want this upcoming 8938 to be able to closely check all that I had within those foreign accounts that had been merely listed as 43 accounts, etc.

But my moving my investments into a compliant investment, I will thus have greatly simplified my reporting requirements going forward to something like nine accounts, including the Alert Pay, Pay Pay and Travel Card accounts. I will thus have only about a checking account, two savings accounts, one credit card and my personal pension and dual-compliant investment portfolio. So no longer will be a big deal to fill out the 8938 and fbars from 2012 tax year forwards (filed in 2013).


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## Arlington

Cafreeb12 said:


> The language they use in all their articles is demeaning, lying and really insulting. Not one article has told the truth or told our stories. We don't owe them any "taxes" and our "foreign assets" in a lot of cases are our foreign spouses and childrens, earned on foreign soil by people who are not even American.


I often email the authors of these articles and politely chastise them for fear mongering and point out the cash grab by tax accountants and lawyers. I direct them to this forum for a more balanced view. Not once have I seen a follow-up article to reflect the reality. Of course not - it wouldn't make for an interesting story about the arrogant Americans. 

Margaret Wente is one of the worst - as a columnist, she exploits her own situation with the IRS. I heard her do an interview with an American radio station, acting as if she is steps away from being hauled into jail in handcuffs. Makes for good ratings but it's just not true.


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## Mona Lisa76

Arlington said:


> I often email the authors of these articles and politely chastise them for fear mongering and point out the cash grab by tax accountants and lawyers. I direct them to this forum for a more balanced view. Not once have I seen a follow-up article to reflect the reality. Of course not - it wouldn't make for an interesting story about the arrogant Americans.
> 
> Margaret Wente is one of the worst - as a columnist, she exploits her own situation with the IRS. I heard her do an interview with an American radio station, acting as if she is steps away from being hauled into jail in handcuffs. Makes for good ratings but it's just not true.


I agree that the tax attorneys and accountants like to play up our fears in order to rake in more money from us. They have a symbiotic relationship with the IRS, obviously. The IRS tacitly accepts their tactics as a result. This is why I don't necessarily think the professionals even have our best interests at heart...they instead play on our paranoia and vulnerability. Even the likes of Forbes has spout off the propaganda machine.

On the other hands, it's been mentioned to me by both my enrolled agent and Financial Advisor who'd attended a reception hosted by the IRS tax attache at the American Embassy in London that that it's to a large extent a media blitz and that they're really focusing on the 'big fish' who've obviously been evading their taxes and that they're deliberately trying to scare us little people into tax compliance rather than to clobber us. 

I also suspect that my accountant made a few discreet inquiries on my behalf before submitting my amended returns; after all, if she'd thought my situation was THAT dire, she'd have recommended a Tax Attorney for me but it was implied that a quiet amending of the returns with correct back taxes paid (with interest) should suffice, especially with future steps to move into completely compliant portfolios.


----------



## AmTaker

Mona Lisa76 said:


> Can't speak for Canadians but all I can say is that it's been insinuated to me that the IRS office here in London at the US Embassy are largely responsible with how cases such as mine will be treated...and it's been implied that they will be merciful, especially as because my noncompliance had been unintentional, especially as I've made concerted steps to put it all back right. ).


Really ? I had not heard that local tax attaches have much input in who's audited or who's not. I thought it was largely done through their central computers and centralized offices (especially when they are making a big push in an area). That would be interesting if its correct. [ Although I do remember someone mentioning to me that offshore issues were going through a special management structure, I don't know if it was only for the duration of the OVDI program]

I did look at the IRS manual (available online) for the duties of tax attaches

Internal Revenue Manual - 4.30.3 Overseas Posts

but my eyes started to glaze over before I finished .


----------



## Mona Lisa76

AmTaker said:


> Really ? I had not heard that local tax attaches have much input in who's audited or who's not. I thought it was largely done through their central computers and centralized offices (especially when they are making a big push in an area). That would be interesting if its correct. [ Although I do remember someone mentioning to me that offshore issues were going through a special management structure, I don't know if it was only for the duration of the OVDI program]
> 
> I did look at the IRS manual (available online) for the duties of tax attaches
> 
> Internal Revenue Manual - 4.30.3 Overseas Posts
> 
> but my eyes started to glaze over before I finished .


Maybe it's just good PR on their part, LOL. But do you really think they're going to want to audit 580 pages of amended tax returns when it should seem obvious that it will have been pedantically calculated by my enrolled agent accountant showing increased taxes due to the PFICs but also hardly any deductions taken (married filing separately, only standard deduction, no mortgage deductions, etc.). It would thus seem they were honestly amended returns. It will take ages for them to plow through all that, especially when they prefer to close cases as quickly as possible.

It's also a hell of a lot to post to Texas, LOL. 

I suppose I'll just have to wait and see and hope for the best though... to say it's been nerve-wracking is an understatement though. Would have thought I'd have anywhere up to three years before I might hear about an audit, especially as some of the amended returns will now have been extended to a six year statute of limitations due to having listed substantially increased foreign unearned income (though this was all correctly reported to HMRC).

Had the impression though that they don't generally go into detailed audits with longterm expats but if they did, that they'd be concentrating on whether the 2555 FEIE had been properly filed, etc.

Perhaps I'll have to suffer another six years of sleepless nights


----------



## Vangrrl

AmTaker said:


> They are likely entered into the computers at Texas. At that point, they can be accessed anywhere by IRS agents. Likely, the large majority are just processed as is, while some are flagged for audit. If they go for audit, they could go to an agent who is trained in foreign tax issues, maybe even with country specific expertise. There are IRS agents who have expertise in foreign tax issues and treaties and the like, and I understand that more are being trained. But this is difficult and complicated enough that such agents may be in demand and would likely not be bothered with audits unless there is tax due. Also, there are largely automated programs that kick out notices via matching.
> 
> For FBARs, they go to Detroit, then are entered into a system there. I think that system is more widely accessible (i.e to other US government agencies as well). I have no idea how they flag FBARs for audit, how they match with tax forms etc. I suppose delinquent FBARs without a good explanation, especially when there is some tax due may be vetted manually by an IRS agent at some point.
> 
> Some of this is pure speculation on my part ...


Thanks for replying.

I'm just trying to get my head around what information the IRS has access to and how much I really should "fear" them. In Canada, my bank and my employer are sending T3's, T4's and T5's to CRA and its fairly easy for them to match up those slips to my reported income. Its happened to me before where I inadvertently missed a T4 (a small honorarium) and I got a letter from CRA saying that I owed tax on it, which of course, I paid. 

Similarly, in the US, the IRS has access to W2's and the like. But what is the IRS using to determine the legitimacy of my reporting on my 1040? 

I didn't include any T4's and such with my US tax return. My accountant didn't tell me to. Was I supposed to? Of course I have them all in my records in case I'm asked.

It just seems to me that all they can realistically be looking for is calculation errors. Maybe they can compare my Canadian return to my US return and match up the income reported? Do they have access to our Canadian returns?

When FATCA comes into place, is the IRS going to be receiving T5's from our Canadian banking institutions? Or just bank account info (ie. fbar info). Are Canadian banks going to be generating T5's for accounts like RESPs and TFSAs which are not even being reported to the Canadian government?

If someone has an TFSA (which I don't) and doesn't report the internal interest to the IRS because they honestly assumed that the tax treaty means what is tax deferred in Canada is tax deferred in the US, how would the IRS ever know?


----------



## Vangrrl

I just want to qualify my above post: I'm not trying to find ways of cheating on my 1040's. 

What I'm trying to figure out is how much time and money I really need to spend on being tax compliant. I don't want to spend the rest of my days studying tax documents. I'd like to make a good faith effort every year and be able to sleep at night. Which for me means reporting to the IRS what I report to the CRA.

I don't want to renounce my US citizenship. My husband and I are both in professional fields where it would be foolish for me to give up any chance of ever working in the US and we're too young to want to make that decision with finality, even if it is unlikely. But I also don't want to be spending money on cross-border accountants and lawyers most of whom I have no respect for following the OVDI debacle (2 of the more respected cross border firms locally both suggest I go into OVDI).


----------



## Mona Lisa76

Vangrrl said:


> I just want to qualify my above post: I'm not trying to find ways of cheating on my 1040's.
> 
> What I'm trying to figure out is how much time and money I really need to spend on being tax compliant. I don't want to spend the rest of my days studying tax documents. I'd like to make a good faith effort every year and be able to sleep at night. Which for me means reporting to the IRS what I report to the CRA.
> 
> I don't want to renounce my US citizenship. My husband and I are both in professional fields where it would be foolish for me to give up any chance of ever working in the US and we're too young to want to make that decision with finality, even if it is unlikely. But I also don't want to be spending money on cross-border accountants and lawyers most of whom I have no respect for following the OVDI debacle (2 of the more respected cross border firms locally both suggest I go into OVDI).


I could refer you to my tax accountant though she is based in London.


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## Peg

AmTaker said:


> I did look at the IRS manual (available online) for the duties of tax attaches
> 
> Internal Revenue Manual - 4.30.3 Overseas Posts
> 
> but my eyes started to glaze over before I finished .


Bookmarked for my insomnia nights- could really help :clap2:


----------



## Guest

Peg said:


> Bookmarked for my insomnia nights- could really help :clap2:


Also add the Canada-US Tax Treaty (one of my earlier posts, or just google it) to help sleep at night.

Where do these people learn how to write? The Canada Revenue Agency instructions for my annual tax return in Canada is a model of clarity and simplicity by comparison.


----------



## Guest

*New Democratic Party of Canada's position on FATCA*

Today I googled “NDP and FATCA” to see what has happened in this past week, since I’ve had no further communication from the NDP’s foreign affairs critic on the issue. I wish I had done so sooner; the following hits have not appeared in my earlier searches on FATCA, at least not in the top page or so, which is all I have the patience to look for. From now on, when I do my regular “sweep” of the internet on the issue, I am going to add an “ndp and fatca” search.

Ms. Denise Savoie is one of the NDP’s Members of Parliament from British Columbia (she represents the riding of Victoria). She has posted on her website the NDP’s official position on the FATCA issue, see this link:
NDP Position on the US Foreign Account Tax Compliance Act (FATCA)

As well, two days ago she posted the following update to her constituents on this issue:
US Tax Information
This update includes a link to a letter she sent on September 17 to Jim Flaherty, Canada’s Finance Minister, on behalf of her constituents, regarding this issue. There is also a joint letter sent on October 11 to Mr. Flaherty by the 12 NDP Members of Parliament from British Columbia regarding this issue. There is also a letter Ms. Savoie sent to President Obama on September 30 regarding this issue. Finally, there is an excellent footnoted summary of the issue and how it affects Canadian-resident US citizens (or those the US government presumes to be citizens even if those individuals don’t consider themselves US citizens), which seems to be accurate and objective in terms of reporting “requirements.” The latter urges people to write Mr. Flaherty, Congress, and to the Canadian Privacy Commissioner on this issue. You can find the links to the PDF versions of all four documents at the bottom of the above-referenced update page on Ms. Savoie’s website.

All of the above documents are excellent and well-worth reading and perhaps forwarding to anyone who you think needs concise, coherent and sensible information about the issue. 

It is encouraging to see that at least one Member of our Parliament is taking a very active stance on this issue, and that the NDP has taken an official position on this issue. As far as I am aware at this writing, no other political party in Canada has issued an official position on this issue (yes I also googled "Liberal and FATCA" and drew a big fat blank in terms of the Liberal Party of Canada; ditto the Green Party; and I'd be wasting my time looking for a Conservative Party statement on the issue, other than Mr. Flaherty's well-known letter to several US newspapers). 

I only wish that my own MP, who seems more concerned about running for the party leadership than addressing his constituents’ concerns, were as dedicated and active on this issue as is the representative of the lucky citizens of the beautiful city of Victoria.


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## Cafreeb12

Why can't our PM be someone like this woman! I wrote to thank her for her stance. This is what we need not some assurance about "sympathy" grandmas" sit tight" and whatever else that was said adding up to nothing as far as results go. Time is ticking and people are renouncing.. If they ever realize their "mistake" it will be too late for us. However, they will just do as they did in the nineties and call us all "traitors" for having the gall to protect our families from this. It's Alice down the rabbit hole time with regard to how this is framed in the U.S. when it is covered at all.


----------



## Guest

Cafreeb12 said:


> Why can't our PM be someone like this woman! I wrote to thank her for her stance. This is what we need not some assurance about "sympathy" grandmas" sit tight" and whatever else that was said adding up to nothing as far as results go. Time is ticking and people are renouncing.. If they ever realize their "mistake" it will be too late for us. However, they will just do as they did in the nineties and call us all "traitors" for having the gall to protect our families from this. It's Alice down the rabbit hole time with regard to how this is framed in the U.S. when it is covered at all.


Thanks Cafreeb 12, for this idea. I also wrote Ms. Savoie to thank her for her stance. Now intending to write my MP (NDP-Andrew Cash) and am wondering if there is any point in writing Congressman and Senators? I've always felt it was all so hopeless and useless but.........


----------



## Cafreeb12

nobledreamer said:


> Thanks Cafreeb 12, for this idea. I also wrote Ms. Savoie to thank her for her stance. Now intending to write my MP (NDP-Andrew Cash) and am wondering if there is any point in writing Congressman and Senators? I've always felt it was all so hopeless and useless but.........


I think the more letters they get the better. Write to anyone you can think of and place pressure on them. They aren't going to like having their offices flooded with mail and complaints over this. In fact it would be a good idea to go after those who wrote this legislation starting with the top person. Pick a day and fax, call and write. Everyone here could do this say November 5th. Tell your story and how it's affected your family forcing you to renounce or protect your family from this over reaching and unfair legislation and if you do renounce you then get to worry about every time you cross the border to see family. The legislation will not change because it was set up as a way for US to fund "jobs" in the U.S. The IRS has hired or will be hiring eight hundred people to deal with this issue alone. Wow! Then Obama will claim "look over there! I created jobs!" Yes, on the backs of lower and middle income Americans who don't happen to live in your borders. Way to go. Demonizing us in the press is a way to silence any objection beforehand. So instead of really creating jobs this is a stop gap measure paid for by us on our backs forcing us to renounce? What then I ask? What about when we no longer have this obligation, where will these created out of thin air jobs go? And further if someones job depends on them fining us for the funds to pay for that persons salary isn't that a conflict of interest? Won't the person doing the work be motivated to impose penalties to make sure their salaries continue? 

This is the most ill thought through, *and that's being kind as it assumes this wasn't done on purpose to pit middle income American against other middle income American* legislation I've seen in a long, long time.


----------



## Mona Lisa76

Cafreeb12 said:


> I think the more letters they get the better. Write to anyone you can think of and place pressure on them. They aren't going to like having their offices flooded with mail and complaints over this. In fact it would be a good idea to go after those who wrote this legislation starting with the top person. Pick a day and fax, call and write. Everyone here could do this say November 5th. Tell your story and how it's affected your family forcing you to renounce or protect your family from this over reaching and unfair legislation and if you do renounce you then get to worry about every time you cross the border to see family. The legislation will not change because it was set up as a way for US to fund "jobs" in the U.S. The IRS has hired or will be hiring eight hundred people to deal with this issue alone. Wow! Then Obama will claim "look over there! I created jobs!" Yes, on the backs of lower and middle income Americans who don't happen to live in your borders. Way to go. Demonizing us in the press is a way to silence any objection beforehand. So instead of really creating jobs this is a stop gap measure paid for by us on our backs forcing us to renounce? What then I ask? What about when we no longer have this obligation, where will these created out of thin air jobs go? And further if someones job depends on them fining us for the funds to pay for that persons salary isn't that a conflict of interest? Won't the person doing the work be motivated to impose penalties to make sure their salaries continue?
> 
> This is the most ill thought through, *and that's being kind as it assumes this wasn't done on purpose to pit middle income American against other middle income American* legislation I've seen in a long, long time.


I agree that it's utterly terrifying. And as I'm like a deer frozen in the headlights, I am aware that thete's very little I can do if they decide to be nasty and try to seize all my assets due to delinquent fbar reporting. Civil penalties alone could bankrupt me and even leave us homeless. It would certainly raise revenue though if they decided to universely enforce the fbar fines. All I can think to do is move my assets outside the United States and pray that they'll not decide to pursue me through the British courts. 

I would like to think that they'll be happy enough that I made a complete and honest disclosure, paid all the back taxes I owed with interest and that I will be fully compliant going forward.


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## justbrowsing

nobledreamer said:


> Thanks Cafreeb 12, for this idea. I also wrote Ms. Savoie to thank her for her stance. Now intending to write my MP (NDP-Andrew Cash) and am wondering if there is any point in writing Congressman and Senators? I've always felt it was all so hopeless and useless but.........


I will gladly contact them. Which Congressman and Senators were responsible for this legislation?


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## AmTaker

*Article about Voluntary Disclosures: Quiet and Otherwise*

An interesting article about voluntary disclosures involving foreign accounts by 2 very prominent tax lawyers, redirected from Jack Townsend's blog.

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B0SLTNWD-Z3YNjg0MGJmMjUtMDk1NS00NmQ5LWI1MTgtYTNmYTljZDI3NTJh&hl=en_US

They have a lot of sensible suggestions, which would actually meet the IRS's goal of catching real tax evaders while sparing innocents. In particular, they recommend. 

"A separate path for Americans living abroad
whereby they can reenter the system without
the imposition of penalties except when there
is evidence of fraud or willfulness."


----------



## 416

This is well worth a look. 


> But even that penalty structure discouraged most per-
> sons in this group from entering OVDI. Most of
> them owed little or no U.S. taxes, and having to
> forfeit 5 percent of their unreported financial ac-
> counts just for peace of mind seemed excessive,
> especially given the need to expend thousands of
> dollars in legal and accounting fees to submit eight
> years of tax returns and FBARs.
> 
> We can attest that
> many people in that group are likely, at best, to start
> filing next year, and that some will simply remain
> noncompliant and expect, with good reason, that
> the IRS will never find them.5
> This phenomenon is being experienced most
> dramatically in Canada, with its hundreds of thou-
> sands of U.S. citizens. Those individuals, many of
> whom left the United States during childhood be-
> fore they had entered any tax system, were stunned
> and angered by recent publicity regarding OVDI #2
> in Canada. Despite the recently added 5 percent
> safe harbor for some members of that group, they
> cannot comprehend why the IRS is clinging to a
> penalty structure that could take a portion of their
> net assets when most of them owed no or de
> minimis U.S. taxes. Several highly critical articles
> and editorials have been published in Canada,6 and
> criticism of the United States is gaining political
> traction north of the border. The increasingly nega-
> tive attitudes toward the United States, and espe-
> cially the IRS, hurt cooperation in a critical
> relationship.
> ... One unintended consequence of the OVDI programs and
> the publicity surrounding them as to this group is a significant
> increase in the number of U.S. citizens residing outside the
> United States and who hold citizenship elsewhere who want to
> expatriate. Expatriation requires a certification under penalties
> of perjury that the taxpayer has complied with all U.S. tax
> obligations for the preceding five years, so some remedial action
> is usually required. But while the rules on expatriation are
> technical, and for many people there is a significant exit tax, we
> are finding that many clients wish to discuss this option. Sadly
> (and ironically), for the United States this represents an outflow
> of talent, culture, and capital.


----------



## Guest

justbrowsing said:


> I will gladly contact them. Which Congressman and Senators were responsible for this legislation?


Foreign Account Tax Compliance Act (FATCA)

The Foreign Account Tax Compliance Act (FATCA) was introduced on October 27, 2009 by Chairman *Baucus* (D-MT), Chairman *Rangel (*D-NY-15), Senator *Kerry* (D-MA), and Representative *Neal* (D-MA-2) to address concerns about U.S. persons avoiding U.S. tax through offshore bank accounts. It was passed as part of the Hiring Incentives to Restore Employment Act (H.R. 2847).

OpenCongress - 112th Congress - Track bills, votes, senators, and representatives in the U.S. Congress
“Write a letter to your two senators and one US
representative, from one page, immediately


----------



## Cafreeb12

justbrowsing said:


> I will gladly contact them. Which Congressman and Senators were responsible for this legislation?


Carl Levin of Michigan was at the top of the charge. Also a former head of Goldman Sachs. Gee, I don't see a problem there do you? I mean it's not like Goldman did anything wrong right? And here he is ranting about over seas "tax cheats" and passing legislation like "Hire" I think he'd be the first person to write to.
Carl Levin - United States Senator for Michigan: Home

Remember, remember the FIFTH of November.


----------



## Cafreeb12

nobledreamer said:


> Foreign Account Tax Compliance Act (FATCA)
> 
> The Foreign Account Tax Compliance Act (FATCA) was introduced on October 27, 2009 by Chairman *Baucus* (D-MT), Chairman *Rangel (*D-NY-15), Senator *Kerry* (D-MA), and Representative *Neal* (D-MA-2) to address concerns about U.S. persons avoiding U.S. tax through offshore bank accounts. It was passed as part of the Hiring Incentives to Restore Employment Act (H.R. 2847).
> 
> OpenCongress - 112th Congress - Track bills, votes, senators, and representatives in the U.S. Congress
> “Write a letter to your two senators and one US
> representative, from one page, immediately


Thank you! I added Levin. Also, get your American family living in the states to write them too! You can write one letter and copy to all above. State your situation, your innocence. The consequences to your family AND the consequences to the U.S. when people start pulling out investments as they are already doing...and the fact that this is forcing honest people who owed them nothing to renounce or be a burden to their foreign spouses and children which you are sure isn't what they intended. right?


----------



## Cafreeb12

416 said:


> This is well worth a look.


That's interesting! Do you have a link? I'd like to write the author!


----------



## justbrowsing

Cafreeb12 said:


> That's interesting! Do you have a link? I'd like to write the author!


Scott D. Michel - Lawyer in Washington, District of Columbia (DC) - Lawyers.com

and

Firms - Chambers Partners - Mark E Matthews


----------



## Guest

Cafreeb12 said:


> Carl Levin of Michigan was at the top of the charge. Also a former head of Goldman Sachs. Gee, I don't see a problem there do you? I mean it's not like Goldman did anything wrong right? And here he is ranting about over seas "tax cheats" and passing legislation like "Hire" I think he'd be the first person to write to.
> Carl Levin - United States Senator for Michigan: Home
> 
> Remember, remember the FIFTH of November.


I haven't voted in a US election since 1968 (the only one I ever voted in, as it turns out, losing first my residence and then my citizenship kinda prevented further voting in US elections), but what I find shocking and upsetting is the party affiliation of Levin and the others. All of them are Democrats, and one (Kerry) was once the Democrat presidential nominee. I voted Democrat in 1968, I personally registered more than 1000 new Democratic voters in the 1968 Indiana Primary (to vote for McCarthy and against LBJ, but still they were potential Democrats), and in 1960 I was elected president of my high school's chapter of Teenage Democrats for Kennedy/Johnson. I guess I shouldn't be surprised; it was the 1968 Democratic National Convention and Police Riot in Chicago that caused me to start thinking seriously about immigrating to Canada and giving up my US citizenship. The Democrats have long had some very disturbing tendencies; it was Kennedy who first sent military "advisers" into Vietnam, and LBJ who got into that war seriously. Both Democrats. The only reason I voted Democratic in 1968 is that, much as I was disgusted by Hubert Humphrey, I just couldn't bring myself not to vote against Richard Nixon.:spit: But it was a last-minute decision, and if the state of Indiana had allowed write-in votes (they had voting machines in 1968) I'd have voted Democrat for state and local offices and would have written in Bugs Bunny for the presidential spot, as a protest vote. As I recall you couldn't easily jigger the voting machine to spoil a ballot on one slot, but maybe that's my lack of mechanical dexterity.

Democrats everywhere should hang their heads in shame that it was Democrats who inflicted FATCA on everyone. And the Obama Administration (change you can't believe in) that is enforcing it.


----------



## Cafreeb12

Schubert said:


> I haven't voted in a US election since 1968 (the only one I ever voted in, as it turns out, losing first my residence and then my citizenship kinda prevented further voting in US elections), but what I find shocking and upsetting is the party affiliation of Levin and the others. All of them are Democrats, and one (Kerry) was once the Democrat presidential nominee. I voted Democrat in 1968, I personally registered more than 1000 new Democratic voters in the 1968 Indiana Primary (to vote for McCarthy and against LBJ, but still they were potential Democrats), and in 1960 I was elected president of my high school's chapter of Teenage Democrats for Kennedy/Johnson. I guess I shouldn't be surprised; it was the 1968 Democratic National Convention and Police Riot in Chicago that caused me to start thinking seriously about immigrating to Canada and giving up my US citizenship. The Democrats have long had some very disturbing tendencies; it was Kennedy who first sent military "advisers" into Vietnam, and LBJ who got into that war seriously. Both Democrats. The only reason I voted Democratic in 1968 is that, much as I was disgusted by Hubert Humphrey, I just couldn't bring myself not to vote against Richard Nixon.:spit: But it was a last-minute decision, and if the state of Indiana had allowed write-in votes (they had voting machines in 1968) I'd have voted Democrat for state and local offices and would have written in Bugs Bunny for the presidential spot, as a protest vote. As I recall you couldn't easily jigger the voting machine to spoil a ballot on one slot, but maybe that's my lack of mechanical dexterity.
> 
> Democrats everywhere should hang their heads in shame that it was Democrats who inflicted FATCA on everyone. And the Obama Administration (change you can't believe in) that is enforcing it.


Shubert, speaking as someone who was a former delegate for the democrats let me tell you a few things. That party is owned lock stock and barrel as much as the republicans are. I saw some shocking vote manipulation in 2008 that would curl your hair. I left over it. I was heart broken to learn that they knew, didn't care and planned to do nothing to stop it or anything to rectify it in the future. I spoke on the phone with Dr. Dean for half an hour about it. He did not deny it was going on, said he felt "some were left out of the process" and that was that. So I learned a few years ago that, the party of FDR just ain't what it used to be. My vote did not count and neither did the votes of millions of others but, hey! So what right?! I will NEVER forgive them for what I saw them do then so somehow this doesn't surprise me much.

I have learned the hard way that democrats higher up in that party for the most part talk out of one side of their mouth then serve the needs of the corporate donors who put them there. In a way it's worse because they always say how bad republicans are for the "people" out of one side of their mouths then turn around and do things like this. The party of FDR is no more and hasn't been for quite a long time now.


----------



## Ladyhawk

It is a shock to discover that your county's politicians are corrupt, but everyone assumes it's only the politicians of the other party. Much of the vitriol in the political discourse down south consists of one party accusing the other of the most immoral heinous and traitorous acts imaginable, but in truth, both parties have been complicit in the continual misuse and betrayal of both the money and the trust of the people who elected them. Get this straight - neither party has clean hands, and that includes the current administration. A cliche but true - so many good people go to Washington to do good, and end up doing well - very well indeed. They are part of the 1%.

Perhaps even worse are the politicians who are well-meaning but use their power, and often their indignation, to formulate laws that are supposed to rectify some dastardly behaviour, but it only serves to further distort the playing field and set up even more perverse incentives for some other form of corruption. The solution, in my view, is to remove so much power and money from the central government and return it to locales that are closer to the people. But that is anathema to Canadians, who have a far more trusting view of government. One thing I learned from my US history was a healthy distrust of concentrated government power. By and large, ordinary people have the ability, horse sense, and integrity to solve problems together that our politicians would inevitably distort for some political gain. A pox on all their houses.
And this forum is a case in point. We are here helping and supporting each other in the face of a common threat, and it doesn't matter who we voted for. This, people, is democracy out loud.


----------



## Cafreeb12

Ladyhawk said:


> It is a shock to discover that your county's politicians are corrupt, but everyone assumes it's only the politicians of the other party. Much of the vitriol in the political discourse down south consists of one party accusing the other of the most immoral heinous and traitorous acts imaginable, but in truth, both parties have been complicit in the continual misuse and betrayal of both the money and the trust of the people who elected them. Get this straight - neither party has clean hands, and that includes the current administration. A cliche but true - so many good people go to Washington to do good, and end up doing well - very well indeed. They are part of the 1%.
> 
> Perhaps even worse are the politicians who are well-meaning but use their power, and often their indignation, to formulate laws that are supposed to rectify some dastardly behaviour, but it only serves to further distort the playing field and set up even more perverse incentives for some other form of corruption. The solution, in my view, is to remove so much power and money from the central government and return it to locales that are closer to the people. But that is anathema to Canadians, who have a far more trusting view of government. One thing I learned from my US history was a healthy distrust of concentrated government power. By and large, ordinary people have the ability, horse sense, and integrity to solve problems together that our politicians would inevitably distort for some political gain. A pox on all their houses.
> And this forum is a case in point. We are here helping and supporting each other in the face of a common threat, and it doesn't matter who we voted for. This, people, is democracy out loud.


Ladyhawk, I'm tempted to say "Mic check!" to you. I agree with you as far as local activism working better for most things. I do prefer Canada's social system though over the U.S. and it's' part of the reason we didn't move back to the U.S. when my son was born as I had fully planned to do. He had major health issues and we could not afford to live there. CHEO in Ottawa saved his life over a five year period of us having dealings with them. My son had five specialists there in addition to his regular doctor. He wouldn't be here without them. Sadly, since that time that service was off loaded to the provinces and the local community which hasn't worked out so well. 

Your example of this forum is a good one and no need for a megaphone OR a mic check system.


----------



## AmTaker

Vangrrl said:


> I just want to qualify my above post: I'm not trying to find ways of cheating on my 1040's.
> 
> What I'm trying to figure out is how much time and money I really need to spend on being tax compliant. I don't want to spend the rest of my days studying tax documents. I'd like to make a good faith effort every year and be able to sleep at night. Which for me means reporting to the IRS what I report to the CRA.
> 
> I don't want to renounce my US citizenship. My husband and I are both in professional fields where it would be foolish for me to give up any chance of ever working in the US and we're too young to want to make that decision with finality, even if it is unlikely. But I also don't want to be spending money on cross-border accountants and lawyers most of whom I have no respect for following the OVDI debacle (2 of the more respected cross border firms locally both suggest I go into OVDI).


I think you would need to either spend time filling out your US returns or get a professional for at least the next few years. Remember that your past returns still have open SoLs, so if a new return gets audited, they can go back to previous returns as well. Its not just CRA income too, there is stuff that is not taxable in Canada that is taxable in the US, and various information returns. You can probably save some money by filing the FBARs yourself, since those aren't that complicated -- but accountants charge a lot for filing those, since the penalties are so high, they get liability insurance to protect themselves.


----------



## AmTaker

Mona Lisa76 said:


> I could refer you to my tax accountant though she is based in London.


But she has a magical 20 (or is it 35 ) point formula ( garlic, silver, holy relic) for warding off the IRS !!!

Anyway, I think its better to get a local (whatever 'local' might be) or do it yourself with maybe some tax software.


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## Mona Lisa76

N


AmTaker said:


> But she has a magical 20 (or is it 35 ) point formula ( garlic, silver, holy relic) for warding off the IRS !!!
> 
> Anyway, I think its better to get a local (whatever 'local' might be) or do it yourself with maybe some tax software.


She's never promised me anything; she has merely pointed out that in all her years of filing delinquent and amended returns, she has never been harrassedor even audited. She has pointed out that it's unlikely that the irs will bother me. She generally files quiet or refers more dubious clients to an attorney. That sounds believable.


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## AmTaker

Mona Lisa76 said:


> She's never promised me anything; she has merely pointed out that in all her years of filing delinquent and amended returns, she has never been harrassed or even audited. She has pointed out that it's unlikely that the irs will bother me. She generally files quiet or refers more dubious clients to an attorney. That sounds believable.


I wasn't being sarcastic on what your preparer said to you (which obviously I don't know), but on some comments/articles I read from her on a forum earlier this year when I started researching this stuff : those comments talked about some 20 or so point list she attached that prevented FBAR penalties, although her comments were even incorrect about actual statutory FBAR penalties which eliminated her credibility totally in my eyes. 

Then again, its not any worse than preparers who gleefully tout a possible chamber of horror penalties for non FBAR filing and say someone should go into OVDI. Those massive penalties are almost never applied even to really bad guys, so they should not be used to scare average people. I've become very skeptical of preparers in general, and I think spending half a day extra each year should be sufficient for people who don't have complicated forms to finish up US tax returns. Of course, the new FATCA form could be a pain to do too.


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## Mona Lisa76

AmTaker said:


> I wasn't being sarcastic on what your preparer said to you (which obviously I don't know), but on some comments/articles I read from her on a forum earlier this year when I started researching this stuff : those comments talked about some 20 or so point list she attached that prevented FBAR penalties, although her comments were even incorrect about actual statutory FBAR penalties which eliminated her credibility totally in my eyes.
> 
> Then again, its not any worse than preparers who gleefully tout a possible chamber of horror penalties for non FBAR filing and say someone should go into OVDI. Those massive penalties are almost never applied even to really bad guys, so they should not be used to scare average people. I've become very skeptical of preparers in general, and I think spending half a day extra each year should be sufficient for people who don't have complicated forms to finish up US tax returns. Of course, the new FATCA form could be a pain to do too.


 I take your point and am inclined to agree. Back in the spring when I first heard about all this I was so scared and felt desperate; I was going to use someone a lot more affordable but at the last minute they reneged and claimed my returns would be too complicated for them to file. There was a lot of confusion because it seemed at the time that I was going to have to urgently get all my amended tax returns filed before the 30 June FBAR deadline because, as I understood things, I had to have filed all my delinquent FBARS (with copies of the delinquent FBARS along with copies of the amended tax returns sent to a separate address in Philadelphia) before I submitted 2010's FBAR which caused an artificial sense of urgency. 

I thus felt desperate and felt I had little choice but to hire this tax preparer based here in London, especially as I'd received an extornionate quote from yet another specialist tax accounting firm. The fact that the more affordable one felt like it was out of her league, along with the fact that the second place was going to wind up costing me about £40,000 made me conclude that this third one was the only one I could realistically use because of the time factor in needing to get everything done urgently.

Unlike the other two places, she at least gave me a sense of optimism. She never promised me anything but explained her career history and how in all the six years she's been practicing (taking 10 to 20 clients like me per year) that she's never been had any FBAR fines assessed for any of them. She also explained how she networks around with other preparers and that it is almost unheard of for longterm expats to be clobbered. Which gets back to your point, of course.

I could have probably gone to someone like Greenback and been reasonably OK at a fraction of the price but at the time I was desperate. She probably takes advantage of our vulnerability though feel reassured that she would be able to represent me or refer me to an experienced attorney if the IRS decided to play rough.

The problem though is that she pointed out quite reasonably that the PFIC taxation is very complicated and as I held close to 50 UK-based mutual funds, I was stuck. I wouldn't have had a clue how to fill out the 8621 forms and especially with FATCA and the upcoming 8938 'son of FBAR' form which will have to be retroactively filed even from this tax year (2011), I realized I had no choice but to use a specialist. 

The whole situation is exasperating but it's just one of those things.

At least in a worst case scenario I could always attest that I'd tried to put things right with an honest, good-faith disclosure if it ever went to court. Would have been harder to argue reasonable cause if I had merely filed going forward.

I have sniffed around though and have found to my relief that she is well-thought of here in London. Not a cowgirl. She's a bit scatty but very bright and I believe quite knowledgable as well as experienced in this field.

I would tend to believe that the IRS is mainly demonstrating their 'nuclear option' to terrify people like us into compliance; it certainly scared me into action. And the attorneys and accountants enjoy a symbiotic relationship and make a living from our vulnerability, hence the IRS's expecting filers to use professionals for help. The whole set-up sucks but there you have it. Like Vangirl, I see renouncing as an option so will just have suck it up and deal with it, almost like annual membership dues.


----------



## AmTaker

Mona Lisa76 said:


> I would tend to believe that the IRS is mainly demonstrating their 'nuclear option' to terrify people like us into compliance; it certainly scared me into action. And the attorneys and accountants enjoy a symbiotic relationship and make a living from our vulnerability, hence the IRS's expecting filers to use professionals for help. The whole set-up sucks but there you have it. Like Vangirl, I see renouncing as an option so will just have suck it up and deal with it, almost like annual membership dues.



I happen to be a 'covered' expatriate, so I don't really want to consider renunciation for that reason because I have the exit tax to contend with. But I'm finding that the returns aren't that hard to do, even the PFIC one (form 8621).


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## Mona Lisa76

AmTaker said:


> I happen to be a 'covered' expatriate, so I don't really want to consider renunciation for that reason because I have the exit tax to contend with. But I'm finding that the returns aren't that hard to do, even the PFIC one (form 8621).


You're probably right, especially if you're using the mark to market method. This is what irks me: how the accountant does all he or she can to make one feel dependent on them. She referred me onto a financial advisor who I believe is skimming a substantial percentage of my portfolio income as de facto ongoing commission. She is effectively a trustee and will be relaying information to my accountant, thus effectively forcing me to stick with her going forward. They're all blood suckers at the end of the day. 


All that's happened to me this year has ruined any chances for early retirement and it's made me bitter. But it's also caused me to change my prioritize and lower my expectations I suppose. I know I will never be able to completely stop working before my last 60s at the earliest but at least I'm living more for today instead of for the future, which is a blessing in disguise.

I just resent how the system has a way of knocking me back down though when I was trying to get ahead and escape the rat race.


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## Vangrrl

AmTaker said:


> I think you would need to either spend time filling out your US returns or get a professional for at least the next few years. Remember that your past returns still have open SoLs, so if a new return gets audited, they can go back to previous returns as well. Its not just CRA income too, there is stuff that is not taxable in Canada that is taxable in the US, and various information returns. You can probably save some money by filing the FBARs yourself, since those aren't that complicated -- but accountants charge a lot for filing those, since the penalties are so high, they get liability insurance to protect themselves.


Thanks for reminding me about SOLs. I was feeling a bit too cocky after filing the last few years returns.  I'll keep things as straight as I can (and stick with the expat accountant) for the next few years. My husband calls it the "cost of staying American" and for now it is what it is.


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## Vangrrl

Mona Lisa76 said:


> N
> 
> She's never promised me anything; she has merely pointed out that in all her years of filing delinquent and amended returns, she has never been harrassedor even audited. She has pointed out that it's unlikely that the irs will bother me. She generally files quiet or refers more dubious clients to an attorney. That sounds believable.


I think that most everyone that's been filing late returns in the past few years would be able to say the same. The IRS just didn't make a priority of ex-pat returns, late or not. Whether that's changed now.... its hard to say. Like you said, this all may just be a big flexing of muscles that isn't actually going to amount to much in terms of follow up, but we just don't know.

I understand your panic and feel the pressure to make decisions quickly. If it weren't for the fact that the local "expert" I was referred to was on vacation for 2 weeks in August, and in the mean time I found this forum and this wealth of information, I would probably be in OVDI right now. Just the thought of this makes me so angry.


----------



## Vangrrl

AmTaker said:


> I happen to be a 'covered' expatriate, so I don't really want to consider renunciation for that reason because I have the exit tax to contend with. But I'm finding that the returns aren't that hard to do, even the PFIC one (form 8621).


Could you remind me again, for a covered expatriate, how is the $2M assets calculated? Does that include joint assets? Would I exclude half of my assets (namely my nearly-paid-off house) if it is owned jointly with my Canadian husband?


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## Ladyhawk

Vangrrl said:


> I understand your panic and feel the pressure to make decisions quickly. If it weren't for the fact that the local "expert" I was referred to was on vacation for 2 weeks in August, and in the mean time I found this forum and this wealth of information, I would probably be in OVDI right now. Just the thought of this makes me so angry.


Me too, Vangrrl, I shudder to think how close I came to rushing off a Fed-Ex letter asking for a 90-day extension and asking to join the program. I am so glad I resisted doing that and I am FURIOUS at how people like Peg got trapped because they are honest and wanted to set things right. It was a horrible dilemma, juggling the scenario of compliance through OVDI but with the possibility of huge fines, versus the chance I'd fly under the radar through quiet disclosure but could be hit bigtime if I were to be audited.

The reason I resisted joining is the same intuition I have now, which is that I am a small fish, the IRS is flooded with paperwork, they are probably short on resources to cope with it, and they will in any case be likely to focus their efforts on the ones who will net them the most money. All I have submitted so far is my 2010 1040, which showed I owed no taxes, although I ignored the Schedule B part because I was unaware of it. I won't send in an amended return as that seems to set off alarms, but I'll probably file taxes back to 2008, and then the FBARS. I won't owe any taxes for those years. If they want more, they can ask for them and I'll send it to them. Then I'll stay compliant going forward.


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## Mona Lisa76

Vangrrl said:


> I think that most everyone that's been filing late returns in the past few years would be able to say the same. The IRS just didn't make a priority of ex-pat returns, late or not. Whether that's changed now.... its hard to say. Like you said, this all may just be a big flexing of muscles that isn't actually going to amount to much in terms of follow up, but we just don't know.
> 
> I understand your panic and feel the pressure to make decisions quickly. If it weren't for the fact that the local "expert" I was referred to was on vacation for 2 weeks in August, and in the mean time I found this forum and this wealth of information, I would probably be in OVDI right now. Just the thought of this makes me so angry.


I completely agree that these so called 'experts' are milking us for what it's worth. It's just that I was caught in the headlights and realized that if I continued to file merely nominal returns that I would then be guilty of willful intent because I would now be aware that I wasn't doing things correctly. With FATCA's long reach, I felt I had no choice but to make a full disclosure because things really could be different this time.

This is the dilemma. I tend to think they'll probably concentrate on bigger fish but with all the technology and fatca, they may decide to make examples of minnows too. Think of how desperate their deficit is. They need money and will get it however they can. Agree it's horrible about all the innocent casualties who unwittingly joined OVDI like Peg...

Another thing is that cheaper tax preparers were all encouraging OVDI so felt I had no choice really in who I chose. THey're all blood suckers though...in many ways, I feel more annoyed that I will have probably compromised my investing going forward due to all the commission my financial advisor will be taking from my new duel compliant portfolio but hopefully it's simply more transparent costing.

I'm sure that mutual funds also skim returns indirectly.

If I had no family ties I'd have probably renounced but as things are I can't so it is what it is. Money is not everything. I'll take more time to smell the roses at least.


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## justbrowsing

Vangrrl said:


> Could you remind me again, for a covered expatriate, how is the $2M assets calculated? Does that include joint assets? Would I exclude half of my assets (namely my nearly-paid-off house) if it is owned jointly with my Canadian husband?


The form is 8854 and if you google irs 8854 you will find instructions and the form with the calculation worksheet.

Depending on your circumstances (i.e. registered as CDN born abroad at birth and long residency in Canada) you are exempt from the exit tax. I believe that is the only exemption but there may be others.


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## Guest

Vangrrl said:


> Could you remind me again, for a covered expatriate, how is the $2M assets calculated? Does that include joint assets? Would I exclude half of my assets (namely my nearly-paid-off house) if it is owned jointly with my Canadian husband?


In addition to your question, I am seeking accurate advice on how to value our pensions in determining whether we are "convered" or not; i.e. I am retired and have a defined benefit pension for which I am receiving $1,337/month. I had a retirement projection done by HSBC Securities last week -- for my net worth, that pension is valued at $301,202. My CPP is valued at $145,478; OAS $116,418; Social Security $57,425. Rental on my duplex is valued at $247,718 -- not to mention the value of the house in inflated-assessment / house prices in Calgary. I hold the title in my name (not jointly with my husband / re-married in 2005) only for what I considered to be best planning for the well-being of my adult developmenally-delayed son when I am no longer here. 

I REALLY need so much further advice to acheive the goals I have worked and strived for for my family. IRS of course cannot answer these questions so I am bouncing from one professional to another in seeking "the formula," essential to my decision. I know what I DEFINITELY want to do, RENOUNCE, and be done with this for myself, my family, any future executor(s). Whether or not that is realistic financially is another question. 

I am one who definitely thought that I had relinquished my U.S. citizenship in the early 1970's when I became a Canadian citizen. A lot of my anger is to myself for not going to the right person (immigration rather than tax advice) and cementing my place in the U.S. system since I now have that U.S. passport that I lived without until 2009. What was I thinking????


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## Vangrrl

justbrowsing said:


> The form is 8854 and if you google irs 8854 you will find instructions and the form with the calculation worksheet.
> 
> Depending on your circumstances (i.e. registered as CDN born abroad at birth and long residency in Canada) you are exempt from the exit tax. I believe that is the only exemption but there may be others.


Thank you, I will look that up (there's a form for everything, right?)! 

Unfortunately, although we moved to Canada when I was 9 months old, my parents were not Canadian at the time (nor Americans).


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## Pacifica

nobledreamer said:


> The Foreign Account Tax Compliance Act (FATCA) was introduced on October 27, 2009 by Chairman *Baucus* (D-MT), Chairman *Rangel (*D-NY-15), Senator *Kerry* (D-MA), and Representative *Neal* (D-MA-2) to address concerns about U.S. persons avoiding U.S. tax through offshore bank accounts. It was passed as part of the Hiring Incentives to Restore Employment Act (H.R. 2847).


Regarding FATCA bill sponsor Charles Rangel, on 16 November 2010, the Adjudicatory Subcommittee of the House Ethics Committee found Rep. Rangel guilty of 11 ethics violations, some of which involved failure to disclose income and assets and non-payment of taxes.

I note in particular (USA Today 2010.11.17) "Ethics subcommittee concluded Rangel ... failed to disclose roughly $60,000 in assets and income in reports to Congress and failed to pay taxes to the IRS on rental income earned from a villa he owns in the Dominican Republic."

Rep. Rangel was Chair of the Ways and Means Committee, which is the House Committee that writes the US Tax Code.


----------



## AmTaker

Vangrrl said:


> Could you remind me again, for a covered expatriate, how is the $2M assets calculated? Does that include joint assets? Would I exclude half of my assets (namely my nearly-paid-off house) if it is owned jointly with my Canadian husband?


Yes, for joint assets, you can take 50% in general. The matter is a little complicated in some US states, because they have special community property laws, but I don't know if that applies to people living abroad. In any case, if you bought it together, it should be joint.


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## AmTaker

Calgary411 said:


> In addition to your question, I am seeking accurate advice on how to value our pensions in determining whether we are "convered" or not; i.e. I am retired and have a defined benefit pension for which I am receiving $1,337/month. I had a retirement projection done by HSBC Securities last week -- for my net worth, that pension is valued at $301,202. My CPP is valued at $145,478; OAS $116,418; Social Security $57,425. Rental on my duplex is valued at $247,718 -- not to mention the value of the house in inflated-assessment / house prices in Calgary. I hold the title in my name (not jointly with my husband / re-married in 2005) only for what I considered to be best planning for the well-being of my adult developmenally-delayed son when I am no longer here.
> 
> I REALLY need so much further advice to acheive the goals I have worked and strived for for my family. IRS of course cannot answer these questions so I am bouncing from one professional to another in seeking "the formula," essential to my decision. I know what I DEFINITELY want to do, RENOUNCE, and be done with this for myself, my family, any future executor(s). Whether or not that is realistic financially is another question.
> 
> I


I'm not an expert, but I don't think Social Security (thats US Social Security, right ) would be included in this value, since its considered a 'qualified pension' (essentially, any US based pension). Also, I don't think both the value of 'rental on duplex' and the value of the duplex would be included, thats double counting. Only value would be included. If you add all that up, and come close to $2M, then you should talk to an expert at least once. I think there are US law firms that specialize in this. If you're not close, I don't think you need to bother.


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## Guest

AmTaker said:


> I'm not an expert, but I don't think Social Security (thats US Social Security, right ) would be included in this value, since its considered a 'qualified pension' (essentially, any US based pension). Also, I don't think both the value of 'rental on duplex' and the value of the duplex would be included, thats double counting. Only value would be included. If you add all that up, and come close to $2M, then you should talk to an expert at least once. I think there are US law firms that specialize in this. If you're not close, I don't think you need to bother.


Thanks. Unfortunately, I am close so I need to make absolutely sure about value of all my assets before I renounce -- I live fairly frugally as my eye has been on the future of my son and government safety nets not a given with future demographics, health care costs, etc. I am house-heavy due real estate gains. I know I haven't made the wisest choices so I hope the estate planner I will see next week, specializing in estates built around the needs of the disabled community, who also is a lawyer with past exeprience in tax, both Canadian and U.S., will help get me on a more sensible track.


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## Guest

Pacifica said:


> Regarding FATCA bill sponsor Charles Rangel, on 16 November 2010, the Adjudicatory Subcommittee of the House Ethics Committee found Rep. Rangel guilty of 11 ethics violations, some of which involved failure to disclose income and assets and non-payment of taxes.
> 
> I note in particular (USA Today 2010.11.17) "Ethics subcommittee concluded Rangel ... failed to disclose roughly $60,000 in assets and income in reports to Congress and failed to pay taxes to the IRS on rental income earned from a villa he owns in the Dominican Republic."
> 
> Rep. Rangel was Chair of the Ways and Means Committee, which is the House Committee that writes the US Tax Code.


How incredibly ironic. I always thought he was just a bit of a nutcase and forgot about the ethics violations......


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## Cafreeb12

nobledreamer said:


> How incredibly ironic. I always thought he was just a bit of a nutcase and forgot about the ethics violations......


Ironic indeed and Levin was head of Goldman Sachs, Geithner is also a tax evader. Wow! but, here we are being gone after...you know all us ex pat "tax cheats" who didn't owe them a red cent.


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## Guest

nobledreamer said:


> How incredibly ironic. I always thought he was just a bit of a nutcase and forgot about the ethics violations......


(very long string of obscene and defamatory expletives deleted) No he's not a nutcase. He should be frog-marched to the nearest stone wall and machine-gunned to death without the benefit of a blindfold. Not just for the tax and ethics violations, but for being a typical santimonious imperalist hypocritical US congressvermin to sponsor something that nails people like everyone on this forum and then tries to exempt lowlifes like himself.

If there is universal justice administered by some sort of God then there is a very special place in Hell waiting for this man when he dies.

Sorry somewhat off topic but the devil made me do it


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## McLovin

Schubert said:


> (very long string of obscene and defamatory expletives deleted) No he's not a nutcase. He should be frog-marched to the nearest stone wall and machine-gunned to death without the benefit of a blindfold. Not just for the tax and ethics violations, but for being a typical santimonious imperalist hypocritical US congressvermin to sponsor something that nails people like everyone on this forum and then tries to exempt lowlifes like himself.
> 
> If there is universal justice administered by some sort of God then there is a very special place in Hell waiting for this man when he dies.
> 
> Sorry somewhat off topic but the devil made me do it


The more I read about stuff like this, I grow more furious. After some persuasion, I was able to talk my father off the ledge and he has agreed to hold off filing his past-returns and FBAR until we gather more definitive facts related to his case. 

Since he has a Canadian birthplace (got US czp in 2003), he may be exempt from the exit tax even with subsection 3 (meeting IRS tax req's) and is considering renouncing. I am in the process of engaging someone I was referred to by a colleague, who has a PHd and is the case-law expert for a large tax law firm in LA. Apparently the IRS is "scared of this guy", so we'll see what he has to say. I will certainly relay all information he is able to provide.


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## Guest

*Possible evidence of IRS-Border Patrol data linkages*

I hesitate to report this, because it’s third-hand, but I consider the source extremely reliable. 

This afternoon I met with a fellow US-expatriate from the Vietnam era who became a Canadian in 1980 fully believing that meant she lost her US citizenship. She is scrambling to meet ends meet and is horrified at what any tax penalties could do to the rest of her life. She was going to visit her family in the US for Thanksgiving but has cancelled, doesn’t want to cross the border now for the following reasons.

She and another US expatriate (whom I know but not well) had lunch yesterday and the other person reported a mutual friend of theirs, also a woman of a certain age (over 60), was recently pulled over into secondary on crossing the border (don’t know which crossing) on a Canadian passport showing US birthplace. She was grilled for two hours ABOUT HER TAX SITUATION and was fined $10,000 before being let go. (I can’t believe she paid up on the spot, I’d have demanded to speak with a Canadian consular official, with my lawyer, and with my accountant and have refused to pay or sign a ***damn thing and would have raised an unholy ruckus, but that’s me.)

I don’t know (will try to find out, but it’s a delicate matter as you can appreciate, no idea how long it will take to winkle this out) whether she had already been on IRS radar or whether this was a random sweep that turned bad, but it sounds distinctly as if (contrary to what I’d have believed possible for technical and administrative reasons) IRS and Border Patrol may have some data-base linkages. So if you’re not clear on your tax situation, best not to cross. Spend your money in Canada not the US, this Thanksgiving. Tell your relatives why and have them write their congressvermin, for whatever good that will do.

I don't want to be the one to cry wolf when there isn't one, but I take this seriously enough to report it here. If anyone else has similar stories or information, please post. I will post again if I hear anything materially different or beyond what I just reported.


----------



## McLovin

Schubert said:


> I hesitate to report this, because it’s third-hand, but I consider the source extremely reliable.
> 
> This afternoon I met with a fellow US-expatriate from the Vietnam era who became a Canadian in 1980 fully believing that meant she lost her US citizenship. She is scrambling to meet ends meet and is horrified at what any tax penalties could do to the rest of her life. She was going to visit her family in the US for Thanksgiving but has cancelled, doesn’t want to cross the border now for the following reasons.
> 
> She and another US expatriate (whom I know but not well) had lunch yesterday and the other person reported a mutual friend of theirs, also a woman of a certain age (over 60), was recently pulled over into secondary on crossing the border (don’t know which crossing) on a Canadian passport showing US birthplace. She was grilled for two hours ABOUT HER TAX SITUATION and was fined $10,000 before being let go. (I can’t believe she paid up on the spot, I’d have demanded to speak with a Canadian consular official, with my lawyer, and with my accountant and have refused to pay or sign a ***damn thing and would have raised an unholy ruckus, but that’s me.)
> 
> I don’t know (will try to find out, but it’s a delicate matter as you can appreciate, no idea how long it will take to winkle this out) whether she had already been on IRS radar or whether this was a random sweep that turned bad, but it sounds distinctly as if (contrary to what I’d have believed possible for technical and administrative reasons) IRS and Border Patrol may have some data-base linkages. So if you’re not clear on your tax situation, best not to cross. Spend your money in Canada not the US, this Thanksgiving. Tell your relatives why and have them write their congressvermin, for whatever good that will do.
> 
> I don't want to be the one to cry wolf when there isn't one, but I take this seriously enough to report it here. If anyone else has similar stories or information, please post. I will post again if I hear anything materially different or beyond what I just reported.


I have been dealing with immigration into the U.S for over a decade. I can say with certainty that the IRS and DHS (Dept. of Homeland Security) ARE in fact linked. It has only been a couple years since the two systems have directly communicated. I am not sure to what extent they are using it for flagging or fishing, but it would not surprise me if the US birthplace on CAN passport is a flagged condition. To my knowledge, DHS would be able to pull at least your basic tax information if they matched your identity to an American SSN.


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## AmTaker

Schubert said:


> I hesitate to report this, because it’s third-hand, but I consider the source extremely reliable.
> 
> This afternoon I met with a fellow US-expatriate from the Vietnam era who became a Canadian in 1980 fully believing that meant she lost her US citizenship. She is scrambling to meet ends meet and is horrified at what any tax penalties could do to the rest of her life. She was going to visit her family in the US for Thanksgiving but has cancelled, doesn’t want to cross the border now for the following reasons.
> 
> She and another US expatriate (whom I know but not well) had lunch yesterday and the other person reported a mutual friend of theirs, also a woman of a certain age (over 60), was recently pulled over into secondary on crossing the border (don’t know which crossing) on a Canadian passport showing US birthplace. She was grilled for two hours ABOUT HER TAX SITUATION and was fined $10,000 before being let go. (I can’t believe she paid up on the spot, I’d have demanded to speak with a Canadian consular official, with my lawyer, and with my accountant and have refused to pay or sign a ***damn thing and would have raised an unholy ruckus, but that’s me.)
> 
> .


This sounds very much like an urban legend. Who would cough up 10K like this without complaining to high heaven ? Even big time tax evaders are given their day in court before being fined (or have a chance to challenge fines in tax court).


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## Guest

AmTaker said:


> This sounds very much like an urban legend. Who would cough up 10K like this without complaining to high heaven ? Even big time tax evaders are given their day in court before being fined (or have a chance to challenge fines in tax court).


I have no doubt there was a 10K fine involved, what I'm not clear on and hope to get confirmation about is whether it was on the spot or later.

However, given my personal knowledge of the two people who had lunch and my suspicion the third party who was the victim is similar, I can well believe that an older person pulled over into secondary, especially if she was travelling alone and isn't as personally assertive (and has always thought of herself as an honest, innocent person), could be bullied into admitting or doing almost anything before she had the time to calm down and realize should could call for legal help. I could say the same about the people who were bullied by the US Border guy out west, I think in Blaine Wash., who got fired or resigned because of repeated bullying and abusing a couple hundred people crossing into the US there, which was reported on CBC News website a week or two ago. Someone obviously complained and eventually the higher-ups acted on it, but I'll bet there were a lot of people who were too intimidated or terrified to resist or complain on the spot.

Talk to anyone who was a survivor or a child of a survivor of the Holcaust about that. People don't believe what's happening to them, think if they're polite and compliant it will get better or at least won't get worse, etc.

I'm using that example quite deliberately. I happen to think it's appropriate, both in this particular situation and more generally.


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## Deckard1138

*Is it really happening?*

Hi Schubert,

If we are now actually moving out of the realm of possibility about these things and into real-world cases of border interdiction and shakedowns, then I believe we should start documenting them in a separate sticky thread. I know you're still trying to verify this story, but even hearing this scares the jeepers out me. That could have been my father a couple of weeks ago when he drove down to Pennsylvania for probably his last-ever high school reunion. I warned him to be absolutely truthful if they did pull him over and start asking questions. Now, since nothing happened that particular time, he and my step-mom have concluded that all of this is overblown, paranoid nonsense and they'll go back again whenever they feel like it. Meanwhile, dad is a true sitting-duck since he has a U.S. passport and SSN, and has never filed U.S. tax returns or FBAR forms since moving to Canada. His Canadian citizenship will be worth diddly squat should they choose to pull him aside.

As for me, I've already decided I'm going nowhere near the border, at least for now. I would not want to subject my family, or myself, to that kind of emotional trauma and financial risk. The last time I went to the States was just this last summer, with my wife and daughter. We drove to Boston so my daughter could attend a nationals dance competition. While there I made a number of side trips, including Faneuil Hall, the U.S.S. Constitution, Bunker Hill, Paul Revere House, the Kennedy Archives and Museum, and even to the house I lived in when I was just two years old. So ironic that it had to be the hallowed birthplace of the United States, site of the original tea party, no taxation without representation and all that other mythical American claptrap that's been tossed into a growing bonfire of imperial fascism. If I never have the chance to go back again, this is what I'll remember of my last time on American soil - a final twist of the knife.


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## Ladyhawk

Schubert, I read something back in August about the fact that recently the IRS and Border Services have been given the go-ahead to exchange information so that border agents may (not must) question you about your tax status and can access data regarding this, but I do not know the details. I will see if I can find that article in my numerous bookmarks on the whole sorry mess.
There are also many many anecdotes floating around, sometimes appearing (undocumented) in articles in reputable journals (would that include the Mop and Pail?) in which evil border agents have harassed people at the border and interrogated them about their tax status, refused them entry to the US, or turned them over to an IRS agent, or even called in the law. It is impossible to say how true such tales are unless proper documentation or references are given, so I remain skeptical unless there are reasonable grounds to trust the credibility of the source. But I'm sufficiently paranoid, or is that realistic, after all this to believe that border agents may have, now or in the near future, a lot of leeway to investigate anyone for anything they think may relate to national security - and yes, terrorist organizations need bank accounts and may masquerade as legit organizations with personnel who cross the border, so we are fair game in their eyes.

BTW, your use of the Holocaust analogy is inappropriate in my opinion. I don't mean this personally in any way, but that particular analogy is used incessantly in political rhetoric, even in Canada, and it is not analogous to this situation. Yes we are looking at the targeting of a class of people for financial and perhaps legal harassment, but we aren't talking genocide here. Using the Holocaust to apply to any gross miscarriage of justice dulls its impact in time.


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## Bevdeforges

AmTaker said:


> This sounds very much like an urban legend. Who would cough up 10K like this without complaining to high heaven ? Even big time tax evaders are given their day in court before being fined (or have a chance to challenge fines in tax court).


I agree here. The US doesn't collect big fines like this "on the spot" - precisely because anyone shaken down like this would (and should) immediately go to the press because it looks like pure corruption on the part of the officials involved. There has to be some form of an audit involved and a little thing called due process.

While the data systems of the IRS and the Border patrol may be linked these days, for those Canadians (or anyone else) who are merely "accidental Americans" - born overseas but with an American parent - there is little or no danger of being stopped, unless you are already on the IRS or Homeland Security radar for "issues" you're already aware of.
Cheers,
Bev


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## Cafreeb12

Bevdeforges said:


> I agree here. The US doesn't collect big fines like this "on the spot" - precisely because anyone shaken down like this would (and should) immediately go to the press because it looks like pure corruption on the part of the officials involved. There has to be some form of an audit involved and a little thing called due process.
> 
> While the data systems of the IRS and the Border patrol may be linked these days, for those Canadians (or anyone else) who are merely "accidental Americans" - born overseas but with an American parent - there is little or no danger of being stopped, unless you are already on the IRS or Homeland Security radar for "issues" you're already aware of.
> Cheers,
> Bev



Yes, isn't that graft at the border? They can't possibly be authorized to collect such fines can they? That sounds a bit like some countries where you get fleeced in order to be let in as a matter of course, which does happen in some more outlying places. I've never heard of it with the U.S. though....yet. Shocking. Although I have heard of some over zealous border agents who subsequently got in trouble for harassing people well outside the guidelines of what they were allowed to do. Unfortunately, that didn't protect the people he treated like criminals for no reason. However, maybe there IS some mechanism coming where you could be fined..after all you can be pulled over and asked to pay on goods already...which is fair. I'm clueless on how they might deal with this fines and penalties issue at the border but, I have been reading some articles that they do plan to start measures in that direction.


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## AmTaker

Cafreeb12 said:


> Yes, isn't that graft at the border? They can't possibly be authorized to collect such fines can they? That sounds a bit like some countries where you get fleeced in order to be let in as a matter of course, which does happen in some more outlying places. I've never heard of it with the U.S. though....yet. Shocking. Although I have heard of some over zealous border agents who subsequently got in trouble for harassing people well outside the guidelines of what they were allowed to do. Unfortunately, that didn't protect the people he treated like criminals for no reason. However, maybe there IS some mechanism coming where you could be fined..after all you can be pulled over and asked to pay on goods already...which is fair. I'm clueless on how they might deal with this fines and penalties issue at the border but, I have been reading some articles that they do plan to start measures in that direction.


People being harassed at the border is not unheard of in the US especially if they have some doubt about your immigration status. Or if you're a GC holder returning after a long stay abroad. And they certainly have DHS checks and the like. they could ask about US birth place if it shows up on foreign passport, but for immigration reasons, not tax reasons. 

But to date, I have NEVER heard one reliable story of fines being assessed (let alone collected) at the border. Its an urban legend, a classical friend of a friend story. In the first place, the fine would have to be assessed, you would have to be given an opportunity to respond in a court etc., and even then I doubt you would be stopped at the border unless a really large sum was involved.


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## AmTaker

Calgary411 said:


> Thanks. Unfortunately, I am close so I need to make absolutely sure about value of all my assets before I renounce -- I live fairly frugally as my eye has been on the future of my son and government safety nets not a given with future demographics, health care costs, etc. I am house-heavy due real estate gains. I know I haven't made the wisest choices so I hope the estate planner I will see next week, specializing in estates built around the needs of the disabled community, who also is a lawyer with past exeprience in tax, both Canadian and U.S., will help get me on a more sensible track.


I'm not sure its unfortunate to be 'close' .

If you talk to an expert, be sure to check about the pensions since those rules are really complicated depending on whether they are 'qualified' or not. Also, if you turn out to be covered, the total value of some types of pensions is assumed to be current income, paid out on that date. So even if you would not owe taxes otherwise because of the 600K exclusion on the MTM tax, you would have to pay current income tax on the whole pension as a lump sum (likely that would be at a pretty high rate, 35% or so). thats my reading of the law anyway. although I'm not an expert.


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## Guest

AmTaker said:


> I'm not sure its unfortunate to be 'close' .
> 
> If you talk to an expert, be sure to check about the pensions since those rules are really complicated depending on whether they are 'qualified' or not. Also, if you turn out to be covered, the total value of some types of pensions is assumed to be current income, paid out on that date. So even if you would not owe taxes otherwise because of the 600K exclusion on the MTM tax, you would have to pay current income tax on the whole pension as a lump sum (likely that would be at a pretty high rate, 35% or so). thats my reading of the law anyway. although I'm not an expert.


Thanks -- I definitely want to get accurate information regarding pensions as it will make a big difference. 

And, I know what you'e saying about my situation not being so very unfortunate. I am so very thankful to be in Canada since 1969 and to have become a Canadian citizen and to have raised my kids here. I know I could not have been a contributing member of society had I stayed in the U.S. or returned to the U.S. upon my divorce in 1984, just because of my son's and my health. As a single mom, my and my son's pre-existing conditions would have been very expesive to manage in the U.S. I likely would have been forced to rely on Medicaid. So, I am indeed so lucky in so many ways. 

I worked very hard over the years and thought I was being responsible in planning for my son's future when I am gone. However, I find I've made many big mistakes, the main one getting advice from a cross-border accounting firm instead of immigration law and entering back into the U.S. tax system in 2008 by doing back returns and FBARs and in 2009 by applying for the dreaded U.S. passport. I should have listened to my gut. What I have in place for my son, including the Registered Disablity Savings Account I hold for him, similar to Canada's Registered Education Savings Plan, I do not want to hand any portion of (the bonds and grants) to the IRS. I may have a window of opportunity here if I am not a "covered person" for the exit tax. I need to be absolutely sure -- if that is not the case, my decision (mainly from a financial aspect for my son) may have to be continuing as a U.S. citizen. My preference is to be ONLY a Canadian citizen. I have never intended anything else since taking my Canadian citizenship in the early 70's.


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## Guest

Bevdeforges said:


> I agree here. The US doesn't collect big fines like this "on the spot" - precisely because anyone shaken down like this would (and should) immediately go to the press because it looks like pure corruption on the part of the officials involved. There has to be some form of an audit involved and a little thing called due process.


It is possible that the timing of the fine, under what circumstances it was paid, may have been garbled a bit in the transmission of the story to me. I'd like some more detail on the citizenship/passport details, what triggered the secondary screening, and whether there had already been a tax audit on the file or whether this was totally out of the blue. Also whether legal advice was requested or demanded or even presented as an option, if in fact the "shake down" occurred at the border crossing (and if it was in fact a shake down, the specific border crossing, date and time with a plea from me that these details be made available by the victim to the appropriate authorities). I am trying to arrange a face-to-face meeting with the victim, which I think may be feasible given my personal connections to some of the people in this story. If that happens, I'll summarize what I learn, in this forum. Not certain of timing but if a meeting happens it should be within a week or so.


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## Cafreeb12

Calgary411 said:


> Thanks -- I definitely want to get accurate information regarding pensions as it will make a big difference.
> 
> And, I know what you'e saying about my situation not being so very unfortunate. I am so very thankful to be in Canada since 1969 and to have become a Canadian citizen and to have raised my kids here. I know I could not have been a contributing member of society had I stayed in the U.S. or returned to the U.S. upon my divorce in 1984, just because of my son's and my health. As a single mom, my and my son's pre-existing conditions would have been very expesive to manage in the U.S. I likely would have been forced to rely on Medicaid. So, I am indeed so lucky in so many ways.
> 
> I worked very hard over the years and thought I was being responsible in planning for my son's future when I am gone. However, I find I've made many big mistakes, the main one getting advice from a cross-border accounting firm instead of immigration law and entering back into the U.S. tax system in 2008 by doing back returns and FBARs and in 2009 by applying for the dreaded U.S. passport. I should have listened to my gut. What I have in place for my son, including the Registered Disablity Savings Account I hold for him, similar to Canada's Registered Education Savings Plan, I do not want to hand any portion of (the bonds and grants) to the IRS. I may have a window of opportunity here if I am not a "covered person" for the exit tax. I need to be absolutely sure -- if that is not the case, my decision (mainly from a financial aspect for my son) may have to be continuing as a U.S. citizen. My preference is to be ONLY a Canadian citizen. I have never intended anything else since taking my Canadian citizenship in the early 70's.


This is interesting and I'm so intrigued by these situations. I too was glad to be here as my son is also disabled. I am getting some responses from Americans who have never lived outside the U.S. along the lines of "Oh, well you CHOSE to leave so you have to pay your taxes" etc. etc. etc. In so many of our cases it wasn't really as if we just up one day said, "I am leaving the U.S.!" without our situation being a contributing factor. For most of us it wasn't financially motivated at all. There was no way after my son was born in Canada with his health issues I could have moved back to the U.S. even if I had wanted to. It simply would have been too arduous and we also would have been using the system there much more than here I.E. a "burden" on that system. Canada because of it's health care system allowed us to be more independent and contribute more to society as well as not putting us under the poor house with medical debt, though we did have some. Many in the U.S. largely due to the media are missing the human factor here and seeing this as entirely a bunch of caviar eating, champagne swilling rich people leaving the U.S. and draining their society of tax revenue. When what I'm seeing is a totally different issue. It's lead them to come after people and put them in precarious financial straits who really shouldn't be in this category of tax reporting at all. Let alone the fact that people such as yourself have to take such time and energy when you have precious little of it, and devote it to sorting this mess all out.


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## Guest

*Retraction*



Schubert said:


> I hesitate to report this, because it’s third-hand, but I consider the source extremely reliable.
> 
> This afternoon I met with a fellow US-expatriate from the Vietnam era who became a Canadian in 1980 fully believing that meant she lost her US citizenship. She is scrambling to meet ends meet and is horrified at what any tax penalties could do to the rest of her life. She was going to visit her family in the US for Thanksgiving but has cancelled, doesn’t want to cross the border now for the following reasons.
> 
> She and another US expatriate (whom I know but not well) had lunch yesterday and the other person reported a mutual friend of theirs, also a woman of a certain age (over 60), was recently pulled over into secondary on crossing the border (don’t know which crossing) on a Canadian passport showing US birthplace. She was grilled for two hours ABOUT HER TAX SITUATION and was fined $10,000 before being let go. (I can’t believe she paid up on the spot, I’d have demanded to speak with a Canadian consular official, with my lawyer, and with my accountant and have refused to pay or sign a ***damn thing and would have raised an unholy ruckus, but that’s me.)
> 
> I don’t know (will try to find out, but it’s a delicate matter as you can appreciate, no idea how long it will take to winkle this out) whether she had already been on IRS radar or whether this was a random sweep that turned bad, but it sounds distinctly as if (contrary to what I’d have believed possible for technical and administrative reasons) IRS and Border Patrol may have some data-base linkages. So if you’re not clear on your tax situation, best not to cross. Spend your money in Canada not the US, this Thanksgiving. Tell your relatives why and have them write their congressvermin, for whatever good that will do.
> 
> I don't want to be the one to cry wolf when there isn't one, but I take this seriously enough to report it here. If anyone else has similar stories or information, please post. I will post again if I hear anything materially different or beyond what I just reported.


I have learned today there was some mis-communication regarding the details of the incident described above, to an extent that I no longer have confidence in the story as described above. The story above may be a mingling of two or more related stories, I’m not sure; maybe I’ll eventually get to the bottom of it. Please disregard what I said in the above post, with my abject apologies for any needless anxiety it might have caused anyone. Next time I hear something like this, I’ll do a little more rigorous checking before posting, than I did in this case.

My wife and I are hoping to set up a face-to-face meeting with a number of individuals in our situation (it turns out there are more of us in our extended social circle than I realized), including I hope the ones involved in the above story, to share some information and ideas locally. If I learn anything different from or in addition to what is already on this forum, I will share it (once I’ve cross-checked it to the extent possible).


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## Cafreeb12

Schubert said:


> I have learned today there was some mis-communication regarding the details of the incident described above, to an extent that I no longer have confidence in the story as described above. The story above may be a mingling of two or more related stories, I’m not sure; maybe I’ll eventually get to the bottom of it. Please disregard what I said in the above post, with my abject apologies for any needless anxiety it might have caused anyone. Next time I hear something like this, I’ll do a little more rigorous checking before posting, than I did in this case.
> 
> My wife and I are hoping to set up a face-to-face meeting with a number of individuals in our situation (it turns out there are more of us in our extended social circle than I realized), including I hope the ones involved in the above story, to share some information and ideas locally. If I learn anything different from or in addition to what is already on this forum, I will share it (once I’ve cross-checked it to the extent possible).


It's bound to be par for the course with so much mis information by our own government that we are going to get some things wrong. Of course this is only natural in such a bungled and mixed up situation. It's simply not your fault. I'm surprised there isn't more of this sort of thing. It's amazing we can think straight to tell any experiences at all in the middle of this morass and debacle. Thanks for your explanation. Shows me how honest we are in comparison to how we're being portrayed. :clap2:


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## Cafreeb12

*"Drug War Profiteers: Book Exposes How Wachovia Bank Laundered Millions For Mexican Cartels" *
*Story, with video from Democracy Now. *

Well, well, well. So this money is coming into the U.S. and being laundered by banks there. Democracy Now has this story up on their main page if you google it. Hesitate to put the link to the story but, it sure is interesting in our context. Perhaps instead of looking at off shoring and probing into OUR innocent bank accounts with FATCA they ought to look into their own banks within their borders a lot more closely.


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## AmTaker

Mona Lisa76 said:


> Another thing is that cheaper tax preparers were all encouraging OVDI so felt I had no choice really in who I chose. THey're all blood suckers though...in many ways, I feel more annoyed that I will have probably compromised my investing going forward due to all the commission my financial advisor will be taking from my new duel compliant portfolio but hopefully it's simply more transparent costing.
> 
> I'm sure that mutual funds also skim returns indirectly.



I'm not familiar with how financial advisers operate in the UK (indeed, being a DIYer, I haven't even used any in North America), but I would assume that the advisor has revealed clearly how much load etc. they are getting on the investments. I'm also not sure that anything more than a 'one time cleanup would be needed', and I am a little wary of letting the tax tail wave the investment dog, i.e. making investment decisions based very largely on tax consequences. I suppose the best solution is to hold stocks independently rather than mutual funds. Or even holding mutual funds in a US account might work. The UK has its own PFIC rules, as I remember, but those are less punitive and complicated than US rules.


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## Guest

*Banking News...*

Not sure where this post should go, but it might make interesting reading. It feels very strange to be reading articles like this with interest, since before all this nonsense, I would have simply skimmed the title and passed right on by. In fact, I don't think I would have paid regular attention to the Financial Post at all. The power of media and scare tactics? 

I know this is about the UBS litigation, but it seems to fall under the category of the complete end of sovereignty of nations. I won't say anything about the rights of private individuals because I think that disappeared decades ago, probably growing exponential since McCarthism. 

*Swiss banks near deal to disclose customer names to U.S.*

Link: Swiss banks near deal to disclose customer names to U.S. | Legal Post | Financial Post


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## Bevdeforges

CanadianAtHeart said:


> Not sure where this post should go, but it might make interesting reading. It feels very strange to be reading articles like this with interest, since before all this nonsense, I would have simply skimmed the title and passed right on by. In fact, I don't think I would have paid regular attention to the Financial Post at all. The power of media and scare tactics?
> 
> I know this is about the UBS litigation, but it seems to fall under the category of the complete end of sovereignty of nations. I won't say anything about the rights of private individuals because I think that disappeared decades ago, probably growing exponential since McCarthism.
> 
> *Swiss banks near deal to disclose customer names to U.S.*
> 
> Link: Swiss banks near deal to disclose customer names to U.S. | Legal Post | Financial Post


The Swiss Banks were in a rather particular situation - what with their "bank secrecy" laws and all. It's not only the US who was seeking names and account information on citizens with secret Swiss bank accounts. There was a similar "big stink" when someone in the German tax office "inadvertently" got hold of a list of German citizens with undisclosed bank accounts in Liechtenstein. Then, there is Luxembourg, another long-time tax haven the EU countries have been looking to crack.
Cheers,
Bev


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## Cafreeb12

Bevdeforges said:


> The Swiss Banks were in a rather particular situation - what with their "bank secrecy" laws and all. It's not only the US who was seeking names and account information on citizens with secret Swiss bank accounts. There was a similar "big stink" when someone in the German tax office "inadvertently" got hold of a list of German citizens with undisclosed bank accounts in Liechtenstein. Then, there is Luxembourg, another long-time tax haven the EU countries have been looking to crack.
> Cheers,
> Bev


I'm actually pretty miffed at the Swiss banks and some of the other tax haven banks. They are the reason we are ALL in this mess.


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## AmTaker

Cafreeb12 said:


> I'm actually pretty miffed at the Swiss banks and some of the other tax haven banks. They are the reason we are ALL in this mess.


I agree completely. They went out of their way to recruit American taxpayers living in the US with often illegal source income and were even accomplices to hiding money abroad. One banker mentioned that he smuggled diamonds in paste tubes for clients.


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## Arlington

Here's another kind of birther:

A curious global industry has emerged that caters to wealthy foreign women willing to spend tens of thousands of dollars to give birth in the United States and get instant U.S. citizenship for their babies.

Rock Center with Brian Williams - Born in the U.S.A.: Birth tourists get instant U.S. citizenship for their newborns

Oh, the problems they will inherit. These are VERY wealthy families with lots of assets. They are really going to create a giant mess for their children when they become adults. Some will move to the US and take advantage of benefits and hopefully contribute to US society. Others will never take advantage of the benefits and will be surprised to learn the tax consequences of their birth. It's almost making me laugh.

It's fun reading the comments at the end of the article - absolutely hilarious and frightening at the same time.


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## 416

Arlington said:


> Oh, the problems they will inherit. These are VERY wealthy families with lots of assets. They are really going to create a giant mess for their children when they become adults. Some will move to the US and take advantage of benefits and hopefully contribute to US society. Others will never take advantage of the benefits and will be surprised to learn the tax consequences of their birth. It's almost making me laugh.


If the IRS was more creative, they'd be encouraging it.


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## Deckard1138

Arlington said:


> A curious global industry has emerged that caters to wealthy foreign women willing to spend tens of thousands of dollars to give birth in the United States and get instant U.S. citizenship for their babies.


I'm trying _really_ hard to figure out why anyone would want to have U.S. citizenship these days... :der:


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## McLovin

416 said:


> If the IRS was more creative, they'd be encouraging it.


It's amazing they didn't think of it first, and implement their own goverment sponsored programs that charge ten times that amount.


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## Cafreeb12

Deckard1138 said:


> I'm trying _really_ hard to figure out why anyone would want to have U.S. citizenship these days... :der:


Yes, it's truly a mind blower. These people do not seem to realize the position they have now put their entire family in. gah! And I agree with the person who said they should be encouraging it since the treasury and IRS seem to need to scrap up every reason imaginable to get tax funds. Let them ALL have American citizenship and stop griping about it. Maybe we can work out some sort of exchange..:tongue1:


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## McLovin

Cafreeb12 said:


> Yes, it's truly a mind blower. These people do not seem to realize the position they have now put their entire family in. gah! And I agree with the person who said they should be encouraging it since the treasury and IRS seem to need to scrap up every reason imaginable to get tax funds. Let them ALL have American citizenship and stop griping about it. Maybe we can work out some sort of exchange..:tongue1:


For me, moving to America made sense at the time because of the number of great jobs in the information industry and the booming (now “dooming”) economy. For a long time I was excited about the fact my kids were born with US citizenship, so unlike me they could avoid visa issues and have the freedom to make decisions on where they wanted to live. Watching my father (and you all) suffer because of this certainly caused me to evaluate any future plans in the US, especially with regards to our three daughters.


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## Cafreeb12

McLovin said:


> For me, moving to America made sense at the time because of the number of great jobs in the information industry and the booming (now “dooming”) economy. For a long time I was excited about the fact my kids were born with US citizenship, so unlike me they could avoid visa issues and have the freedom to make decisions on where they wanted to live. Watching my father (and you all) suffer because of this certainly caused me to evaluate any future plans in the US, especially with regards to our three daughters.


;

What I'm seeing here are people who made individual choices based on their life circumstances. I've yet to see anyone who made a single decision with the intention of harming or taking anything away from the U.S. It had zero to do with that which is one reason why the way this legislation is written is so wrong. There had to be a better way to go after people deliberately off shoring money. There had to be a way to make a distinction between us and actual criminals. I'm really glad I did not register my son as American even though looking at the rules now, he might be anyway. It's hard to say that but, they sure are not making it attractive to be American. More like a hardship on everyone including the non Americans in our families.


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## Guest

CanadianHoosier said:


> Here is a link to Senator Carl Levin and FATCA. Reinforces the message that we are not the targets, just innocent victims.


Just spotted this a few weeks late but can't resist replying:

that's not innocent victims. that's what the US military have for decades felt worth calling "collateral damage." As in, oops, the smart bombs took out a bunch of by-standing women, kids and old men, so sorry, them's the breaks ...

'Tis pity Levin has never been standing next to a napalm dump or a predator drone strike ...


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## Guest

Schubert said:


> Today I googled “NDP and FATCA” to see what has happened in this past week, since I’ve had no further communication from the NDP’s foreign affairs critic on the issue. I wish I had done so sooner; the following hits have not appeared in my earlier searches on FATCA, at least not in the top page or so, which is all I have the patience to look for. From now on, when I do my regular “sweep” of the internet on the issue, I am going to add an “ndp and fatca” search.
> 
> Ms. Denise Savoie is one of the NDP’s Members of Parliament from British Columbia (she represents the riding of Victoria). She has posted on her website the NDP’s official position on the FATCA issue, see this link:
> NDP Position on the US Foreign Account Tax Compliance Act (FATCA)
> 
> As well, two days ago she posted the following update to her constituents on this issue:
> US Tax Information
> This update includes a link to a letter she sent on September 17 to Jim Flaherty, Canada’s Finance Minister, on behalf of her constituents, regarding this issue. There is also a joint letter sent on October 11 to Mr. Flaherty by the 12 NDP Members of Parliament from British Columbia regarding this issue. There is also a letter Ms. Savoie sent to President Obama on September 30 regarding this issue. Finally, there is an excellent footnoted summary of the issue and how it affects Canadian-resident US citizens (or those the US government presumes to be citizens even if those individuals don’t consider themselves US citizens), which seems to be accurate and objective in terms of reporting “requirements.” The latter urges people to write Mr. Flaherty, Congress, and to the Canadian Privacy Commissioner on this issue. You can find the links to the PDF versions of all four documents at the bottom of the above-referenced update page on Ms. Savoie’s website.
> 
> All of the above documents are excellent and well-worth reading and perhaps forwarding to anyone who you think needs concise, coherent and sensible information about the issue.
> 
> It is encouraging to see that at least one Member of our Parliament is taking a very active stance on this issue, and that the NDP has taken an official position on this issue. As far as I am aware at this writing, no other political party in Canada has issued an official position on this issue (yes I also googled "Liberal and FATCA" and drew a big fat blank in terms of the Liberal Party of Canada; ditto the Green Party; and I'd be wasting my time looking for a Conservative Party statement on the issue, other than Mr. Flaherty's well-known letter to several US newspapers).
> 
> I only wish that my own MP, who seems more concerned about running for the party leadership than addressing his constituents’ concerns, were as dedicated and active on this issue as is the representative of the lucky citizens of the beautiful city of Victoria.


I wrote Ms. Savoie a few days ago and received her reply today. The bold and italics are mine.

October 28, 2011

Dear XOXOXO,

Thank you for writing me about the ongoing US tax problem. I am glad you found the information on my website useful and will continue to update it as things develop. While there have been some promising developments, there is still no firm resolution to the issue, and I encourage you to make the effort to contact the Finance Minister in Canada and any representatives you might have in the United States to express your concern. While I believe the government could be doing more, they *are moving *on this because they have heard from so many of the thousands of Canadians who are affected by this unfair action. 

Sincerely,

Denise Savoie, MP
Victoria


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## Cafreeb12

Schubert said:


> Just spotted this a few weeks late but can't resist replying:
> 
> that's not innocent victims. that's what the US military have for decades felt worth calling "collateral damage." As in, oops, the smart bombs took out a bunch of by-standing women, kids and old men, so sorry, them's the breaks ...
> 
> 'Tis pity Levin has never been standing next to a napalm dump or a predator drone strike ...


Shubert, I saw another article where that exact wording was used with regard to FATCA and FBAR, "there will be some collateral damage" That's what they called us. The exact wording, it really took me aback. I wish I could find that article now. I'll try to look it up. Simply amazing. So my son, and husband and I and all of you are "collateral damage" throw away lives that are impacted for the "greater good" The more I see what this really means the less trouble I'm having renouncing. However, there is still the fact I never would have done it save for this. I little hard stone of resentment is building in me over this and I do not like it but, there it is. Later on when they see the thousands who have renounced will they call us all traitors then too? I wouldn't put it past them. Yeah, I'm a real big "traitor" I volunteered across the border for some cause or other every single year at my own expense because I cared what happened to "my" country. Guess, I won't be bothering with that anymore either.


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## Guest

nobledreamer said:


> I wrote Ms. Savoie a few days ago and received her reply today. The bold and italics are mine.


Haven't received a reply yet from Ms Savoie, but did yesterday get a reply from Ms Laverdiere the new NDP foreign affairs critic. I won't quote it here, it basically was a cut-and-paste from the NDP position statement on FATCA/FBAR and had a PDF of the joint letter to Flaherty from the 12 BC NDP MPs, all of which is already on Ms Savoie's website. However at least I did get a reply (still nothing from Dewar, if you're an NDP party member vote for someone else for the leadership, he's really not serving at least this constituent and longtime NDP voter well, and that's not kosher even if he is running for the leadership I'm still his constituent d*** it).

Suspect I'll get something from Ms Savoie soon, even though I'm not her constituent. I suspect MPs are being swamped on this thing.

In other news, a couple of weeks ago when I spoke to someone in the Privacy Commissioner's office about FATCA, I was told that "ministers" are having lots of discussions about this issue. Wouldn't say more even if he could, and I wouldn't expect him to as cabinet deliberations are routinely Secret and I'm sure everyone above the rank of secretary in the Privacy Commission has had to sign the Official Secrets Act ...

I haven't written Flaherty yet but am drafting something over the weekend, focusing on folks who thought they'd automatically lost their US citizenship decades ago and were never told they'd need a Certificate so never contacted the US and now are sitting beneath a large avalanche slope that's about to give way.


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## Guest

Cafreeb12 said:


> Shubert, I saw another article where that exact wording was used with regard to FATCA and FBAR, "there will be some collateral damage" That's what they called us. The exact wording, it really took me aback. I wish I could find that article now. I'll try to look it up. Simply amazing. So my son, and husband and I and all of you are "collateral damage" throw away lives that are impacted for the "greater good" The more I see what this really means the less trouble I'm having renouncing. However, there is still the fact I never would have done it save for this. I little hard stone of resentment is building in me over this and I do not like it but, there it is. Later on when they see the thousands who have renounced will they call us all traitors then too? I wouldn't put it past them. Yeah, I'm a real big "traitor" I volunteered across the border for some cause or other every single year at my own expense because I cared what happened to "my" country. Guess, I won't be bothering with that anymore either.


Remember My Lai (1968)? Remember the quote from the US officer on national TV "we had to destroy the (Vietnamese so who cares) village in order to save it?"

I found it VERY easy to dump my US citizenship and come to Canada in 1969. No problem at all, no angst, no regrets, nothing but relief to be in a sane, decent country finally.

If anything has changed, it's gotten much much worse since then, down there.


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## Guest

CanadianHoosier said:


> Here is a link to Senator Carl Levin and FATCA. Reinforces the message that we are not the targets, just innocent victims.
> 
> Carl Levin - United States Senator for Michigan: Newsroom - Press Releases


While I am definitely not a fan of Sen. Levin,  he is not a former head of Goldman Sachs but rather, the one who grilled them in the hearings:

http://www.nytimes.com/2011/04/14/business/14crisis.html?pagewanted=all


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## Bevdeforges

What's really discouraging is to hear the rhetoric in the US on "the tax issue" amongst the candidates for president. Given the current legislative constipation, it's pretty much certain that taxes will be a huge campaign issue next year - but the down side of that for us overseas Americans is that the issue of taxation of non-residents is nowhere on the radar and in the current climate, no candidate of either party is going to want to go on the record as letting a group of American taxpayers off the hook, especially a group like the "expats" who are believed to all be on fat corporate expense accounts.

However, a wander through the IRS statistics Tax Statistics - Produced by the Statistics of Income Division and Other Areas of the Internal Revenue Service offers some real interesting figures regarding just how many folks file from overseas and what sorts of income they show. If the one file is correct, total collections in 2010 for international addresses came to a whopping $8M, which is a pittance in the US budget. Makes one wonder just how much the IRS is going to spend to "track down" overseas based "tax evaders." 
Cheers,
Bev


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## Guest

Bevdeforges said:


> What's really discouraging is to hear the rhetoric in the US on "the tax issue" amongst the candidates for president. Given the current legislative constipation, it's pretty much certain that taxes will be a huge campaign issue next year - but the down side of that for us overseas Americans is that the issue of taxation of non-residents is nowhere on the radar and in the current climate, no candidate of either party is going to want to go on the record as letting a group of American taxpayers off the hook, especially a group like the "expats" who are believed to all be on fat corporate expense accounts.
> 
> However, a wander through the IRS statistics Tax Statistics - Produced by the Statistics of Income Division and Other Areas of the Internal Revenue Service offers some real interesting figures regarding just how many folks file from overseas and what sorts of income they show. If the one file is correct, total collections in 2010 for international addresses came to a whopping $8M, which is a pittance in the US budget. Makes one wonder just how much the IRS is going to spend to "track down" overseas based "tax evaders."
> Cheers,
> Bev


As I'm awake in the middle of the night, again thinking and trying to make sense of my situation, I have clarified what I'm feeling. FOR ME, this is a political issue, as well as financial due to penalties and not paying over and over the administrative costs of complying (while no taxes owing to the U.S.). 

When I became a Canadian citizen in the early 70’s, it was because the U.S. was no longer “my country right or wrong.” For me, I don’t like, and never have liked, the continuing “Military Industrial Complex” and now tie the situation we are in, as expatriates, to another analogy that wise Shubert gave – that, like the collateral damage of innocents in continuing wars, U.S. citizens in other countries are collateral damage of the U.S. economic war in their quest to find real enemy -- those, many living in the continental U.S., who have wilfully evaded taxes by sending part of their wealth to tax havens. As others, I have earned my livelihood in Canada, raised my family in Canada, always paid my taxes in Canada. I intended to be ONLY a citizen of Canada when I took this country’s oath of citizenship -- until I was convinced I was “illegal” by not filing taxes in the U.S. and, regrettably, complied. In my view, this is another over-reach of the U.S. to “bully” other countries of the world. I hope to be proved wrong, but I took no faith in the U.S. ambassador’s patting us on the head with his instructions for U.S. citizens in Canada to “sit tight as the U.S. is not unreasonable, not unsympathetic, not irresponsible.”

I very much agree, Bev, no candidate of either party is going to want to go on the record as letting a group of American taxpayers off the hook, especially a group like the "expats" who are believed to all be on fat corporate expense accounts. The U.S. political campaign circus and its purely entertainment value for too many is disheartening. Wake up, those in the country of my birth.


----------



## Guest

Arlington said:


> Here's another kind of birther:
> 
> A curious global industry has emerged that caters to wealthy foreign women willing to spend tens of thousands of dollars to give birth in the United States and get instant U.S. citizenship for their babies.
> 
> Rock Center with Brian Williams - Born in the U.S.A.: Birth tourists get instant U.S. citizenship for their newborns
> 
> Oh, the problems they will inherit. These are VERY wealthy families with lots of assets. They are really going to create a giant mess for their children when they become adults. Some will move to the US and take advantage of benefits and hopefully contribute to US society. Others will never take advantage of the benefits and will be surprised to learn the tax consequences of their birth. It's almost making me laugh.
> 
> ... comments at the end of the article - ... frightening ...


And, perhaps, this proposed kind "U.S. Offer" (trap?) should come with a proviso / a warning of what entering into the U.S. tax system would mean:
US bill proposes visas for people spending $500,000 or more on a house


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## CanadianHoosier

Cafreeb12 said:


> I am thinking this through and I"m not sure now if my son is American! He was born here, and I'd been here ten years when he was born. His father is Canadian and has never lived or worked in the U.S. My son does not want American citizenship and we talked about it over the years and I left the decision up to him, I thought since I was out of the U.S. for that many years he wasn't "automatically" a citizen without me having to file papers which I did not do. If he IS American by "virtue" of having me as a mother that opens up a whole other world of hurt.


Caution - FREE advice 

Based upon my trek thru the maze, I would encourage you to send an email to the Toronto Consulate office and ask them to provide you some guidance. 

Speculation causes anxiety. 

Trying to interpret some of these government docs is a challenge. 

Focus on the facts, then some of the stress associated with your journey can be lessened.


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## 416

Bevdeforges said:


> If the one file is correct, total collections in 2010 for international addresses came to a whopping $8M, which is a pittance in the US budget. Makes one wonder just how much the IRS is going to spend to "track down" overseas based "tax evaders."


from here:



> Nearly 50% of the returns filed by overseas citizens or resident aliens report no tax liability, primarily as a result of sections 911 and 901 of the Code. In addition, even among those overseas citizens or resident aliens who have been found by IRS not to have filed returns, the provisions of sections 911 and 901 still may operate to eliminate or reduce significantly the amount of U.S. tax owed.7 For example, in one IRS compliance initiative, which the Government Accounting Office (the “GAO”) studied in a 1993 report, Tax Administration: IRS Activities to Increase Compliance of Overseas Taxpayers (the “1993 GAO Report”), out of 176 overseas taxpayers that IRS contacted who hadn’t filed returns, only one owed U.S. taxes, totaling $9,595. Similarly, in another initiative, only $2,126 was owed from a group of 140 delinquent filers, and in a third only $5,345 was owed from a group of 62 overseas nonfilers. See 1993 GAO Report, at 9-10.8 Although these samples are clearly too small for any definitive general conclusions to be drawn from them, Treasury believes the samples do indicate that with respect to U.S. taxpayers working overseas, a taxpayer’s failure to file a U.S. tax return does not necessarily indicate that the taxpayer is not paying the taxes he or she owes to the United States. Therefore an initiative aimed merely at increasing overseas filing compliance may not necessarily raise sufficient revenue to justify the cost of such an initiative.


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## Bevdeforges

Hey 416 - thanks for the link. This report is FASCINATING, and obviously has all sorts of implications for the FBAR and FATCA issue as well.
Cheers,
Bev


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## Guest

416 said:


> from here:


Really great information! Thanks for researching and posting this. Talking with CafreeB last nite and realizing, whatever that figure IRS is bragging about from the first disclosure initiative, $2 billion + change, I believe I recently readd it costs more than that to fund what is being done in Iraq, for a *week*. I will check back later with accurate figures but goes without saying.............


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## Deckard1138

*Recent speech by Jackie Bugnion, Executive Director of ACA*

Hi all,

Just came back from a very informative, lively and supportive "koffee klatsch" with a couple of other Ottawa-based members of this forum - Schubert and Pacifica - along with a couple of significant others. We have agreed to stick to our forum aliases, even though we now know each others' real names - feels like we've started a secret little playground club, LOL. I'll share a bit more information about our discussions later, but domestic chores await right now (at least we can still _try_ to live normal lives, can't we?).

Nevertheless, I've wanted to post a link to a very lucid and forceful speech that was given by Jackie Bugnion, Executive Director of ACA (American Citizens Abroad) at the International Withholding Tax Summit 2011 in London on October 4th, 2011:

US expats' lobbying group demands repeal of FATCA

The link is to an article from the STEP Journal (Society of Trust & Estate Practitioners) which, at the bottom, contains .pdf links to both Jackie's speech and to ACA's official call for repeal of FATCA. You can also drill-down to these links by going to ACA's own news page at:

ACA American Citizens Abroad - ACA and FATCA in the press

As long as I'm shilling today for ACA, also be sure to listen to their recent interview on a radio program called Switzerland in Sound:

http://www.aca.ch/joomla/images/sounds/fatcasis.mp3

While I believe that the ACA crew is doing a wonderful job in coordinating and lobbying on behalf of all of us, I just wish there was a _little_ more emphasis on FBAR penalties, and how this, even more than FATCA, is the real ticking time-bomb that threatens to financially decimate most dual-citizens who never knew they had a reporting obligation. Even if FATCA is somehow repealed, it isn't going to make much difference to those still affected by FBAR brutality, so to me these two things should _always_ be linked together in public discussions until they're _both_ repealed.

OK, back to vacuuming, cleaning washrooms etc. (so can you tell by my spelling and vocabulary that I really _am_ 100% Canadian? Just hope the U.S. authorities come to the same conclusion).


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## Guest

CanadianHoosier said:


> Caution - FREE advice
> 
> Based upon my trek thru the maze, I would encourage you to send an email to the Toronto Consulate office and ask them to provide you some guidance.
> 
> Speculation causes anxiety.
> 
> Trying to interpret some of these government docs is a challenge.
> 
> Focus on the facts, then some of the stress associated with your journey can be lessened.



Good advice. Let us know if you hear from the Toronto Consulate on this subject. I have not yet heard back from my October 12 e-mail query to the Calgary Consulate. If or when I do, I will let you know.


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## CanadianHoosier

Very interesting article, the ACA speech captures the essence of the issues we are facing. Provides compelling facts that reinforce the need to renounce.

BTW, I went into my local bank branch today, asked to flip my personal banking account to a new account. The young banker queried my reason, he was shocked when I explained the looming menace.

I was outta there in 20 minutes. The joint accounts will have to be flipped when the Boss returns. She is shopping with her girlfriends in Buffalo and Erie this weekend.


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## Guest

*IRS Advisory Committee Warns of FATCA Conflicts*

Washington, D.C. (October 27, 2011)


By Michael Cohn, Accounting Today


An advisory committee cautioned the Internal Revenue Service that implementation of the Foreign Account Tax Compliance Act could run afoul of foreign laws.

IRS Advisory Committee Warns of Foreign Account Tax Compliance Act Conflicts


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## Peg

Calgary411 said:


> Good advice. Let us know if you hear from the Toronto Consulate on this subject. I have not yet heard back from my October 12 e-mail query to the Calgary Consulate. If or when I do, I will let you know.


I recommend you try emailing Calgary again --- I heard back the same day from them and after a few emails, over 2 days, my appointment was booked for 5 weeks from that date.

When I emailed Ottawa they took a few days to respond.


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## Guest

CanadianHoosier said:


> Caution - FREE advice
> 
> Based upon my trek thru the maze, I would encourage you to send an email to the Toronto Consulate office and ask them to provide you some guidance.


The above quote was in reply to a query about whether one's son is considered an American.

If I had a child who I'd listed with the US Embassy on his/her birth, thinking naively "oh he/she can make a decision when an adult," I would be very reluctant to contact the US embassy on this directly in any way in which you (and hence your child) could be identified. 

Go instead to this website and read what the official US party line is on this subject:

Acquisition of U.S. Citizenship by a Child Born Abroad

I searched on behalf of a friend who is very concerned about this issue. I couldn't find any US government website that says anything about your child actually getting to decide as an adult what he or she wants re US citizenship. As far as I can tell (and I may have overlooked something, but I did look pretty carefully), if you registered your child with a US Embassy or Consultate and they issued to you what is now called a Consular Report of a Birth Abroad (slightly different name in years past) at the time you registered the child (they should have given you a copy), then yes your child is in their eyes a US citizen.

Be aware that if you apply for relinquishment or renunciation, one of the questions you have to answer under oath is whether or not you ever registered a child with a US Embassy. The form doesn't ask for details if you say "yes," but they might follow up on that. I do know of at least one person who is agonizing over whether or not to renounce, for this very reason.

I will spare you the vocabulary I want to use, as a parent and grandparent, with reference to the IRS and what it and State are putting parents through on this point.:flame:


----------



## Guest

Peg said:


> I recommend you try emailing Calgary again --- I heard back the same day from them and after a few emails, over 2 days, my appointment was booked for 5 weeks from that date.
> 
> When I emailed Ottawa they took a few days to respond.


Thanks for info on your response from Calgary Consulate. Glad to know the timeframe for getting your Calgary appointment.

Perhaps response to my email is delayed since I am not YET asking for my appointment to renounce. Instead, I asked specific questions that I need answered as basis for my decision on whether renouncing will work best for me (as I hope). I'm trying to get those anwers elsewhere in the meantime.


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## Guest

Deckard1138 said:


> Nevertheless, I've wanted to post a link to a very lucid and forceful speech that was given by Jackie Bugnion, Executive Director of ACA (American Citizens Abroad) at the International Withholding Tax Summit 2011 in London on October 4th, 2011:
> 
> US expats' lobbying group demands repeal of FATCA


Seems weird replying to Deckard's post under my pseudonym after having spent nearly two hours face-to-face with him, Pacifica and two significant others this morning, but I think we're agreed that in a public web forum anonymity is the best recourse especially in this situation.

Just wanted to comment that Bugnion's speech is excellent, especially his final point about US financial imperialsim. However he missed one point that is coming across on this forum -- the number of former Americans who are in the next couple of months systematically pulling their own investments out of the US economy, both in self-protection and in deliberate retaliation and repayment to the US for what it's doing to our peace of mind. It's the one way we can fight back in language that even Congress and Wall Street have a remote chance of comprehending. The US isn't just going to be losing foreign investment, it's losing citizens and citizens' investments in the country of their birth. And they deserve that, richly so.:boxing:

Not to mention what I suspect and deeply hope will be a cascading effect as affected former Americans notify their friends and neighbours in Canada and in other countries and other folks start bailing out of Wall Street. If the US thinks it's in deep financial trouble now, they haven't seen the half of it yet. Especially once the Chinese get cranked up over this. 

Add this point to Bugnion's speech and the excellent GAO study reported earlier today on this thread, and we need to come up with a new oxymoron to describe Washington stupidity, to match the old examples of "military intelligence" and "friendly fire" from Vietnam and earlier days. Or maybe Washington should just repeat Walt Kelly's wonderful phrase from the McCarthy era in the 1950s, "we have met the enemy, and he is us."


----------



## Guest

Schubert said:


> The above quote was in reply to a query about whether one's son is considered an American.
> 
> If I had a child who I'd listed with the US Embassy on his/her birth, thinking naively "oh he/she can make a decision when an adult," I would be very reluctant to contact the US embassy on this directly in any way in which you (and hence your child) could be identified.
> 
> Go instead to this website and read what the official US party line is on this subject:
> 
> Acquisition of U.S. Citizenship by a Child Born Abroad
> 
> I searched on behalf of a friend who is very concerned about this issue. I couldn't find any US government website that says anything about your child actually getting to decide as an adult what he or she wants re US citizenship. As far as I can tell (and I may have overlooked something, but I did look pretty carefully), if you registered your child with a US Embassy or Consultate and they issued to you what is now called a Consular Report of a Birth Abroad (slightly different name in years past) at the time you registered the child (they should have given you a copy), then yes your child is in their eyes a US citizen.
> 
> Be aware that if you apply for relinquishment or renunciation, one of the questions you have to answer under oath is whether or not you ever registered a child with a US Embassy. The form doesn't ask for details if you say "yes," but they might follow up on that. I do know of at least one person who is agonizing over whether or not to renounce, for this very reason.
> 
> I will spare you the vocabulary I want to use, as a parent and grandparent, with reference to the IRS and what it and State are putting parents through on this point.:flame:


I thought cafreeb12 had NOT registered her son???? So at least for her, shouldn't be an issue........


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## Guest

nobledreamer said:


> I thought cafreeb12 had NOT registered her son???? So at least for her, shouldn't be an issue........


Sorry you're right, I'm getting punchy and confusing her with some other people I know.

However, if she hadn't ever registered her son, all the more reason NOT to contact any US officials about this. If he wasn't registered, he's not on their radar and likely never will be unless he or she come forward to them. If she contacts them in any way in which they can identify her, he might be on the radar. Not worth it IMO. 

If in doubt and unwilling to rely on the US website, going through a lawyer (under protection of client-lawyer privacy) might be a better option than a direct approach to State. Or just speak to a knowledgeable lawyer and rely on his/her advice without asking him or her to contact State.

Never forget, in all countries, public servants swear an oath to uphold the laws and regulations of their government. That will likely always trump whatever personal feelings or sympathies individual public servants might have in specific cases, "if push comes to shove."


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## Cafreeb12

nobledreamer said:


> I thought cafreeb12 had NOT registered her son???? So at least for her, shouldn't be an issue........


No I didn't register him and he would likely go under the radar. It was this paragraph from State that worried me and still does a little. They seem to be gathering info and whose to say they won't retroactively decided everyone who met the requirement to be a U.S. citizen, actually IS one whether registered or not. It seems that is the way it is now except if you never registered it's hard to find you.


> Birth Abroad to One Citizen and One Alien Parent in Wedlock
> 
> A child born abroad to one U.S. citizen parent and one alien parent acquires U.S. citizenship at birth under Section 301(g) of the INA provided the U.S. citizen parent was physically present in the United States or one of its outlying possessions for the time period required by the law applicable at the time of the child's birth. (For birth on or after November 14, 1986, a period of five years physical presence, two after the age of fourteen, is required. For birth between December 24, 1952 and November 13, 1986, a period of ten years, five after the age of fourteen, is required for physical presence in the United States or one of its outlying possessions to transmit U.S. citizenship to the child.) The U.S. citizen parent must be genetically related to the child to transmit U.S. citizenship.


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## Deckard1138

Schubert said:


> Or maybe Washington should just repeat Walt Kelly's wonderful phrase from the McCarthy era in the 1950s, "we have met the enemy, and he is us."


Along the same line of thinking, here's another interesting link:

What Hath God Wrought? (FBAR edition) | Hodgen Law Group, PC | Hodgen Law Group, PC

This article references both this forum and Ms. Bugnion from ACA.


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## Peg

Calgary411 said:


> Thanks for info on your response from Calgary Consulate. Glad to know the timeframe for getting your Calgary appointment.
> 
> Perhaps response to my email is delayed since I am not YET asking for my appointment to renounce. Instead, I asked specific questions that I need answered as basis for my decision on whether renouncing will work best for me (as I hope). I'm trying to get those anwers elsewhere in the meantime.


That actually surprises me that they would respond to a renunciation quicker than a few questions! My thought was to book the appointment and then decide later if I wanted to keep it. With the increasing number of renunciations, I didn't want to wait to book it and have a longer wait.


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## Bevdeforges

Cafreeb12 said:


> No I didn't register him and he would likely go under the radar. It was this paragraph from State that worried me and still does a little. They seem to be gathering info and whose to say they won't retroactively decided everyone who met the requirement to be a U.S. citizen, actually IS one whether registered or not. It seems that is the way it is now except if you never registered it's hard to find you.


Actually, the section you quote about kids born to one American parent being "automatically" considered US citizens is kind of funny in a way. When I was part of AARO, we used to get folks jumping through all sorts of hoops to try and "prove" that the US parent had lived the requisite period of time in the US when they were trying to get US citizenship for their kids. If Mom (or Dad) couldn't provide adequate proof of their US residence, the kid was usually denied citizenship.

Do you really think the government is now going to make the effort to "prove" the parent's residence in the US so they can claim the kid as "one of their own?" AARO and the other expat groups were telling people to save their airline ticket receipts, boarding passes and old passports to provide the "proofs" necessary. If you simply "can't find anything" I kind of doubt the US is going to provide the proof for you... they have enough trouble keeping track of their resident citizens as it is!
Cheers,
Bev


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## CanadianHoosier

Deckard1138 said:


> Along the same line of thinking, here's another interesting link:
> 
> What Hath God Wrought? (FBAR edition) | Hodgen Law Group, PC | Hodgen Law Group, PC
> 
> This article references both this forum and Ms. Bugnion from ACA.


Yes, this is worth the look. :ranger: I bounced around the web a bit and found these links.

IRS Offshore Voluntary Disclosure Program Increased Tax Compliance

http://www.treasury.gov/tigta/auditreports/2011reports/201130118fr.pdf

An excerpt from the above report:
A key accomplishment of the 2009 OVDI was bringing thousands of U.S. taxpayers back into compliance by requiring them to properly report and pay their taxes on their offshore accounts. In addition, these taxpayers are also required to continue to properly disclose this income when submitting future income tax returns. In a speech on November 16, 2010, the IRS Commissioner stated: We are finding that many of these voluntary disclosure cases involve significant amounts of previously unpaid tax. Account sizes and taxes vary considerably from case to case, but the closed cases so far have averaged more than $200,000 in tax collections per case, which includes back taxes, interest and penalties. But collecting additional revenue for past misdeeds is not the only important consideration here — regardless of account size, it is important that we are bringing thousands of U.S. taxpayers back into the system so they properly report and pay their taxes for years to come on their offshore accounts.


----------



## Guest

Deckard1138 said:


> Along the same line of thinking, here's another interesting link:
> 
> What Hath God Wrought? (FBAR edition) | Hodgen Law Group, PC | Hodgen Law Group, PC
> 
> This article references both this forum and Ms. Bugnion from ACA.


My favourite quotation which I'll reprint here for anyone who missed it or doesn't like following links:

"Look. The police in my town all carry guns. But they don’t shoot out the tires of your car if your parking meter expires.

"Hey IRS! Just because you have draconian penalties on the books doesn’t mean you have to use them. And you don’t have to wave the gun around menacingly and occasionally shoot a driver just to make sure that other people feed a quarter into the meter."

:clap2::clap2::clap2::clap2:

Good to see there still are Americans south of my border with some common sense and humanity. Unfortunately none of them seem to work for the IRS or sit in Congress. Or work at Treasury or sit in the White House. Are you listening, Obama?


----------



## Guest

Peg said:


> That actually surprises me that they would respond to a renunciation quicker than a few questions! My thought was to book the appointment and then decide later if I wanted to keep it. With the increasing number of renunciations, I didn't want to wait to book it and have a longer wait.


I agree the steps you are taking are prudent. I just need questions answered first to help determine if I will have to pay the exit tax upon renunciation. If so, I may have to stay put. For sure, I prefer to be able to renounce 1) because I thought that I had relinquished my citizenship so long ago when I became a Canadian citizen and 2) I do not want to leave this mess with my family or an executor to further deal with when I am gone. For me, at stake, is the future I leave for my developmentally disabled adult son.

Apparently my questions are beyond the scope of the IRS EMail Tax Law Assistance people and likely too much for anyone at the Calgary Consulate to answer because those were my questions to them. The IRS EMail Tax Law Assistance response:

Your Question Was:
In determining if I DO NOT meet the qualifications for the EXIT TAX if I renounce my U.S. citizenship, how are the following valued?

1)The value of my home (gain since purchase?)

2)The value of my Canadian Defined Benefit Company Pension (present value or a value in the future?)

Thanks very much for this needed information. 
The Answer To Your Question Is:
Thank you for your inquiry of October 13, 2011. 

Unfortunately, your question regarding the valuation of assets for the purposes of determining your responsibilities regarding expatriation is beyond the scope of the service we intend to provide, due to its highly complex nature. The Internal Revenue Service's tax law service is intended to work in partnership with the professional tax preparation community. Thus, we refer taxpayers to that resource when their questions involve complex issues and situations. You may want to seek the services of a tax attorney, certified public accountant or other tax professional. You may also find assistance in Publication 519, U.S. Tax Guide For Aliens, and in the instructions for Form 8854, Initial and Annual Expatriation Statement. We're sorry for the inconvenience.


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## Peg

Calgary411 said:


> I agree the steps you are taking are prudent. I just need questions answered first to help determine if I will have to pay the exit tax upon renunciation. If so, I may have to stay put. For sure, I prefer to be able to renounce 1) because I thought that I had relinquished my citizenship so long ago when I became a Canadian citizen and 2) I do not want to leave this mess with my family or an executor to further deal with when I am gone. For me, at stake, is the future I leave for my developmentally disabled adult son.


That is understandable given your situation. Clearly, you are not the tax cheats that the IRS is portraying! The Exit Tax in your situation is beyond ridiculous. 

It saddens me yet inspires me to see you and Cafreeb12 planning for your children. That is a big enough concern for parents without adding in the mess of the US Gov. I have to think that the Canadian Gov or a tax accountant or an advocacy group would help both of you find your answers. I hope that you do write to everyone and anyone who could possibly make a difference! 

I work with teenagers with cognitive delays and they are amazing! It makes me want to ask if any of them could be US citizens...


----------



## Guest

Peg said:


> That is understandable given your situation. Clearly, you are not the tax cheats that the IRS is portraying! The Exit Tax in your situation is beyond ridiculous.
> 
> It saddens me yet inspires me to see you and Cafreeb12 planning for your children. That is a big enough concern for parents without adding in the mess of the US Gov. I have to think that the Canadian Gov or a tax accountant or an advocacy group would help both of you find your answers. I hope that you do write to everyone and anyone who could possibly make a difference!
> 
> I work with teenagers with cognitive delays and they are amazing! It makes me want to ask if any of them could be US citizens...


You're right -- I worry about them too. I volunteer with a couple of 'camps' for developmentally persons at this areas's wonderful Camp Horizon. I feel I will get everything figured out eventually for my family. I hate to think about what this could mean for so many families with a U.S. component, those not yet aware as we are.


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## Bevdeforges

CanadianHoosier said:


> Yes, this is worth the look. :ranger: I bounced around the web a bit and found these links.
> 
> IRS Offshore Voluntary Disclosure Program Increased Tax Compliance
> 
> http://www.treasury.gov/tigta/auditreports/2011reports/201130118fr.pdf
> 
> An excerpt from the above report:
> A key accomplishment of the 2009 OVDI was bringing thousands of U.S. taxpayers back into compliance by requiring them to properly report and pay their taxes on their offshore accounts. In addition, these taxpayers are also required to continue to properly disclose this income when submitting future income tax returns. In a speech on November 16, 2010, the IRS Commissioner stated: We are finding that many of these voluntary disclosure cases involve significant amounts of previously unpaid tax. Account sizes and taxes vary considerably from case to case, but the closed cases so far have averaged more than $200,000 in tax collections per case, which includes back taxes, interest and penalties. But collecting additional revenue for past misdeeds is not the only important consideration here — regardless of account size, it is important that we are bringing thousands of U.S. taxpayers back into the system so they properly report and pay their taxes for years to come on their offshore accounts.


Note that there is no indication of the residence of all these "closed cases" - I strongly suspect that most of the OVDI folks they found owing loads of taxes are *US residents* who were hiding their investments overseas in "offshore accounts" NOT overseas residents with stock standard bank accounts and local (to them) investments and insurance policies.
Cheers,
Bev


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## itlajfk

Actually, I think it depends on whether your income is 'active' (income from employment) or 'passive' (income from investments). It may be a bit more work, but using Form 1116 takes into account tax you would have paid on your Canadian investment income (such as interest income). From what I can gather, the income deduction permitted on Form 2555 is mostly (not all, but mostly) ordinary income, or income from earnings. So, if you had say, $80,000 in income and you are retired and $50,000 of that is coming from investments, you would lose most of the Form 2555 deduction. And, if I understand it correctly, you have to choose one or the other, you can't do both. So, I guess it depends on your individual situation.


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## CanadianHoosier

Bevdeforges said:


> Note that there is no indication of the residence of all these "closed cases" - I strongly suspect that most of the OVDI folks they found owing loads of taxes are *US residents* who were hiding their investments overseas in "offshore accounts" NOT overseas residents with stock standard bank accounts and local (to them) investments and insurance policies.
> Cheers,
> Bev


If I recall my statistics from articles I've read.... 

Disclaimer: Alzheimer's is on both sides of my family tree...

There are approximately 1,000,000 US expatriates / Canadian citizens impacted by FATCA. 

Yet there are approximately 7,000,000 US citizens, living in the US and not filing their income tax returns...

:confused2:

Either way, it still sux to be a dual...


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## Ladyhawk

CanadianHoosier said:


> If I recall my statistics from articles I've read....
> 
> Disclaimer: Alzheimer's is on both sides of my family tree...
> 
> There are approximately 1,000,000 US expatriates / Canadian citizens impacted by FATCA.
> 
> Yet there are approximately 7,000,000 US citizens, living in the US and not filing their income tax returns...
> 
> :confused2:
> 
> Either way, it still sux to be a dual...


Interesting statistic - you'd think they'd focus on the hometown folks first. But... are the 7 million all delinquent? If you make less than 9K, or something, you don't have to file. Failing to file isn't a crime, but hiding income is. Clearly they aren't after delinquent tax returns, they are after the hidden money, and it's easier to hide it from the IRS if you live, and earn, outside the country.

Still, going after everyone through FATCA and the FBARs is like trying to control guns with a registry - only the honest ones will comply. It does little or nothing to catch the illegal component. Same with controlled substances - prescription laws, certification requirements for dispensing, drug storage regulations equivalent to Fort Knox, and severe repercussions for doctors if their patients abuse drugs make it hard for legitimate cases to get what medications they need but it hasn't made a dent in the illegal drug trade. 

Amnesties to get the prodigals back into the fold makes sense, but punishing them once they show up, or doubling down on the honest schmucks, is counterproductive, as this forum clearly demonstrates!


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## Vangrrl

itlajfk said:


> Actually, I think it depends on whether your income is 'active' (income from employment) or 'passive' (income from investments). It may be a bit more work, but using Form 1116 takes into account tax you would have paid on your Canadian investment income (such as interest income). From what I can gather, the income deduction permitted on Form 2555 is mostly (not all, but mostly) ordinary income, or income from earnings. So, if you had say, $80,000 in income and you are retired and $50,000 of that is coming from investments, you would lose most of the Form 2555 deduction. And, if I understand it correctly, you have to choose one or the other, you can't do both. So, I guess it depends on your individual situation.


No, you can do both. Just not on the same income (ie. a particular income source, and its corresponding tax is either excluded using 2555 or its tax is credited using 1116).


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## Bevdeforges

itlajfk said:


> Actually, I think it depends on whether your income is 'active' (income from employment) or 'passive' (income from investments). It may be a bit more work, but using Form 1116 takes into account tax you would have paid on your Canadian investment income (such as interest income). From what I can gather, the income deduction permitted on Form 2555 is mostly (not all, but mostly) ordinary income, or income from earnings. So, if you had say, $80,000 in income and you are retired and $50,000 of that is coming from investments, you would lose most of the Form 2555 deduction. And, if I understand it correctly, you have to choose one or the other, you can't do both. So, I guess it depends on your individual situation.


The form 2555 exclusion applies only to "earned income" - i.e. salary or other work-related income. (The IRS includes your income from self-employment as "earned income" as long as it can be said to result from your personal efforts in running the business.) You use the 1116 for investment and other "passive" income. 

There is no problem in filing both the 2555 and the 1116, though you have to allocate any deductions and other income adjustments to the "correct" income stream - and you can only apply taxes paid to the income on which the taxes were levied.
Cheers,
Bev


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## Bevdeforges

Ladyhawk said:


> Interesting statistic - you'd think they'd focus on the hometown folks first. But... are the 7 million all delinquent? If you make less than 9K, or something, you don't have to file. Failing to file isn't a crime, but hiding income is. Clearly they aren't after delinquent tax returns, they are after the hidden money, and it's easier to hide it from the IRS if you live, and earn, outside the country.!


Actually, I think what happened is that they are going after the folks with "offshore accounts and investments" - which means primarily the US residents with more money than they know what to do with. But, the Congresscritters have no clue about the issue of Americans resident overseas - in fact many don't even realize that they are still subject to US taxation (or that they are entitled to vote) - and so when they write the legislation, they just make it apply to "anyone with an overseas account or overseas financial interests."

It's sheer stupidity on the part of Congress rather than any malevolent intent. And in some ways, that's scarier than if they really were out to get the foreign residents. 
Cheers,
Bev


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## Arlington

Tonight at 10:00 pm on NBC - Brian Williams' Rock Center (new 20/20, Primetime type show).

The subject is Chinese women coming to the US to have babies so they'll have US citizenship. I doubt if he'll mention the tax implications for these poor (as in unsuspecting) babies.


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## Guest

Hi all,

I just posted a new thread in the USA forum. I always wonder how well informed people looking to move to the US or currently living there are with regards to FBAR, FATCA and the lot so I decided to post some info there. 

I would imagine that the reactions that I will receive there won't be the most positive possible though so I would certainly love some assistance if it gets ugly! :boxing:

http://www.expatforum.com/expats/am...-america/93418-you-want-live-usa-careful.html

Just thought that it would be irresponsible to not post something there since most people seem to be oblivious outside of Canada and the UK that these issues even exist!


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## Guest

Bevdeforges said:


> Actually, I think what happened is that they are going after the folks with "offshore accounts and investments" - which means primarily the US residents with more money than they know what to do with. But, the Congresscritters have no clue about the issue of Americans resident overseas - in fact many don't even realize that they are still subject to US taxation (or that they are entitled to vote) - and so when they write the legislation, they just make it apply to "anyone with an overseas account or overseas financial interests."
> 
> It's sheer stupidity on the part of Congress rather than any malevolent intent. And in some ways, that's scarier than if they really were out to get the foreign residents.
> Cheers,
> Bev



The cynic in me says that some politicians there are going specifically after those abroad and ignoring those in their constituencies for two reasons.

1) US citizens abroad are not a unified political force. Sure, they can vote for the US president or for a senator in their last place of residence, but those actually resident in their constituencies are always going to take preference over us since they can bring the heat come election time. We are simply easy prey to pick on when the US media portrays US citizens abroad as living the high life in the Bahamas. 

2) Almost nobody had heard of reporting their bank accounts and naturally everyone living abroad has a foreign bank account, so, presto! - Huge income from penalties with zero political capital wasted, for all the reasons mentioned above.

I agree though that the vast majority probably just vote through these bills without giving them a second thought, but there is definitely a dangerous core of people at the center of this sort of legislation (cough Charles Grassley cough) who have masterfully exploited the weak position of US expats to get these bills passed. 

Just do a search for Grassley to see that he has been fighting to get rid of the Foreign Earned Income Exclusion for years. I think this provision was actually in Obama's latest tax reform bill as well. That is so scary to think that this is supported by members of both parties...only a matter of time before it's gone?


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## Cafreeb12

DonPomodoro said:


> The cynic in me says that some politicians there are going specifically after those abroad and ignoring those in their constituencies for two reasons.
> 
> 1) US citizens abroad are not a unified political force. Sure, they can vote for the US president or for a senator in their last place of residence, but those actually resident in their constituencies are always going to take preference over us since they can bring the heat come election time. We are simply easy prey to pick on when the US media portrays US citizens abroad as living the high life in the Bahamas.
> 
> 2) Almost nobody had heard of reporting their bank accounts and naturally everyone living abroad has a foreign bank account, so, presto! - Huge income from penalties with zero political capital wasted, for all the reasons mentioned above.
> 
> I agree though that the vast majority probably just vote through these bills without giving them a second thought, but there is definitely a dangerous core of people at the center of this sort of legislation (cough Charles Grassley cough) who have masterfully exploited the weak position of US expats to get these bills passed.
> 
> Just do a search for Grassley to see that he has been fighting to get rid of the Foreign Earned Income Exclusion for years. I think this provision was actually in Obama's latest tax reform bill as well. That is so scary to think that this is supported by members of both parties...only a matter of time before it's gone?


I agree with you. It was done on purpose as a way to raise funds and since they knew most of us owe no taxes they just added huge fines on FBAR. It was really quite brilliant as we don't have ANY voice there so no one will care what happens to us. And if we do somehow get press they will respond by continuing to paint us all as caviar eating, champagne swillers living the high life "off shore" 

I wrote to democrats abroad today just to see if anything would happen. No response. Honestly, I do think we are taxed without representation. The "allowing" us to vote thing is just another excuse to justify these penalty grabs and tax forms. My representative doesn't know I"m alive and has not listened to me at all. Seriously, it's just over for me. I am not really treated as equally as ever other "citizen" anyway. I'll just get through this, claim my mother's inheritance next year. pay the tax on the IRA and renounce. I don't see a better choice here. Has anyone had a response from a congress critter? I'd like to know if one person did and what they had to say.


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## Bevdeforges

Oh, I have no doubts that there are "evil" Congresscritters like Grassley, trying to make their fame and fortune by going after us "caviar swilling" expats. (You know, we are all living on expat allowances and hiding income in our overseas accounts...)

But, I also don't believe for an instant that the IRS is capable of swooping in and automatically collecting those onerous fines and penalties on stock standard checking and savings accounts overseas. The overseas offices are grossly understaffed. The Paris office, for example has either 3 or 5 staff and is responsible for something like 30 or more countries, including most of Europe and all of Africa. During tax preparation season (i.e. the first half of the year) they have to limit their time to one or two hours a day for taking phone calls, walk-in questions, etc.).

I'm all for making a full disclosure - perhaps not always on the forms they want, but all the accounts - with enough information to "show" them that there is no undeclared income for them to come after. (I have my reasons for not wanting to renounce or take other drastic action at this time - though if circumstances change, that decision could change, too.) But my financial situation is pretty simple. Those with more complex situations have to decide what they are or are not willing to do and what level of risk they are willing to bear. 
Cheers,
Bev


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## Guest

Bevdeforges said:


> Oh, I have no doubts that there are "evil" Congresscritters like Grassley, trying to make their fame and fortune by going after us "caviar swilling" expats. (You know, we are all living on expat allowances and hiding income in our overseas accounts...)
> 
> But, I also don't believe for an instant that the IRS is capable of swooping in and automatically collecting those onerous fines and penalties on stock standard checking and savings accounts overseas. The overseas offices are grossly understaffed. The Paris office, for example has either 3 or 5 staff and is responsible for something like 30 or more countries, including most of Europe and all of Africa. During tax preparation season (i.e. the first half of the year) they have to limit their time to one or two hours a day for taking phone calls, walk-in questions, etc.).


Of course, but let's just hope that Grassley and friends don't hear about how understaffed the IRS is overseas - Why, the US just freed up 80 million dollars in its budget yesterday when it withdrew Unesco funding...I bet that could fund thousands of IRS agents worldwide! Bit of a joke really if they only have 4 or 5 people covering such a huge geographic area. How many are in Canada? Anyone know?


----------



## AmTaker

Deckard1138 said:


> I'm trying _really_ hard to figure out why anyone would want to have U.S. citizenship these days... :der:


My recollection is that there is currently something like a 10 year waiting list for green card for so-called skilled workers from countries like India, Mexico, The Phillipines and China, with a smaller list (but still many years) for other countries. And thats for skilled workers -- which I believe means bachelor's + work experience or a masters or something. The waiting list for people without college degrees or most family categories except spouse and parents stretches into decades (as I recollect). And thats just green card, not citizenship. So there are a LOT of people who are interested in obtaining US citizenship or at least permanent residence. I'm not sure how many are fully aware of US tax laws (although one of the banks that was targeted by the IRS specifically focused on offshore accounts to Indian immigrants), but I would guess it wouldn't deter most. For people from poorer countries, the US is still a pretty big magnet. 

Of course, with China and India growing much faster than the US (but still with a much lower per capita GDP), in the future that might not be true any more ..


----------



## AmTaker

Arlington said:


> Tonight at 10:00 pm on NBC - Brian Williams' Rock Center (new 20/20, Primetime type show).
> 
> The subject is Chinese women coming to the US to have babies so they'll have US citizenship. I doubt if he'll mention the tax implications for these poor (as in unsuspecting) babies.


Realistically, the US wouldn't really be able to collect any taxes today from any Chinese US dual citizen with no US assets. 18 years from now, when these kids come of age, it'll be even less likely, since China's GDP and political and economic clout will likely surpass that of the US. So I doubt the tax implications would bother these babies unless they live and accumulate considerable assets in the US, in which case they have presumably derived some benefit from the US citizenship that compensate for any tax demands. The parents may also view this as a 'hedge' for their kids if the economic and political situation in China turns sour (maybe some older family members still remember the Cultural revolutions). So its not totally irrational. Although I doubt the very wealthy would be interested in this, we're more likely talking about the merely well to do.


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## Bevdeforges

DonPomodoro said:


> Of course, but let's just hope that Grassley and friends don't hear about how understaffed the IRS is overseas - Why, the US just freed up 80 million dollars in its budget yesterday when it withdrew Unesco funding...I bet that could fund thousands of IRS agents worldwide! Bit of a joke really if they only have 4 or 5 people covering such a huge geographic area. How many are in Canada? Anyone know?


Interesting article in today's NY Times about Congress "investigating" why the IRS isn't acting on some measure passed a few years ago to clamp down on not-for-profit hospitals and charities in the US. (Grassley was mentioned and was fuming about the matter, or so it seems.)
Cheers,
Bev


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## Guest

DonPomodoro said:


> Of course, but let's just hope that Grassley and friends don't hear about how understaffed the IRS is overseas - Why, the US just freed up 80 million dollars in its budget yesterday when it withdrew Unesco funding...I bet that could fund thousands of IRS agents worldwide! Bit of a joke really if they only have 4 or 5 people covering such a huge geographic area. How many are in Canada? Anyone know?


Don't know how many agents they have but this is how many offices they have in Canada.

U.S. Department of State

• Canada: Ottawa
• Canada: Calgary
• Canada: Halifax
• Canada: Montreal
• Canada: Quebec
• Canada: Toronto
• Canada: Vancouver
• Canada: Winnipeg
• Canada: VPP Northwest Territories
• Canada: VPP Nunavut
• Canada: VPP Southwest Ontario
• Canada: VPP Yukon


----------



## McLovin

AmTaker said:


> My recollection is that there is currently something like a 10 year waiting list for green card for so-called skilled workers from countries like India, Mexico, The Phillipines and China, with a smaller list (but still many years) for other countries. And thats for skilled workers -- which I believe means bachelor's + work experience or a masters or something. The waiting list for people without college degrees or most family categories except spouse and parents stretches into decades (as I recollect). And thats just green card, not citizenship. So there are a LOT of people who are interested in obtaining US citizenship or at least permanent residence. I'm not sure how many are fully aware of US tax laws (although one of the banks that was targeted by the IRS specifically focused on offshore accounts to Indian immigrants), but I would guess it wouldn't deter most. For people from poorer countries, the US is still a pretty big magnet.
> 
> Of course, with China and India growing much faster than the US (but still with a much lower per capita GDP), in the future that might not be true any more ..


EB-2 R.O.W (rest of world) is actually current, those holding advanced degrees can obtain permanent residency in as little as six months. But EB-2 India and China (and all EB-3) are severely backlogged. Regardless, there are ~140k people with active filings who, as you said, are probably unaware of the trade-offs associated to what they are signing up for.

I did find something else, most of you probably know this... once you are a permanent resident you are responsible for filing taxes and FBAR to the US for a period of ten years after you emigrate from the US. So even after you leave, citizen or not, they still have their hooks in you for over a decade.


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## Guest

Canadians who used to be Americans - page 2 - Lonely Planet travel forum

auntie_social 

Sep 16, 2011 3:41 PM
Posts: 1,201


I knew about the 2014 rule, I guess they have to have bank account information so perhaps that is why the US is pushing so hard for FBAR (Foreign Bank Account Reporting) statements to be filed. These give all information to the US Department of Treasury, the Criminal Investigations branch at this point in time. *Supposedly, it doesn't go to the IRS unless you wait until after Dec. 31, 2011 to file these. But who knows*.

I just came across this - has anyone heard anything like this? That there is some unofficial word that we have up to December 31 before expecting any trouble?


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## Guest

nobledreamer said:


> Don't know how many agents they have but this is how many offices they have in Canada.
> 
> U.S. Department of State
> 
> • Canada: Ottawa
> • Canada: Calgary
> • Canada: Halifax
> • Canada: Montreal
> • Canada: Quebec
> • Canada: Toronto
> • Canada: Vancouver
> • Canada: Winnipeg
> • Canada: VPP Northwest Territories
> • Canada: VPP Nunavut
> • Canada: VPP Southwest Ontario
> • Canada: VPP Yukon


*Such service for we Canadians:*
Taxpayer Assistance | Embassy of the United States Ottawa, Canada

*The Internal Revenue Service (IRS) does not maintain an office in Canada. For information tailored to both U.S. citizens in Canada and Canadian citizens, please refer to this page at the IRS web site. Aliens and U.S. Citizens Living Abroad*

*The information on this page is intended especially for taxpayers residing in Canada. Note: Owing to budget cutbacks, the Internal Revenue Service will not/not be providing any in-person assistance or tax seminars at the U.S. Embassy and certain of the Consulates General in Canada.*
Aliens and U.S. Citizens Living Abroad

*IRS ACCEPTANCE AGENTS - CANADA*
Acceptance Agents - Canada


----------



## Guest

Calgary411 said:


> *Such service for we Canadians:*
> Taxpayer Assistance | Embassy of the United States Ottawa, Canada
> 
> *The Internal Revenue Service (IRS) does not maintain an office in Canada. For information tailored to both U.S. citizens in Canada and Canadian citizens, please refer to this page at the IRS web site. Aliens and U.S. Citizens Living Abroad*
> 
> *The information on this page is intended especially for taxpayers residing in Canada. Note: Owing to budget cutbacks, the Internal Revenue Service will not/not be providing any in-person assistance or tax seminars at the U.S. Embassy and certain of the Consulates General in Canada.*
> Aliens and U.S. Citizens Living Abroad
> 
> *IRS ACCEPTANCE AGENTS - CANADA*
> Acceptance Agents - Canada


Whoops! I've been researching all day for info on consulates and figures for renunciations and misread the post. Sorry, the info I posted was for DOS.


----------



## Guest

nobledreamer said:


> Whoops! I've been researching all day for info on consulates and figures for renunciations and misread the post. Sorry, the info I posted was for DOS.



But still, essentially, no assistance from IRS in Canada with all that is going on with expats here (be it from an IRS office or Consulate) -- and likely the same situation in other countries!! One Calgary firm listed under the "IRS Acceptance Agents" gave me "expert advice" that I paid dearly for, which put me back into the U.S. tax system after I thought (knew!) I had relinquished my U.S. citizenship in the mid-70's when I became a Canadian citizen. 

Thank goodness for this forum and all of you for the small bit of sanity I have left!


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## Guest

Calgary411

"Thank goodness for this forum and all of you for the small bit of sanity I have left!

You've got that right! I literally, eat, sleep and breathe this, all day long...can't wait for it to be over.


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## Ladyhawk

DonPomodoro said:


> The cynic in me says that some politicians there are going specifically after those abroad and ignoring those in their constituencies for two reasons.
> 
> 
> I agree though that the vast majority probably just vote through these bills without giving them a second thought, but there is definitely a dangerous core of people at the center of this sort of legislation (cough Charles Grassley cough) who have masterfully exploited the weak position of US expats to get these bills passed.


The vast majority vote these bills through without even reading them. These days bills in Congress can be thousands of pages long, too long to read even if they had the time, and moreover, virtually any congress critter can add amendments right up to the last minute before the vote - they did this for Obamacare and Dodd-Frank - and for some bills the amendments do not even have to relate to the core objective of the legislation, which is how a lot of earmarks get through - and it all gets voted on with literally no one having read the entire bill first. Then it all goes to scribes and staff who have to read the thing and decide what it means and then write the instructions for how to implement it. Do you wonder why the laws in the US are so numerous, complex, self-contradictory, and result in so many unintended consequences?


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## Deckard1138

*ACA Issues New Letter to IRS Regarding FBAR Penalties*

http://www.aca.ch/fbar-canada.pdf

Hi all,

I'm cross-posting this link on a few relevant threads. It's a new letter from ACA (American Citizens Abroad) addressed to Douglas Shulman, IRS Commissioner. The letter references recent statements made by the U.S. ambassador to Canada, David Jacobson, including:

“The	United States isn’t out to get honest	“grandmas” who don’t owe*anything to the Internal Revenue Service... My message is to sit tight. We are not unreasonable. We are not unsympathetic. We are not irresponsible. The IRS is exploring ways to accommodate the roughly one million dual Canadian-American citizens living here."

The ACA's letter reminds the IRS that the heavy-handed application of FBAR penalties is a worldwide problem for U.S. expats and goes on to appeal to the Commissioner for a return to the previous system where there were no penalties for failure to file FBAR forms.

While Canada does have the largest U.S. expat population, I agree with ACA's position that these issues should be dealt with fairly and consistently throughout the world. Another important reminder that truly global coordination of anti-FBAR and anti-FATCA protests will be essential if we want to reach the eyes, ears and hearts of lawmakers in the U.S. There is still time to make this a 2012 U.S. election issue! :director:


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## Cafreeb12

I agree with trying to make this an issue for election time but, so far I've not had a reply from democrats abroad. I suggest a mass mailing and calling directly to their offices. As well as to republicans abroad and come up with a list of questions to ask them.


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## Guest

McLovin said:


> I did find something else, most of you probably know this... once you are a permanent resident you are responsible for filing taxes and FBAR to the US for a period of ten years after you emigrate from the US. So even after you leave, citizen or not, they still have their hooks in you for over a decade.


from what I've seen on the State website (God knows what the IRS says, those two departments don't seem to speak to each other, and therein probably lies fertile ground for a smart lawyer to drive a fleet of ten-wheelers through them in court if anyone cares to challenge this nonsense in US courts):

the ten-year liability for taxes only applies after renunciation and only if the IRS deems your renunciation was for tax reasons, based on your income-tax payments on average over past five years or on your net worth as they calculate it. If you come under those cutoffs, at least on the State Department document about loss of nationality, there are no tax liabilities.
See here
Advice about Possible Loss of U.S. Citizenship and Dual Nationality
scroll to bottom of page under "loss of nationality and taxation" and read very carefully.


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## Guest

Cafreeb12 said:


> I agree with trying to make this an issue for election time but, so far I've not had a reply from democrats abroad. I suggest a mass mailing and calling directly to their offices. As well as to republicans abroad and come up with a list of questions to ask them.


As an ex- and frankly anti-US person I have a bias, but like others on this forum I have zero faith that the political views of US dual citizens overseas are going to matter squat to any US politician or electoral jurisdiction, if for no other reason than the dual-citizen-overseas vote is so diffused. I wish I were wrong, but pardon my cynicism I don't think I am. Can anyone think one a single Congressional seat or Senate seat in recent history (if ever) where the overseas and military vote made a difference to the outcome? I know it's never happened at the Presidential level, at least not in my lifetime.

I think the best defense (and good offense) is a) lobby heavily with politicians in Canada or wherever you live (I have a separate thread I will start in a day or so regarding this approach, mainly for people who do NOT consider themselves dual US-Canada citizens even if the IRS does, with a copy of a five-page argument and detailed letter I sent to Flaherty and Baird, copies to my MP, the opposition critics for both portfolios, Ms. Savoie MP from Victora, and Elizabeth May who is herself ex-American became Canadian in 1978), the b) lobby your friends and family in the US to lobby on your behalf in their own jurisdictions. I think you'll get more "traction" with these two approaches, but that's just my opinion.:ranger:


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## Guest

*Time for some separate threads?*

Frankly I'm finding this particular thread very disorganized and confusing. A lot of the posts relate to specifics of various IRS forms and pitfalls for completing various tax returns. Interspersed among these are posts, including many of my own, that focus more on political or legal action that might be taken or contemplated. Thank goodness at least the renunciation thread has split off, because that's another very special thrust. 

I'm about to start a new thread, after I get some feedback from Deckard and Pacifica on the start-up wording, aimed at people who themselves (regardless of what State or IRS may think) do NOT consider themselves dual citizens and have absolutely no interest in having US citizenship -- people who (generally decades ago) committed certain expatriating actions with deliberate intent to relinquish their US citizenship, or "accidental Americans" who were born in the US of non-US parents who temporarily were living in the US, or persons born in Canada of US-born parents, and none of whom as adults have wanted anything to do with US citizenship, passports, social security, other benefits, residence, or taxation.

I keep checking this "consequences" thread for good ideas, but I have to wade through a lot of form this and filing requirement that to find them, and I (and my friends and wife mostly for whom I'm doing this) have no interest or use for any of that, because we have no intention of filing any of that stuff unless the Government of Canada treacherously holds a loaded gun to our heads.

It's probably too much work to try to split out the diverse threads in this one thread, given the huge number of posts we're up to (to which I admit I've contributed my share), but maybe the time has come for a little re-organization for future posts from this point forward?

In particular, I think the time has come for one or more separate threads to be established to focus on political (or economic, see my new credit-union/bank thread) "warfare" against the IRS extortion of Canadian assets from Canadian citizens.

Moderator no doubt has views on this organizational issue, which I'd welcome.


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## Deckard1138

Schubert said:


> It's probably too much work to try to split out the diverse threads in this one thread, given the huge number of posts we're up to (to which I admit I've contributed my share), but maybe the time has come for a little re-organization for future posts from this point forward?


Hi Schubert,

Thinking along similar lines, I have already taken it upon myself to create one new thread, freshly minted just a couple of minutes ago:

*OVDI Program Information, Updates and Stories*

You will understand my rationale for this one once you check it out.

You're right, there are now so many intertwined issues that it becomes a bit too much for people, especially newbies, to digest all at once. And, as we know, there are sub-sets of people on this forum who have fairly specific situations and potential ways of responding to them, such as the relinquishment option.

Anyway, there's plenty of room for all and everything - it's just sometimes tricky trying to find the prize at the bottom of the cracker jack box. :confused2:


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## Cafreeb12

Schubert said:


> As an ex- and frankly anti-US person I have a bias, but like others on this forum I have zero faith that the political views of US dual citizens overseas are going to matter squat to any US politician or electoral jurisdiction, if for no other reason than the dual-citizen-overseas vote is so diffused. I wish I were wrong, but pardon my cynicism I don't think I am. Can anyone think one a single Congressional seat or Senate seat in recent history (if ever) where the overseas and military vote made a difference to the outcome? I know it's never happened at the Presidential level, at least not in my lifetime.
> 
> I think the best defense (and good offense) is a) lobby heavily with politicians in Canada or wherever you live (I have a separate thread I will start in a day or so regarding this approach, mainly for people who do NOT consider themselves dual US-Canada citizens even if the IRS does, with a copy of a five-page argument and detailed letter I sent to Flaherty and Baird, copies to my MP, the opposition critics for both portfolios, Ms. Savoie MP from Victora, and Elizabeth May who is herself ex-American became Canadian in 1978), the b) lobby your friends and family in the US to lobby on your behalf in their own jurisdictions. I think you'll get more "traction" with these two approaches, but that's just my opinion.:ranger:


No, I don't think you are wrong. This from a person who knows their vote was thrown away the last time I bothered voting, and it was only once. My vote did not count along with millions of other people and as I've already stated, they had no issue whatsoever sweeping that "little" issue right under the carpet so I haven't much faith in what they'll do. But they don't like noisy...perhaps more media. This is indeed grasping at straws but, due to the position some of us find ourselves in, all of us really, it all becomes brainstorming at some point to see what will make the biggest impact for persons living in Canada affected by this.


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## Deckard1138

Cafreeb12 said:


> But they don't like noisy...perhaps more media. This is indeed grasping at straws but, due to the position some of us find ourselves in, all of us really, it all becomes brainstorming at some point to see what will make the biggest impact for persons living in Canada affected by this.


I believe the old saw that any publicity is good publicity applies to our case. It doesn't really matter whether it comes from Canada, the U.S. or anywhere else in the world. It doesn't matter if it reaches Conservatives, Liberals, the NDP, Republicans or Democrats, capitalists or communists. It doesn't matter if it's carried on CBC, CTV, CNN, FOX or the Shopping Channel. It doesn't even really matter if it happens during an election cycle or not, as long as we get the message out, one way or the other, to _actual people_. 

Normal, regular people only need about five minutes to learn enough about this issue to come away with a strong, visceral, emotional reaction, like every one of the people who didn't know about this issue had when I first sat them down and told them. After that, they were galvanized, just like we are.

The next big challenge for all of us, once we get past the technical details of what we can or can't do or might do, is to start documenting the very real, human consequences of what is unfolding. It is great for ACA to talk about the hundreds of heart-wrenching testimonials they've already received, but then that begs the question - where the hell are all these heart-wrenching stories? Why don't we have a single go-to site that documents this tragic history in real-time? Without this emotional component, we're not going to make much of a dent, or sway many minds that need to be swayed.

We're going to need soundbites and visuals of families spending Christmas apart from each other this year - grandparents in Michigan unable to see their children and grandchildren in Toronto who are now exiled north of the border. Elderly Canadian children unable to say goodbye to their even more elderly parents, unable to bury them and unable to claim their rightful inheritance. We have to figure out ways to make this stuff _real_, using every media platform and trick in the book.

We have only scratched the surface of what can be done with social media: YouTube, Facebook, Twitter etc. These are now the real weapons of democracy - viral videos and viral messaging. We're using a little piece of that potential on forums like these, but it isn't nearly enough - at the moment we're just preaching to the choir. Now we have to compete with European bankruptcy, Occupy Wall Street and Republican contenders in clown cars. It's going to take an awful lot of effort to produce coherent signal above all this noise. This is what we need to start talking about.


----------



## Cafreeb12

Deckard1138 said:


> I believe the old saw that any publicity is good publicity applies to our case. It doesn't really matter whether it comes from Canada, the U.S. or anywhere else in the world. It doesn't matter if it reaches Conservatives, Liberals, the NDP, Republicans or Democrats, capitalists or communists. It doesn't matter if it's carried on CBC, CTV, CNN, FOX or the Shopping Channel. It doesn't even really matter if it happens during an election cycle or not, as long as we get the message out, one way or the other, to _actual people_.
> 
> Normal, regular people only need about five minutes to learn enough about this issue to come away with a strong, visceral, emotional reaction, like every one of the people who didn't know about this issue had when I first sat them down and told them. After that, they were galvanized, just like we are.
> 
> The next big challenge for all of us, once we get past the technical details of what we can or can't do or might do, is to start documenting the very real, human consequences of what is unfolding. It is great for ACA to talk about the hundreds of heart-wrenching testimonials they've already received, but then that begs the question - where the hell are all these heart-wrenching stories? Why don't we have a single go-to site that documents this tragic history in real-time? Without this emotional component, we're not going to make much of a dent, or sway many minds that need to be swayed.
> 
> We're going to need soundbites and visuals of families spending Christmas apart from each other this year - grandparents in Michigan unable to see their children and grandchildren in Toronto who are now exiled north of the border. Elderly Canadian children unable to say goodbye to their even more elderly parents, unable to bury them and unable to claim their rightful inheritance. We have to figure out ways to make this stuff _real_, using every media platform and trick in the book.
> 
> We have only scratched the surface of what can be done with social media: YouTube, Facebook, Twitter etc. These are now the real weapons of democracy - viral videos and viral messaging. We're using a little piece of that potential on forums like these, but it isn't nearly enough - at the moment we're just preaching to the choir. Now we have to compete with European bankruptcy, Occupy Wall Street and Republican contenders in clown cars. It's going to take an awful lot of effort to produce coherent signal above all this noise. This is what we need to start talking about.


Exactly! I sent them in a story and they only shared it with one of their contacts in B.C. who called me! What is the point of these stories if we cannot share them? That's the only component others will understand is the direct damage this is doing to average people. So can we start a You Tube Channel and have people make their own tubes to be included on the page to tell our individual stories? Then lets do it. Also what about a similar FB page? I wanted to make this an issue for Occupy Canada and did go to visit them in Ottawa though I did not have much time with them and really wanted to go back, I intend to. We also need more meet ups. I am in. How about ads in our newspapers for meet ups? Can some of us swing that? I think our local news stations are a good place to start too since they may find this a good human interest story quicker than the larger media will.

P.S. you've started another thread here but, what about a thread for social action that we can all follow and participate in with ideas listed there and actions to be taken collectively shared there too?


----------



## Waldemar22

*let´s all take a big deep breath*

This forum has given me a lot of hope and comfort in knowing I am not alone in all this. 

I must ask, ARE expats who are sending in FBARS late getting wacked with fines and penalties (outside of OVDI)? I am sure there are some but I can´t believe the resources are there to follow up on everyone, especially since most owe nothing. And opting out of one of these programs for people who inadvertantly joined in a panic (I almost did) may be the right thing as an audit is not an automatic response of opting out. For if I understand correctly opting IN guarantees a penalty. Kind of unfair for people with no taxes to pay and a low threshold for adrenaline.

I also found myself in quite a dilema september when I found out about this.I came home from work and read an email from ACA . I thought THIS CAN NOT BE HAPPENNING. I HAD been filing for some years but never knew about the FBARS. I sent them in with a letter and I´ll take my chances. I also needed to ammend some things but still owe nothing.....We´ll see who replies first if anyone does. 

In September the IRS people from the London office were here in Oslo to give a meeting about all this and to inform the expats about their obligations. I wasn´t able to attend but the general gist was just, send them in with a letter, state your case that you were unaware and ask not to be penalized. 

With FATCA coming maybe, what is one to do?


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## AmTaker

Schubert said:


> As an ex- and frankly anti-US person I have a bias, but like others on this forum I have zero faith that the political views of US dual citizens overseas are going to matter squat to any US politician or electoral jurisdiction, if for no other reason than the dual-citizen-overseas vote is so diffused. I wish I were wrong, but pardon my cynicism I don't think I am. Can anyone think one a single Congressional seat or Senate seat in recent history (if ever) where the overseas and military vote made a difference to the outcome? I know it's never happened at the Presidential level, at least not in my lifetime.


You write well for someone still in elementary school . 

At the US Presidential level in 2000, the overseas and military vote most definitely made a difference and in fact, there was a lot of frantic counting and trying to get overseas ballots mailed in to Florida since those votes could and may actually have made the difference in the disputed Presidential election. Some ballots were likely sent in a little late too (after people realized how Florida was going) but were still counted.


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## Mona Lisa76

Waldemar22 said:


> This forum has given me a lot of hope and comfort in knowing I am not alone in all this.
> 
> I must ask, ARE expats who are sending in FBARS late getting wacked with fines and penalties (outside of OVDI)? I am sure there are some but I can´t believe the resources are there to follow up on everyone, especially since most owe nothing. And opting out of one of these programs for people who inadvertantly joined in a panic (I almost did) may be the right thing as an audit is not an automatic response of opting out. For if I understand correctly opting IN guarantees a penalty. Kind of unfair for people with no taxes to pay and a low threshold for adrenaline.
> 
> I also found myself in quite a dilema september when I found out about this.I came home from work and read an email from ACA . I thought THIS CAN NOT BE HAPPENNING. I HAD been filing for some years but never knew about the FBARS. I sent them in with a letter and I´ll take my chances. I also needed to ammend some things but still owe nothing.....We´ll see who replies first if anyone does.
> 
> In September the IRS people from the London office were here in Oslo to give a meeting about all this and to inform the expats about their obligations. I wasn´t able to attend but the general gist was just, send them in with a letter, state your case that you were unaware and ask not to be penalized.
> 
> With FATCA coming maybe, what is one to do?


 First of all, if you've been fully reporting all your foreign income even without filing FBARs, you should be OK regardless.
I am quite optimistic that what they implied is correct. As long as you amend (and pay any US taxes due on) any undereported income, file delinquent fbars with an explanatory note for reasonable cause, and comply going forward you should be alright. My financial advisor recently attended a reception given by the tax attache at the IRS London office and was told the same thing, that they're after obvious tax cheats and big fish. We're just unfortunately caught up in the net of the new fatca laws.

My accountant has also said that she hasn't heard of anyone like ourselves filing amended returns and delinquent FBARs being clobbered.

As for technicalities, FBAR penalties are Article 31 as opposed to normal tax penalties which are Article 26; this means that FBAR penalties cannot be automatically assessed and collected. So far, FBAR fines have only been imposed on what are obvious criminal cases. In Michael Schiavo's case, he had deliberatedly underreported some of his income and hadn't made a complete disclosure of all his foreign accounts. He was also involved with corporations and hiding money behind foreign trusts, etc. So he was being a thoroughly naughty boy.

People like ourselves who make a good faith effort to put things right and comply going forward should be OK from everything I've come to understand. It's still a nerve-wracking process, having to sit through the long Statutes of Limitations but we should be alright, really.

Unfortunately, people who unwittingly joined the OVDI have sadly signed away much of their rights, including an automatic imposition of set penalties for their FBAR failures, along with an artificially extended statue of limitations. AFter all, no one absent of fraud should have to be open to examination as far back as 2003 when returns with more than more than 25% underreported income and/or more than $5000 of unreported income on said return would be merely subject to a six year SOL rather than the normal three year SOL.

Instinct would tell me that people like Peg should opt out, otherwise they will suffer set penalties.

It's all been mainly a huge media blitz to scare people with their nuclear option. But like the cold war, chances are they won't actually use it accept in extreme situations. However, this could all change if and when FATCA becomes fully implemented.

OVDI was originally mainly intended for American RESIDENTS hiding money offshore rather than expats or 'accidental Americans' most of whom are in Canada. Unfortunately, the IRS has used stealth to turn it into a cash grab for those unwittingly caught up in it. They have used FEAR to get people into compliance, probably because their antiquated computers would find it almost impossible to track people down otherwise. This is why they're having to resort to something as extreme as FATCA by getting other countries to effectively do their dirty work for them.

I nevertheless feel that people are being unduly paranoid about the whole thing. The more I look into all this, the more I believe the US Ambassador to Canada is correct in that they're not going to be clobbering loads of honest Canadian duel citizens. It wouldn't be in their interest to do that, especially as it would be difficult for them to collect the draconian fines through the Canadian (and British) courts.

Nevertheless, I agree how exasperating it's been to have had to shell out thousands in various accounting fees and compliance going forward but I regard it as a de facto membership fee to remain an American. I know that people like AmTaker do their own tax returns but some of us aren't so adept at all those technicalities, plus some of us feel safer having represenation in the event of an audit if need be.


----------



## AmTaker

Waldemar22 said:


> This forum has given me a lot of hope and comfort in knowing I am not alone in all this.
> 
> I must ask, ARE expats who are sending in FBARS late getting wacked with fines and penalties (outside of OVDI)? I am sure there are some but I can´t believe the resources are there to follow up on everyone, especially since most owe nothing. And opting out of one of these programs for people who inadvertantly joined in a panic (I almost did) may be the right thing as an audit is not an automatic response of opting out. For if I understand correctly opting IN guarantees a penalty. Kind of unfair for people with no taxes to pay and a low threshold for adrenaline.
> 
> I also found myself in quite a dilema september when I found out about this.I came home from work and read an email from ACA . I thought THIS CAN NOT BE HAPPENNING. I HAD been filing for some years but never knew about the FBARS. I sent them in with a letter and I´ll take my chances. I also needed to ammend some things but still owe nothing.....We´ll see who replies first if anyone does.
> 
> In September the IRS people from the London office were here in Oslo to give a meeting about all this and to inform the expats about their obligations. I wasn´t able to attend but the general gist was just, send them in with a letter, state your case that you were unaware and ask not to be penalized.
> 
> With FATCA coming maybe, what is one to do?


if you had been filing and reporting all overseas income on your US tax return (even if no tax due), there should be no problem at all if FBARs are not filed. The IRS actually said that such people would be fine. They gave a deadline for sending in delinquent FBARs in such a case by early September, but I would assume they are almost certain to accept delinquent FBARs in such a circumstance (all income reported, all tax paid) even after that so-called deadline.


----------



## Waldemar22

Mona Lisa76 said:


> First of all, if you've been fully reporting all your foreign income even without filing FBARs, you should be OK regardless.
> I am quite optimistic that what they implied is correct. As long as you amend (and pay any US taxes due on) any undereported income, file delinquent fbars with an explanatory note for reasonable cause, and comply going forward you should be alright. My financial advisor recently attended a reception given by the tax attache at the IRS London office and was told the same thing, that they're after obvious tax cheats and big fish. We're just unfortunately caught up in the net of the new fatca laws.
> 
> My accountant has also said that she hasn't heard of anyone like ourselves filing amended returns and delinquent FBARs being clobbered.
> 
> As for technicalities, FBAR penalties are Article 31 as opposed to normal tax penalties which are Article 26; this means that FBAR penalties cannot be automatically assessed and collected. So far, FBAR fines have only been imposed on what are obvious criminal cases. In Michael Schiavo's case, he had deliberatedly underreported some of his income and hadn't made a complete disclosure of all his foreign accounts. He was also involved with corporations and hiding money behind foreign trusts, etc. So he was being a thoroughly naughty boy.
> 
> People like ourselves who make a good faith effort to put things right and comply going forward should be OK from everything I've come to understand. It's still a nerve-wracking process, having to sit through the long Statutes of Limitations but we should be alright, really.
> 
> Unfortunately, people who unwittingly joined the OVDI have sadly signed away much of their rights, including an automatic imposition of set penalties for their FBAR failures, along with an artificially extended statue of limitations. AFter all, no one absent of fraud should have to be open to examination as far back as 2003 when returns with more than more than 25% underreported income and/or more than $5000 of unreported income on said return would be merely subject to a six year SOL rather than the normal three year SOL.
> 
> Instinct would tell me that people like Peg should opt out, otherwise they will suffer set penalties.
> 
> It's all been mainly a huge media blitz to scare people with their nuclear option. But like the cold war, chances are they won't actually use it accept in extreme situations. However, this could all change if and when FATCA becomes fully implemented.
> 
> OVDI was originally mainly intended for American RESIDENTS hiding money offshore rather than expats or 'accidental Americans' most of whom are in Canada. Unfortunately, the IRS has used stealth to turn it into a cash grab for those unwittingly caught up in it. They have used FEAR to get people into compliance, probably because their antiquated computers would find it almost impossible to track people down otherwise. This is why they're having to resort to something as extreme as FATCA by getting other countries to effectively do their dirty work for them.
> 
> I nevertheless feel that people are being unduly paranoid about the whole thing. The more I look into all this, the more I believe the US Ambassador to Canada is correct in that they're not going to be clobbering loads of honest Canadian duel citizens. It wouldn't be in their interest to do that, especially as it would be difficult for them to collect the draconian fines through the Canadian (and British) courts.
> 
> Nevertheless, I agree how exasperating it's been to have had to shell out thousands in various accounting fees and compliance going forward but I regard it as a de facto membership fee to remain an American. I know that people like AmTaker do their own tax returns but some of us aren't so adept at all those technicalities, plus some of us feel safer having represenation in the event of an audit if need be.


Thanks for the reply,
It was probably the same people from London who were here. Lets hope they are right....


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## Mona Lisa76

Waldemar22 said:


> Thanks for the reply,
> It was probably the same people from London who were here. Lets hope they are right....


And what Amtaker says is also correct.


----------



## Cafreeb12

Well, I hope you are right Mona Lisa! However, I cannot afford a financial advisor every year or a tax attorney to make sure these forms are filed correctly. I object to reporting my foreign spouses income and having to deal with that every year as well. Further, I am not so sure they won't come after innocent people since they seem to feel going over borders with this FATCA nonsense is "reasonable" and intend to go forward with it. I see zero advantage since this all came up in keeping American citizenship as it makes me the American in our immediate family a financial burden. It also means my husbands privacy is invaded and I simply don't intend to comply with that as I feel it's morally wrong. There's nothing the U.S. can give me that being a Canadian citizen does not. My vote didn't even count in the last election and no senator I've ever written to has responded at all. For some it is worth it to keep their citizenship and it really might seem worth it and for them that's great. It really just depends on your individual situation as you mentioned for Peg. I find all of this a lot more than exasperating. It's intrusive, wrong, expensive and threatening.


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## Bevdeforges

Cafreeb12 said:


> I object to reporting my foreign spouses income and having to deal with that every year as well.


This sentence bothers me. You shouldn't have to report your foreign spouse's income on your US tax returns. Normally, you file as "married, filing separately" and you report only your own income. If you have joint accounts, ok, maybe you declare half the interest - or maybe less (if you base the income on how much each of you contributed to the account, that's perfectly legit, too, as long as you have some rational basis for allocating the joint income).



> I find all of this a lot more than exasperating. It's intrusive, wrong, expensive and threatening.


True, too true...
Cheers,
Bev


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## Cafreeb12

Bevdeforges said:


> This sentence bothers me. You shouldn't have to report your foreign spouse's income on your US tax returns. Normally, you file as "married, filing separately" and you report only your own income. If you have joint accounts, ok, maybe you declare half the interest - or maybe less (if you base the income on how much each of you contributed to the account, that's perfectly legit, too, as long as you have some rational basis for allocating the joint income).
> 
> 
> 
> True, too true...
> Cheers,
> Bev


Under FATCA I will be reporting on any account I have signing rights on. I do not work outside our home so the only income we have is from my foreign spouse. I'm sending in an FBAR right now that had to do with some money he passed through our account from his Canadian mother that I never actually had any access to. To me, having to report an account I have signing rights on but, made none of the money in is reporting on my foreign spouse. Also, any fines on the one late FBAR will come out of his income, not mine. So that's really what I meant. Even without FATCA the FBAR rules are such that for people in situations like mine we're reporting for simply being able to write a check even if we made zero of the money in the account and a foreign person is the sole source of that income. That's what I really have the big issue with. They took a look at this signing rights issue and whether or not to amend it and decided not to amend it. So clearly they feel this is "fair" I don't think my spouse will sit still for this but, even if he would, I wouldn't go along with it any further than I had to. It makes me a liability to my Canadian family too. Very intrusive of foreign persons.


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## fruitcandy

I'm not sure where to post this so I will put it here.

I've been lurking around since the end of August/beginning of September after I found out that I am probably considered a US citizen and had to pay taxes, etc... I didn't enter the OVDI program and I only filed my back taxes and FBARs as best as I could using the information I have for my Canadian taxes.

I'm hoping I did it correctly, and I asked my accountant for help in filing these forms. I just got mail from the US Treasury and they gave me a tax refund. I'm wondering if anyone else had this experience and is this refund valid? (This question is what brought me out of lurking...)

My background is that I was born in the US, but I have never lived there (unless you count maybe 6 months straight when I was 5 and the other shorter family vacations to the US). I pretty much grew up here in Canada and being the only one in my family that has a US citizenship I really did not know about my filing requirements. My parents and I thought that when I became a Canadian citizen and gave back my passport, I would be relinquishing my US citizenship. I am a full-time student.


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## Guest

fruitcandy said:


> I'm not sure where to post this so I will put it here.
> 
> I've been lurking around since the end of August/beginning of September after I found out that I am probably considered a US citizen and had to pay taxes, etc... I didn't enter the OVDI program and I only filed my back taxes and FBARs as best as I could using the information I have for my Canadian taxes.
> 
> I'm hoping I did it correctly, and I asked my accountant for help in filing these forms. I just got mail from the US Treasury and they gave me a tax refund. I'm wondering if anyone else had this experience and is this refund valid? (This question is what brought me out of lurking...)


Hi,

Am glad to hear you got a refund! At least you know you're okay on that side of things. 

I presume you have not yet heard anything regarding your FBARS? Please do let us know if/when you do. This is the area that worries many of us the most.


----------



## fruitcandy

nobledreamer said:


> Hi,
> 
> Am glad to hear you got a refund! At least you know you're okay on that side of things.
> 
> I presume you have not yet heard anything regarding your FBARS? Please do let us know if/when you do. This is the area that worries many of us the most.


I'm just worried that it isn't valid. Do they just give the refund to you? I have no income from the US. I haven't heard anything about the FBARs yet and I'm worried about those too.


----------



## Cafreeb12

fruitcandy said:


> I'm just worried that it isn't valid. Do they just give the refund to you? I have no income from the US. I haven't heard anything about the FBARs yet and I'm worried about those too.


Welcome here and I'm glad you got a refund too! Yes, it is valid..will you pm me the name of the person who prepared the forms for you? lol...


----------



## fruitcandy

I can't seem to pm yet as I'm still a new member. She's just a family friend and she helps me do my Canadian taxes. I'm not too sure if she has experience doing US taxes but I don't know if I could have asked for anyone else to help me since everyone I called either charged more money than what I have or didn't have time to see me


----------



## Cafreeb12

fruitcandy said:


> I can't seem to pm yet as I'm still a new member. She's just a family friend and she helps me do my Canadian taxes. I'm not too sure if she has experience doing US taxes but I don't know if I could have asked for anyone else to help me since everyone I called either charged more money that I have or didn't have time to see me


I was just kidding, you got a refund instead of a penalty so I was thinking whoever it was, certainly as good at it! I know, these accountants and lawyers are cleaning up on this legislation. Sad. Sorry you were caught up in this mess.  Truly.


----------



## fruitcandy

Cafreeb12 said:


> I was just kidding, you got a refund instead of a penalty so I was thinking whoever it was, certainly as good at it! I know, these accountants and lawyers are cleaning up on this legislation. Sad. Sorry you were caught up in this mess.  Truly.


Thanks. I think she used my school fees to get the refund. I just wished that they would mail a letter saying that I'm good to go or something so I can stop worrying. :sad:


----------



## Peg

fruitcandy said:


> Thanks. I think she used my school fees to get the refund. I just wished that they would mail a letter saying that I'm good to go or something so I can stop worrying. :sad:


Elsewhere in this forum, people have said that the IRS will not send anything so the fact that you received a refund is a great thing in my opinion! In Canada, we get the nice summary from the CRA but apparently that is not the case in the USA.


----------



## Bevdeforges

Peg said:


> Elsewhere in this forum, people have said that the IRS will not send anything so the fact that you received a refund is a great thing in my opinion! In Canada, we get the nice summary from the CRA but apparently that is not the case in the USA.


You're right - in the case of the IRS, no news is good news. You won't hear from them unless they have a problem with your filing.

A refund is always appreciated - but just be aware that most refunds need to be declared in the year they are received as "income." (There's always a kicker, isn't there?)
Cheers,
Bev


----------



## LegalBeagle

*US Tax Collection in Canada difficult & unlikely - recent legal opinion article*

It is difficult and likely impossible for the US to collect taxes or penalties within Canada from Canadian-US dual citizens. This is according to a Sept 2011 article from a leading Canadian tax law firm, published by Canadian Tax Foundation. A key factor: Canada-US Tax Treaty prevents Canadian tax authorities from collecting US taxes from Canadian citizens, even if they are also US citizens or nationals.

The article:
"US Tax Collection in Canada" in newsletter "Canadian Tax Highlights"
Number 9, Sept 2011-10-14
The authors are E. Frew and N. Reid
Their firm is Thorsteinssons LLP, Vancouver (specializing in tax law)

I'm only a student not a lawyer, but attempt to summarize with key quotes here. This is not a substitute for your own lawyer! The newsletter is available by subscription; I got a copy from a helpful law firm. Most Canadian tax lawyers, accounting firms and law libraries have subscriptions. 

The article is about US tax collection in Canada only, not within the US, or in other countries. You should be aware that US has no direct legal power in Canada to collect taxes here; it cannot seize Canadian property, bank accounts or wages. Only Canada Revenue Agency can collect taxes in Canada. And only Canadian courts can enforce judgements here.

Canadian courts will not enforce US tax claims or judgements because of the longstanding rule that a sovereign state will not collect taxes for the benefit of a foreign state. This was affirmed in a Supreme Court of Canada judgement.

The Canada - US tax treaty has an assistance in collection provision. However, Canada Revenue will not collect US tax or penalties from Canadian citizens (including dual Canada-US citizens or US-born Canadian citizens) unless the tax claim pre-dates their Canadian citizenship. This is reciprocated by US: they will not collect Canadian taxes from US citizens in their country.

Also, Canada will not collect any US bank reporting penalties in Canada. "Thus, FBAR penalties are not collectible under article XXVI A (of the Tax Treaty) because they are not income or capital taxes or taxes imposed under the Code or related penalties." It is unlikely these would be recognized by Canadian courts as well, because "they are penal and thus are not enforceable in Canada."

Quoting the article's summary:

"In summary, a Canadian citizen (my note: withing Canada) need have little concern about the collection of US tax, interest, and ancillary penalties. However, a US taxpayer who is a Canadian resident and not a Canadian citizen and who owes US tax, interest, and penalties may face collection thereof by the CRA pursuant to treaty article XXVI A. It is extremely unlikely that Canadian citizens or residents will have to face collection of FBAR penalties, except in the very unlikely event that those penalties may be characterized as registrable civil judgments."

Much of this was confirmed by an August 2011 Canada Revenue memo to Don Cayo, an editor at the Vancouver Sun.

BTW: I'm a Canadian student researching this for older relatives who are Canadian citizens born in US, who lived here all their lives, and have no US assets or property. They were distressed: worried about being arrested in their Canadian homes, or that the US government could somehow take their property or bank accounts. They were reassured by this info, so I post it here as a public service. 

Good luck to you all, and advise anyone in this situation consult an expert tax lawyer to discuss options before you sign anything!


----------



## Ladyhawk

Legal Beagle, thanks for this, and I see you cross-posted this on another thread. My reply on that thread was that the problem for many if not most of us is that we still have families and/or financial dealings in the US, and unless we are prepared to renounce and cut off all ties with the US (which one cannot do if one stands to inherit from a US relative), we will have to comply with any FBAR fines.


----------



## Mona Lisa76

Ladyhawk said:


> Legal Beagle, thanks for this, and I see you cross-posted this on another thread. My reply on that thread was that the problem for many if not most of us is that we still have families and/or financial dealings in the US, and unless we are prepared to renounce and cut off all ties with the US (which one cannot do if one stands to inherit from a US relative), we will have to comply with any FBAR fines.


Yes, while I could be wrong, I believe that if I renounced and then subsequently inherited from my American parents, I believe that the US would punish me by punitive taxation on the inheritance: I think 30% of anything over $60,000 or maybe even worse.

On the other hand, I really doubt that people like us are going to be hit with fbar fines so long as we promptly file any delinquent fbars (up to the six year statute of limitations for civil) with filing going forward (also with 8938s for some us)...
I think more and more that Bev is right. I think we're making out that the USA is evil when in fact we're not their targets and are merely caught up in the net thus making good faith reporting the main thing


----------



## 416

Mona Lisa76 said:


> Yes, while I could be wrong, I believe that if I renounced and then subsequently inherited from my American parents, I believe that the US would punish me by punitive taxation on the inheritance: I think 30% of anything over $60,000 or maybe even worse.



Bev, is this correct?


----------



## Bevdeforges

416 said:


> Bev, is this correct?


I'm not in a position at the moment to check the details, but basically the tax free allowances are far less for any heir of a US citizen that is not a US citizen. The one situation I'm sure of is where a US citizen is married to a non-citizen. If the US citizen dies first, the amount that passes tax free to the non-citizen surviving spouse is only about $60,000, whereas a couple where both partners are citizens can pass virtually the whole estate tax free to the survivor. (The theory being that the government will collect when the surviving partner dies - which is not the case if the partner is a non-citizen.)

Not sure if (and if, then how) this applies to other family members who are not US citizens.
Cheers,
Bev


----------



## Mona Lisa76

Bevdeforges said:


> I'm not in a position at the moment to check the details, but basically the tax free allowances are far less for any heir of a US citizen that is not a US citizen. The one situation I'm sure of is where a US citizen is married to a non-citizen. If the US citizen dies first, the amount that passes tax free to the non-citizen surviving spouse is only about $60,000, whereas a couple where both partners are citizens can pass virtually the whole estate tax free to the survivor. (The theory being that the government will collect when the surviving partner dies - which is not the case if the partner is a non-citizen.)
> 
> Not sure if (and if, then how) this applies to other family members who are not US citizens.
> Cheers,
> Bev


I think this is correct though I believe that my non-US spouse would only lose any portion of my estate over $60,000 that's based in the US. As I understand, my UK assets should pass directly to him if I go first?


----------



## Bevdeforges

Mona Lisa76 said:


> I think this is correct though I believe that my non-US spouse would only lose any portion of my estate over $60,000 that's based in the US. As I understand, my UK assets should pass directly to him if I go first?


Depends on where you are resident when you die, but basically, yes. If you're resident outside the US, the US rules only apply to real estate assets (land and buildings) located in the US.
Cheers,
Bev


----------



## 416

Bevdeforges said:


> Depends on where you are resident when you die, but basically, yes. If you're resident outside the US, the US rules only apply to real estate assets (land and buildings) located in the US.
> Cheers,
> Bev


That's very helpful - thanks.


----------



## McLovin

Bevdeforges said:


> Depends on where you are resident when you die, but basically, yes. If you're resident outside the US, the US rules only apply to real estate assets (land and buildings) located in the US.
> Cheers,
> Bev


Bev,

Does that also apply to retirement accounts and other liquidity? My fathers entire savings etc. have been in Canada, and the only American article that he owns is his passport. Do you think any of their estate in Canada would be at risk? Sounds like "no". Thank you!


----------



## Peg

Historical perspective on the increasing complexity in filing IRS tax returns:

While completing my 2006-2010 returns I noticed that each year the Instructions for the 1040 got longer. To satisfy my curiousity I looked at every 5 years:

1985 - 52 pages
1990 - 64
1995 - 84
2000 - 118
2005 - 142
2010 - 179

If someone only has income that is covered under the Foreign Earned Income Exclusion then it is straightforward. But add in Self-employment, TFSA, RESP, RRSP, pension etc it gets more difficult each year!


----------



## kylew

Sorry if this has been answered before, but do I need to fill in a FBAR if my accounts have never exceeded $10k just to show that I am declaring and not hiding anything?


----------



## AmTaker

Mona Lisa76 said:


> I think this is correct though I believe that my non-US spouse would only lose any portion of my estate over $60,000 that's based in the US. As I understand, my UK assets should pass directly to him if I go first?


As far as I understand
-- In general, there is an unlimited martial deduction on estate transfers to spouses UNLESS the spouse is not a US citizen. In that case (even if the spouse is a GC holder), estate tax could be due
-- If you are a US person, then your worldwide estate is taxed on your death and is subject to estate tax. Currently, there is temporary relief from this tax in the US, but it will return in a couple of years -- I think for any estate > 5M. 
-- If you are a non US person, then your estate is taxed only on US property > 60000. 

-- If your country has a special provision in its treaty with the US, that will override most of these provisions.


----------



## Mona Lisa76

AmTaker said:


> As far as I understand
> -- In general, there is an unlimited martial deduction on estate transfers to spouses UNLESS the spouse is not a US citizen. In that case (even if the spouse is a GC holder), estate tax could be due
> -- If you are a US person, then your worldwide estate is taxed on your death and is subject to estate tax. Currently, there is temporary relief from this tax in the US, but it will return in a couple of years -- I think for any estate > 5M.
> -- If you are a non US person, then your estate is taxed only on US property > 60000.
> 
> -- If your country has a special provision in its treaty with the US, that will override most of these provisions.


Thanks for the clarification. I also wonder if I decide to renounce how much my inheritance from my US parents could be taxed by the IRS over and beyond any taxes on their estate. Had the impression it might be around 30% withholding taxes against renunciants. It's all very confusing.

I don't want to renounce but it seems like it could greatly simplify my life and save me thousands in ongoing compliance costs.


----------



## 416

Mona Lisa76 said:


> Had the impression it might be around 30% withholding taxes against renunciants.


I think you have it mixed up with USCs inheriting from renunciants.


----------



## Mona Lisa76

416 said:


> I think you have it mixed up with USCs inheriting from renunciants.


I think you might be right, actually. I had assumed though renunciants would also be penalised when inheriting from USCs (other than spouse). But hopefully am just getting mixed up again,


----------



## 416

Mona Lisa76 said:


> I think you might be right, actually. I had assumed though renunciants would also be penalised when inheriting from USCs (other than spouse). But hopefully am just getting mixed up again,


That might happen in the future. Or not.


----------



## Mona Lisa76

K


416 said:


> That might happen in the future. Or not.


Let's hope not *lol*


----------



## Guest

So what if hypothetically someone moved to Canada from the states several years ago, is now a citizen but was not aware they had to file for US income taxes, has no US income, and is paying off a student loan. Is there a possibility that that person could even get a refund of some kind once they actually did file?


----------



## 416

zucchero81 said:


> So what if hypothetically someone moved to Canada from the states several years ago, is now a citizen but was not aware they had to file for US income taxes, has no US income, and is paying off a student loan. Is there a possibility that that person could even get a refund of some kind once they actually did file?


There are people around who say they ended up in the black from filing a US return - I wouldn't hold my breath.

If you're a naturalized Canadian citizen, it may be easier to tell the State Department that when you took the oath it was voluntarily and with the intention to relinquish U.S. citizenship, and could you have a Certificate of Loss of Nationality backdated to the citizenship ceremony. This may be simpler than a formal renunciation. 

more here.


----------



## Guest

416 said:


> There are people around who say they ended up in the black from filing a US return - I wouldn't hold my breath.
> 
> If you're a naturalized Canadian citizen, it may be easier to tell the State Department that when you took the oath it was voluntarily and with the intention to relinquish U.S. citizenship, and could you have a Certificate of Loss of Nationality backdated to the citizenship ceremony. This may be simpler than a formal renunciation.
> 
> more here.


Not sure if renouncing is an option... if both parents are still in the states what about the question of a possible future inheritance? Doesn't the IRS withhold a huge chunk? Not trying to sound crass or purely interested in money but this is a serious concern.


----------



## Mona Lisa76

I 


zucchero81 said:


> Not sure if renouncing is an option... if both parents are still in the states what about the question of a possible future inheritance? Doesn't the IRS withhold a huge chunk? Not trying to sound crass or purely interested in money but this is a serious concern.


I share exactly the same concerns plus worry that they may want to make it difficult for renunciants to even visit as a way of punishing them for their 'treasonable act'. 

I hate how unclear everything is. Another thing to bear in mind is that any sort of criminal record (even for something as minor as marijuana possession) could make it almost impossible to re- enter into the US if no longer a citizen.


----------



## Guest

Mona Lisa76 said:


> I
> 
> 
> I share exactly the same concerns plus worry that they make it difficult for renunciants to even visit.


Who knows what the future holds, but as a renunciant and ex-draft-dodger (not sure which would be more infuriating in their eyes) I haven't once (yet) been hassled since I resumed crossing the border in 1978, an average of at least once a year since then, to visit family. Mind you their computers shouldn't have anything on the draft evasion since the amnesty should have resulted in all references to that being removed. But I find it hard to believe (hard but not impossible, I guess) that my CLN hasn't been entered on the computer system. Certainly State Department in Washington and the Embassy here in Ottawa have known about it ... but then who knows how much information State shares with Homeland Security, especially going back into ancient history.

My wife and I have pretty-well decided that within the next year we'll be telling family members to visit us in Canada and that we aren't going back again. Certainly I'll never travel to the US again except by air, where I have the option of bailing out of pre-clearance on Canadian soil if things get testy. Do you go through pre-clearance in London or do you have to clear Customs and Immigration on US soil? I guess if you have to do the latter, that's one advantage we still have in Canada (until the Harper weaselhood gives that up too ...)

I do understand and sympathize about the family-ties issues, especially if you have family who won't or can't travel to see you in the UK. Everyone's case is different.


----------



## Mona Lisa76

Schubert said:


> Who knows what the future holds, but as a renunciant and ex-draft-dodger (not sure which would be more infuriating in their eyes) I haven't once (yet) been hassled since I resumed crossing the border in 1978, an average of at least once a year since then, to visit family. Mind you their computers shouldn't have anything on the draft evasion since the amnesty should have resulted in all references to that being removed. But I find it hard to believe (hard but not impossible, I guess) that my CLN hasn't been entered on the computer system. Certainly State Department in Washington and the Embassy here in Ottawa have known about it ... but then who knows how much information State shares with Homeland Security, especially going back into ancient history.
> 
> My wife and I have pretty-well decided that within the next year we'll be telling family members to visit us in Canada and that we aren't going back again. Certainly I'll never travel to the US again except by air, where I have the option of bailing out of pre-clearance on Canadian soil if things get testy. Do you go through pre-clearance in London or do you have to clear Customs and Immigration on US soil? I guess if you have to do the latter, that's one advantage we still have in Canada (until the Harper weaselhood gives that up too ...)
> 
> I do understand and sympathize about the family-ties issues, especially if you have family who won't or can't travel to see you in the UK. Everyone's case is different.


My family expect me to see them rather than have to face the inconvenience and expense ro visit me. They're sympathetic but only up to a point. They feel that as I chose to leave America that it's just too bad. I have to take the rough with the smooth. My mother says she'd undetstand if I renounced but sheis complex....I know her well enough to know she'd be very upset if I actually went through with it. She wishes I'd divorce him and return to America, and cut off all my British ties. She's disappointed that I even chose to move there and marry a foreigner though she's polite enough not to impose her bewilderment. It puts me in a bind and I resent it.


----------



## Arlington

Mona Lisa76 said:


> My family expect me to see them rather than have to face the inconvenience and expense ro visit me. They're sympathetic but only up to a point. They feel that as I chose to leave America that it's just too bad. I have to take the rough with the smooth. My mother says she'd undetstand if I renounced but sheis complex....I know her well enough to know she'd be very upset if I actually went through with it. She wishes I'd divorce him and return to America, and cut off all my British ties. She's disappointed that I even chose to move there and marry a foreigner though she's polite enough not to impose her bewilderment. It puts me in a bind and I resent it.


I love your back story, Mona Lisa. We all have one. Thanks for sharing. Funny . .but your mother sounds quite British.


----------



## Arlington

OTTAWA— From Friday's Globe and Mail 
Published Friday, Dec. 02, 2011 6:00AM EST

Increase text size Americans living in Canada who’ve neglected to pay their U.S. taxes are getting a big break from Uncle Sam.

The U.S. Internal Revenue Service is poised to waive potentially massive penalties for Americans who agree to come clean and don’t owe any taxes, The Globe and Mail has learned.

The new rules will be announced within weeks by the IRS, according to David Jacobson, the U.S. Ambassador to Canada, who has been swamped with complaints from anxious Canadians.


U.S. taxman to go easy on American residents in Canada - The Globe and Mail


----------



## Mona Lisa76

Arlington said:


> I love your back story, Mona Lisa. We all have one. Thanks for sharing. Funny . .but your mother sounds quite British.


She has a good heart but has always been rather matter-of-fact. She loves the old British stcom 'Keeping Up Appearances' *lol*


----------



## Arlington

Mona Lisa76 said:


> She has a good heart but has always been rather matter-of-fact. She loves the old British stcom 'Keeping Up Appearances' *lol*


Very funny. Love that show. I can just picture your mom.


----------



## CanadianHoosier

And to follow on to the Globe's article...

Tax respite in the works for Americans living in Canada | Personal Finance | Financial Post

This appears promising, yet it is bittersweet. 

The damage, for many, has been done...


----------



## Mona Lisa76

CanadianHoosier said:


> And to follow on to the Globe's article...
> 
> Tax respite in the works for Americans living in Canada | Personal Finance | Financial Post
> 
> This appears promising, yet it is bittersweet.
> N
> Tihe damage, for many, has been done...


Yes, all those tax attorneys must be laughing


----------



## Nononymous

CanadianHoosier said:


> And to follow on to the Globe's article...
> 
> Tax respite in the works for Americans living in Canada | Personal Finance | Financial Post
> 
> This appears promising, yet it is bittersweet.
> 
> The damage, for many, has been done...


In this case my "no goddamn way, like hell I will" approach appears to worked out well for me.

Still thinking my best long-term option is to lay low and stay off the radar, at least until such time as I get hassled for crossing the border with a US birthplace on a Canadian passport.


----------



## byline

Nononymous said:


> In this case my "no goddamn way, like hell I will" approach appears to worked out well for me.
> 
> Still thinking my best long-term option is to lay low and stay off the radar, at least until such time as I get hassled for crossing the border with a US birthplace on a Canadian passport.


That would be my concern, that one of my parents becomes ill (or worse), and then I'm stopped or even detained at the border because of this mess. That's why I'm furious over this. Beyond the economic damage that's already been done, this felt like a form of blackmail, where our families and friends were effectively being held hostage till we paid up.

I know of one woman who can't afford the accountants and lawyers' fees, on top of any penalties she might have been hit with. So she visited her aging mother in September and said her goodbyes, because she felt certain she would not be allowed back in again. Pretty heartbreaking, if you ask me. And all for what?

Sue


----------



## Guest

byline said:


> That would be my concern, that one of my parents becomes ill (or worse), and then I'm stopped or even detained at the border because of this mess. That's why I'm furious over this. Beyond the economic damage that's already been done, this felt like a form of blackmail, where our families and friends were effectively being held hostage till we paid up.
> 
> I know of one woman who can't afford the accountants and lawyers' fees, on top of any penalties she might have been hit with. So she visited her aging mother in September and said her goodbyes, because she felt certain she would not be allowed back in again. Pretty heartbreaking, if you ask me. And all for what?
> 
> Sue


Welcome Sue, have enjoyed reading your posts. We definitely understand your situation and how you feel. That story is absolutely heartbreaking. A perfect example why one of the big "Pros" in my list is to realize how cruel all of this has been/is for so many of us. I consider it unforgiveable.

I have only to decide if it is worth waiting, risking future changes in tax code and or renouncing, to see if our son would decide to live in the US. He is dual, my husband is CDN. Of course, the article from last week really leaves FUBAR penalties unclarified........I will decide by this Thursday.....


----------



## byline

Thanks for the welcome, nobledreamer! You're in a very complicated situation. OK, aren't we all? But at least for me and my husband, it's just us, no children. I dread to think of the complications visited upon children of Americans, who may or may not be aware of this situation.

Sue


----------



## Lovecheese

*Shares in a Company*

Hello there-

Can anyone tell me how I go about reporting shares I have in a company?
I have recently back filed my late tax returns to the US for the past 3 years as I was not aware like may of this requirement. My husband and I started a company in 2009 but it has not been active or a source of any income etc until possibly in 2012 when we are looking at starting it up.

Since I have not claimed it on my previous tax years, will the IRS fine me or penalize me for not reporting it before even though it has bnot been acitive and no bank accounts or anything has been associated with it?

Also, now that we are activating it and it will be my husbands sole self employment, I am only claiming the fact I own shares in a company, does the IRS care about when the company officially started anyway? Would I just report this on my FBAR form for 2012?

I am also looking at renouncing in May 2012, has anyone gone to the Vancouver embassy and can they tell me if they allow one trip for the process being as I am 16 hours away. Is the 450.00 payable at the appointment? I have no documents other then a US birth certificate and my SSN on a piece of paper, how are they with handling this type of documentation? And my final question is, I sent an email requesting my appt in May, but have not heard back, do people usually call instead?

Thanks for any help and feedback!!!


----------



## Omater

Lovecheese said:


> Hello there-
> Also, now that we are activating it and it will be my husbands sole self employment, I am only claiming the fact I own shares in a company, does the IRS care about when the company officially started anyway? Would I just report this on my FBAR form for 2012?
> 
> I am also looking at renouncing in May 2012, has anyone gone to the Vancouver embassy and can they tell me if they allow one trip for the process being as I am 16 hours away.


I have the exact same problem. We started a business but it has been very active for years and it is my husband's soul source of income. I was drawing some income from the business during the early years on a part time basis until this last year when I started working in it full time. We then started taking dividends rather than a salary for tax and retirement savings purposes. If I had known about this FBAR issue I would have remained on payroll. Now I have to report those dividends and the source. I hope to have my Citizenship in May and I will relinquish right away, but I am not sure what I might do on that FBAR yet. I am guessing that I will probably have to give up something in order to get the US to release me from their clutches.

Although I am currently doing my own back tax returns I am still not sending them in until I hear what IRS is actually going to do about penalties. I will never trust them again. We are about to travel to the US and I want to be sure to have the tax returns ready. 

There are some very knowledegable members here who may be able to answer these questions.


----------



## Guest

Lovecheese said:


> Hello there-
> 
> Can anyone tell me how I go about reporting shares I have in a company?
> I have recently back filed my late tax returns to the US for the past 3 years as I was not aware like may of this requirement. My husband and I started a company in 2009 but it has not been active or a source of any income etc until possibly in 2012 when we are looking at starting it up.
> 
> Since I have not claimed it on my previous tax years, will the IRS fine me or penalize me for not reporting it before even though it has bnot been acitive and no bank accounts or anything has been associated with it?
> 
> Also, now that we are activating it and it will be my husbands sole self employment, I am only claiming the fact I own shares in a company, does the IRS care about when the company officially started anyway? Would I just report this on my FBAR form for 2012?
> 
> I am also looking at renouncing in May 2012, has anyone gone to the Vancouver embassy and can they tell me if they allow one trip for the process being as I am 16 hours away. Is the 450.00 payable at the appointment? I have no documents other then a US birth certificate and my SSN on a piece of paper, how are they with handling this type of documentation? And my final question is, I sent an email requesting my appt in May, but have not heard back, do people usually call instead?
> 
> Thanks for any help and feedback!!!


Welcome Lovecheese! I can't see what you would have had to report prior to activating your company - no $$, no accts.....Until there is an actual financial account or the shares have a value, I cannot see anything to report.

I am not familiar with Vancouver but seem to remember several people here have had some difficulty in reaching them; if you are that far away, I can't imagine they can require you to come more than once. If you haven't heard back in that long, I would try calling. I do not know about your documents-you would have to ask them or perhaps someone else can advise.......If you renounce,you pay the $450 when your CLN is returned from Washington DC. It is possible to relinquish instead, depending upon your situation. Are you a Canadian citizen? How did you obtain USC?


----------



## justbrowsing

The shares you own in the company (active or not) should be reported on the 5471 form.
IRS Form 5471- Foreign Corporation Ownership Reporting for a readable description.

You are probably a Category #2 filer which will tell you exactly which parts of the 5471 form need to be completed. Instructions for Form 5471 (12/2010)


----------



## justbrowsing

The shares you own in the company (active or not) should be reported on the 5471 form.
IRS Form 5471- Foreign Corporation Ownership Reporting for a readable description.

You are probably a Category #2 filer which will tell you exactly which parts of the 5471 form need to be completed. Instructions for Form 5471 (12/2010)


----------



## eucitizen

Nononymous said:


> Thanks, that's useful clarification. The news articles were very misleading.
> 
> I cannot imagine banks retroactively collecting citizenship information, which would require voluntary disclosure from customers. It'll be interesting to see what happens.
> 
> I suppose I might get organized enough to file these things later in the year, but as before, I really can't think of a situation (beyond moving to the US, which won't happen) in which the IRS would ever find me.


Think again... the IRS will find you.

If you don't adress the situation you will be very, very sorry several years from now when they have improved means of searching out people.


----------



## Peg

eucitizen said:


> Think again... the IRS will find you.
> 
> If you don't adress the situation you will be very, very sorry several years from now when they have improved means of searching out people.


eucitizen - I can't figure out if you are cautious, wise or acting on behalf of the US Gov... I want to think you are just guessing what can happen in the future yet I feel the same way which is why I back-filed and renounced.


----------



## Guest

justbrowsing said:


> The shares you own in the company (active or not) should be reported on the 5471 form.
> IRS Form 5471- Foreign Corporation Ownership Reporting for a readable description.
> 
> You are probably a Category #2 filer which will tell you exactly which parts of the 5471 form need to be completed. Instructions for Form 5471 (12/2010)


Thanks justbrowsing....I don't follow the logic of being required to report something that is inactive. Would this possibly be because the shares already have an assigned value? Does a company have to have an initial amount of equity established even if no $$ has actually moved? Am curious, and like to learn!


----------



## Lovecheese

nobledreamer said:


> Welcome Lovecheese! I can't see what you would have had to report prior to activating your company - no $$, no accts.....Until there is an actual financial account or the shares have a value, I cannot see anything to report.
> 
> I am not familiar with Vancouver but seem to remember several people here have had some difficulty in reaching them; if you are that far away, I can't imagine they can require you to come more than once. If you haven't heard back in that long, I would try calling. I do not know about your documents-you would have to ask them or perhaps someone else can advise.......If you renounce,you pay the $450 when your CLN is returned from Washington DC. It is possible to relinquish instead, depending upon your situation. Are you a Canadian citizen? How did you obtain USC?


Thanks so much for that info. It relieves some stress i have for sure as i want to make sure I am doing everything correctly and I honestly never thought about our company and the need to be reported based on no value, no income etc..and thats all that FBAR indicated, accounts more then 10,000 and things with value.

As for my US citizenship. I was born in the US and lived there until I was 16. And now, even though I am giving away my age, lol... I am 31 and living in canada since. I never worked in the US or filed taxes therefore, never thought in my wildest dreams I was not compliant with tax filing until I found out this Sept. I then filed back 3 years and even got a small refund, how nice! It paid for my therapy!!! HAHA. 
Can you tell me how one would go about relinquishing rather then renunciation? I want to completely give up my US rights, I have canada as my home now, all my family is here and I have no intentions of ever living back in the US so I see no reason to file 200 a year for their tax system, they can go you know where


----------



## Lovecheese

nobledreamer said:


> Thanks justbrowsing....I don't follow the logic of being required to report something that is inactive. Would this possibly be because the shares already have an assigned value? Does a company have to have an initial amount of equity established even if no $$ has actually moved? Am curious, and like to learn!


Thats scary then! Another reason to get away from the US citizenship, their rules are completely unrealistic! I can see if I had money in the buisness or some sort of value, but for just having a name and not at all practicing under a buisness they would possibly fine me penalities for not reporting a name. I would agree to report and I will if and when we actually activate our company, but to get penalized for no money, seems ridiculous!


----------



## Lovecheese

Lovecheese said:


> Thats scary then! Another reason to get away from the US citizenship, their rules are completely unrealistic! I can see if I had money in the buisness or some sort of value, but for just having a name and not at all practicing under a buisness they would possibly fine me penalities for not reporting a name. I would agree to report and I will if and when we actually activate our company, but to get penalized for no money, seems ridiculous!


So, I have clicked on the links provided above with regards to owning shares in a company, even though no money etc etc.. So, what is the advice I should do now being as I have already paid and back filed mt 2008 2009 and 2010 taxes, where our buisness was inc. in 2009 but no income to this date, how do i go back now and let the IRS know it is there but inactive without opening a can or worms and having to re-pay an accountant to re-do everything.
Bottom line, it doesnt change amounts I have in accounts and on my FBARS, I have no money or value in shares from it. My concern is when i file my final 2012 return, I will report this company if we have money then in it, and the IRS will see it was inc. in 2009, therefore, I failed to report it. EIKKK... this all stresses me out! When I thought I was in the clear, did the right thing and now this is thrown at me! Never fails it seems


----------



## Peg

eucitizen said:


> Peg, I am just a normal citizen who is going through the renunciation process like so many others. For me it has taken many years and I have gained lots of insight during the process.
> ...
> The time to get out is NOW and anyone who thinks they can just melt into the background is going to have a huge problem down the road.


I feel for you since it has taken you years - the past 3 months have felt long enough...

Last week I likely scared a friend of a friend when she told me her lawyer told her to just ignore it. She is a US citizen living in Canada - not even a citizen here. To not have another citizenship and to ignore it seems crazy to me. And either her lawyer did not understand FBARs or she didn't listen because her knowledge of them was wrong.

As I have said many times, it is clear on my Canadian passport that I was Born in the USA so I was not willing to just ignore it since I live 1 hour from the border and have most of my family in the US. Oh, and the fact that I joined OVDI by accident and had to deal with it to opt out and renounce...


----------



## Ladyhawk

eucitizen said:


> Now when you renew your passport from abroad, they transmit your data directly to the IRS. When you cross the border on a passport issued abroad, they check if you are a nonfiler and possibly interrogate you or maybe just send your info to the IRS for follow up.
> 
> .



Do you have a reference for this information? Until recently, border services and the IRS could not exchange information. Lately I have read vague general references to the possibility that they can now share information, but I have seen nothing specific about what can be shared and how it is done. 

I do know that despite the nightmare scenarios that we all imagine here about Big Brother seeing all and knowing all, there are laws ensuring that some departments of the US government are prohibited from sharing personal information with other departments. If you cast an overseas vote in an American election for example, at least in 2008, the information you provided in order to establish your eligibility to vote could not be used to check your tax compliance.

Definitive information about data sharing between border services, DOS and the IRS would be helpful here. We already scare each other enough with our active imaginations and cynicism toward Uncle Sam.


----------



## Guest

Ladyhawk said:


> Do you have a reference for this information? Until recently, border services and the IRS could not exchange information. Lately I have read vague general references to the possibility that they can now share information, but I have seen nothing specific about what can be shared and how it is done.
> 
> I do know that despite the nightmare scenarios that we all imagine here about Big Brother seeing all and knowing all, there are laws ensuring that some departments of the US government are prohibited from sharing personal information with other departments. If you cast an overseas vote in an American election for example, at least in 2008, the information you provided in order to establish your eligibility to vote could not be used to check your tax compliance.
> 
> Definitive information about data sharing between border services, DOS and the IRS would be helpful here. We already scare each other enough with our active imaginations and cynicism toward Uncle Sam.


I agree. Somewhere a while back I read about the sharing that is supposed to go on between DOS and IRS but I doubted they had actually done it in my case since I've never heard from either in 30 years. I'll see if I can find that - it was limited to about 4 items and IRS has to pay DOS for it. I also have heard that any information sharing between DOS, IRS, Homeland Security and Customs Border Patrol is not currently possible/being done. I will also see if I can find that......


----------



## Guest

Peg said:


> Last week I likely scared a friend of a friend when she told me her lawyer told her to just ignore it. She is a US citizen living in Canada - not even a citizen here. To not have another citizenship and to ignore it seems crazy to me. And either her lawyer did not understand FBARs or she didn't listen because her knowledge of them was wrong. QUOTE]
> 
> That is completely nuts. I do hope she chooses to listen to you instead of her worthless lawyer.


----------



## Guest

Peg said:


> I feel for you since it has taken you years - the past 3 months have felt long enough...
> 
> Last week I likely scared a friend of a friend when she told me her lawyer told her to just ignore it. She is a US citizen living in Canada - not even a citizen here. To not have another citizenship and to ignore it seems crazy to me. And either her lawyer did not understand FBARs or she didn't listen because her knowledge of them was wrong.
> 
> As I have said many times, it is clear on my Canadian passport that I was Born in the USA so I was not willing to just ignore it since I live 1 hour from the border and have most of my family in the US. Oh, and the fact that I joined OVDI by accident and had to deal with it to opt out and renounce...



Yikes, Peg -- your friend might try having a look at this forum and what some very informed people have to say here -- and maybe arrive at a more informed decision on whether ignoring this is OK for her. She might learn that the U.S. does say she has responsibilities (especially since she doesn't have Canadian citizenship). At least, her common sense might then kick in to tell her a second opinion is in order -- or have her present lawyer put his/her advice in writing and he/she will be accountable for the consequences. I hope it was not advice she paid for. I think there are many walking around in the same kind of bubble.


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## justbrowsing

nobledreamer said:


> Thanks justbrowsing....I don't follow the logic of being required to report something that is inactive. Would this possibly be because the shares already have an assigned value? Does a company have to have an initial amount of equity established even if no $$ has actually moved? Am curious, and like to learn!


My understanding is if you own more than 10% of the shares in a foreign corporation then that ownership must be reported. I believe all companies would have been setup with a share value of $1 or some other nominal sum.


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## eucitizen

*passport renewal*



Ladyhawk said:


> Do you have a reference for this information? Until recently, border services and the IRS could not exchange information. Lately I have read vague general references to the possibility that they can now share information, but I have seen nothing specific about what can be shared and how it is done.


Yes I do; get a copy of the passport renewal documentation from any embassy, there is a line on it that says your information can be shared with the IRS.


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## Ladyhawk

eucitizen said:


> Yes I do; get a copy of the passport renewal documentation from any embassy, there is a line on it that says your information can be shared with the IRS.


Thanks, I'll check that out. 
I wonder if it's "CAN share" or if it's "WILL share". If it is the former, sounds like a scare tactic. It could be something they only do if they have reason to suspect you are a tax evader. So I wonder whether that info really does go to the IRS every time you renew, and every time you cross the border? Sounds like the IRS would be swamped with data and I doubt they'd have the resources to follow up on everyone.


----------



## Guest

nobledreamer said:


> I agree. Somewhere a while back I read about the sharing that is supposed to go on between DOS and IRS but I doubted they had actually done it in my case since I've never heard from either in 30 years. I'll see if I can find that - it was limited to about 4 items and IRS has to pay DOS for it. I also have heard that any information sharing between DOS, IRS, Homeland Security and Customs Border Patrol is not currently possible/being done. I will also see if I can find that......




http://www.treasury.gov/press-center...nts/tax598.pdf

Currently, DOS collects and sends to IRS each applicant’s: (i) full name; (ii) Social
Security number; (iii) mailing address; and (iv) date of birth. IRS processes through the IRP.......the information it receives from DOS to validate the Social Security number furnished by the applicant for use in the various IRP-based compliance programs.

This info is from 1998. Especially interesting is Section III: Sharing Information Between Agencies pp 15-22; p 19 - Department of State Restrictions on Additional Information:

"Current law generally does not require the sharing of information between executive branch agencies with respect to individuals living abroad who retain their U.S. citizenship."

"...the State Department has denied IRS requests for general access to its lists of Americans who register at U.S. embassies and consulates contending that disclosure would violate the Privacy Act [5 U.S.C. § 552a]....... In addition to Privacy Act concerns, State is also concerned that disclosing this information to IRS would discourage persons from registering with the posts. The State Department encourages persons to register their whereabouts with the posts so it can carry out its mission to protect Americans while they are in foreign countries. [1993 GAO Report, p. 8]."

"..... . . IRS should not be given the names and addresses of Amcits [American citizens] registered at overseas posts because the mission of OCS [Overseas Citizens Services] to encourage the registration of Amcits with posts could be adversely impacted if the Amcits were aware that data regarding their whereabouts would be reported to IRS. This *human safety objective *of OCS *is paramount *to the fiscal objectives of the IRS."


----------



## ralphnev

*i've read the whole thread now ....*

& it scares me 
Background / born in USA immigrated in '69, as a child , became a card carrying Canadian Citizen in '94 ...

never filed US taxes till i moved back down USA for 4 yrs in the (shortly after getting my CAN citizenship) , move back to Canada in '98 then kept filing till 2003 (end of US based income) never had to pay IRS & always did the taxes myself 


NEVER heard of FBAR till 2 days ago .. & WTF ? ??!! 
there is no way i want the IRS snooping my /my spouses bank accounts ...

i fully plan on renouncing my citizenship .. 
I've downloaded the forms 1040,1116,2555 for the last 5yrs & will submit asap 

What a crock ..


----------



## 416

nobledreamer said:


> "..... . . IRS should not be given the names and addresses of Amcits [American citizens] registered at overseas posts because the mission of OCS [Overseas Citizens Services] to encourage the registration of Amcits with posts could be adversely impacted if the Amcits were aware that data regarding their whereabouts would be reported to IRS. This *human safety objective *of OCS *is paramount *to the fiscal objectives of the IRS."


Now, I wonder how seriously they'd take me at the US consulate in Toronto if I wanted to register as a US citizen.


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## Mona Lisa76

I am more optimistic that we're not their intended target. I think Bev and possibly AmTaker are the only others who seem to agree


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## Guest

Mona Lisa76 said:


> I am more optimistic that we're not their intended target. I think Bev and possibly AmTaker are the only others who seem to agree


Irrelevant. The US. IRS could just provide us a *real amnesty *-- *a means to let us easily relinquish our U.S. citizenships as should be our right. *

The yearly administration and costs of retaining a U.S. citizenship when we don't want it are insane. I want to get back to living my life as a (ONLY) Canadian. What a lot of wasted energy expended on this. We all have lives to live / let us get on with it.

All that has happened by the latest U.S. announcement is that we U.S. persons who live in whatever other country than the U.S. have been "warned" to get our acts together and continue with the IRS paperwork each year if we want to retain a U.S. citizenship -- OR -- decide to renounce the excess citizenship we do not want and whatever it takes to make that happen -- with the added expense, in many cases, of accountants and lawyers to make sure we are not making some mistake for which we will be penalized heavily. (And, again, the IRS should have people to answer any of our questions on this -- we should not have to retain outside counsel for simple questions / definitions.) 

Having then relinquished our U.S. citizenship once and for all, we should be able to "visit" the U.S. (be it as a tourist or seeing relatives) as any other citizen of whatever country in which we have our preferred citizenship. The IRS should not have the power of making us second-class citizens, or in their eyes criminals, in the country in which we choose to live, work, pay our taxes and, especially, raise our families.


----------



## Vangrrl

Ladyhawk said:


> Thanks, I'll check that out.
> I wonder if it's "CAN share" or if it's "WILL share". If it is the former, sounds like a scare tactic. It could be something they only do if they have reason to suspect you are a tax evader. So I wonder whether that info really does go to the IRS every time you renew, and every time you cross the border? Sounds like the IRS would be swamped with data and I doubt they'd have the resources to follow up on everyone.


This would apply equally to US citizens at home who travel. Do you really think they will stand for a blanket check of every single American who flies/drives in and out of the country's tax status? Is that even practical?


----------



## Mona Lisa76

Calgary411 said:


> Irrelevant. The US. IRS could just provide us a *real amnesty *-- *a means to let us easily relinquish our U.S. citizenships as should be our right. *
> 
> The yearly administration and costs of retaining a U.S. citizenship when we don't want it are insane. I want to get back to living my life as a (ONLY) Canadian. What a lot of wasted energy expended on this. We all have lives to live / let us get on with it.
> 
> All that has happened by the latest U.S. announcement is that we U.S. persons who live in whatever other country than the U.S. have been "warned" to get our acts together and continue with the IRS paperwork each year if we want to retain a U.S. citizenship -- OR -- decide to renounce the excess citizenship we do not want and whatever it takes to make that happen -- with the added expense, in many cases, of accountants and lawyers to make sure we are not making some mistake for which we will be penalized heavily. (And, again, the IRS should have people to answer any of our questions on this -- we should not have to retain outside counsel for simple questions / definitions.)
> 
> Having then relinquished our U.S. citizenship once and for all, we should be able to "visit" the U.S. (be it as a tourist or seeing relatives) as any other citizen of whatever country in which we have our preferred citizenship. The IRS should not have the power of making us second-class citizens, or in:focus: their eyes criminals, in the country in which we choose to live, work, pay our taxes and, especially, raise our families.


I hear you. I'm going to see how the next two or three years pano out.


----------



## Guest

ralphnev said:


> & it scares me
> Background / born in USA immigrated in '69, as a child , became a card carrying Canadian Citizen in '94 ...
> 
> never filed US taxes till i moved back down USA for 4 yrs in the (shortly after getting my CAN citizenship) , move back to Canada in '98 then kept filing till 2003 (end of US based income) never had to pay IRS & always did the taxes myself
> 
> 
> NEVER heard of FBAR till 2 days ago .. & WTF ? ??!!
> there is no way i want the IRS snooping my /my spouses bank accounts ...
> 
> i fully plan on renouncing my citizenship ..
> I've downloaded the forms 1040,1116,2555 for the last 5yrs & will submit asap
> 
> What a crock ..


Welcome to the nuthouse of being an American abroad! :loco:


----------



## Mona Lisa76

Maybe I'm a fool but I'm going to become completely compliant and hope I can find an affordable set-up that's not going to be too onerous. It's a bind but due to family ties and loyalties would consider renounciation really as a last resort.

I'd like to think that there will be a growing market for expat accountants thus causing more competition and thus more afforable rates, etc.

Yes, it's a millstone around my neck but I also realize that millions would be grateful to hold the blue passport so I regard it as a badge of honour I suppose


----------



## Ladyhawk

Mona Lisa76 said:


> Maybe I'm a fool but I'm going to become completely compliant and hope I can find an affordable set-up that's not going to be too onerous. It's a bind but due to family ties and loyalties would consider renounciation really as a last resort.
> 
> I'd like to think that there will be a growing market for expat accountants thus causing more competition and thus more afforable rates, etc.
> 
> Yes, it's a millstone around my neck but I also realize that millions would be grateful to hold the blue passport so I regard it as a badge of honour I suppose


I should think a good many of us here would be competent expat accountants and consultants when this is all over !


----------



## Guest

Mona Lisa76 said:


> Maybe I'm a fool but I'm going to become completely compliant and hope I can find an affordable set-up that's not going to be too onerous. It's a bind but due to family ties and loyalties would consider renounciation really as a last resort.
> 
> I'd like to think that there will be a growing market for expat accountants thus causing more competition and thus more afforable rates, etc.
> 
> Yes, it's a millstone around my neck but I also realize that millions would be grateful to hold the blue passport so I regard it as a badge of honour I suppose


I know how you feel Mona Lisa, I really could not go to the 2nd appointment last week. I was sure I needed to be more accurate about certain questions (mostly FUBAR) before doing it. And then the feelings, just as Ladyhawk wrote a day or so ago. I know in my heart, or my past sense-of-self, that I don't want to renounce. However, when I look at all of it - the terror, anxiety, the likelihood that it will continue, I have to make that stop. As long as I have no penalties, there shouldn't be any reason I can't get back for visits etc. And those millions mostly live in countries a lot less nice than Canada or England. I try to remember I am so fortunate to live where I do.

You're not a fool to be who you are. Everybody's situation is different. I like this forum because for the most part, everybody is free to just be, no fighting etc. So it doesn't matter if we don't all agree. You go girl! :nod:


----------



## eucitizen

*may be wrong but...*



Mona Lisa76 said:


> I am more optimistic that we're not their intended target. I think Bev and possibly AmTaker are the only others who seem to agree


From what I have seen about Bev's posts, in my own opinion and without wishing to offend, she has no first hand experience and has posted some quite erroneous information showing that she is just learning about the whole issue, so I wouldn't use her as a reference.


----------



## eucitizen

*family estate planning*



Mona Lisa76 said:


> Maybe I'm a fool but I'm going to become completely compliant and hope I can find an affordable set-up that's not going to be too onerous.


Some people can perhaps find a compromise and remain outside of the country and still comply.

I would guess if you really don't have any assets, if your employment and investments are straightforward, and if you do not have any estate to pass on to your children or spouse, it could be possible.

But you will have to keep your antennae up and keep informed about changes to regulations every year, you will have to structure your family finances, your marriage contract, etc etc in a way that perhaps puts you at a disadvantage or in a fragile position, you will perhaps have to pay a fortune to structure whatever you hope to pass on to your children, if you are wealthy, to avoid the double estate tax.

My guess is, after a few years of that, and of changing and more restricting and confiscatory regulations coming out of the US, you will give up like so many people are doing.


----------



## eucitizen

*why would they not share it*



Ladyhawk said:


> Thanks, I'll check that out.
> I wonder if it's "CAN share" or if it's "WILL share". If it is the former, sounds like a scare tactic. It could be something they only do if they have reason to suspect you are a tax evader. So I wonder whether that info really does go to the IRS every time you renew, and every time you cross the border? Sounds like the IRS would be swamped with data and I doubt they'd have the resources to follow up on everyone.


They are obviously fighting a war on expat citizens. Why on earth would they not share it if every single case could result in an easy 50,000 or 60,000$ of fbar penalties? 

They have also amended it to say that your passport will perhaps not be renewed if you are not in order on the tax side - just go on any embassy website and get a copy of the documentation.

+-5 years ago, these statements DID NOT EXIST. If they put them on there it is for a reason.


----------



## eucitizen

*you wanted proof*



Ladyhawk said:


> Do you have a reference for this information? Until recently, border services and the IRS could not exchange information.


New U.S.-Canada border plan raises privacy concerns | CTV News


----------



## eucitizen

*That is exactly why they changed the passport application form*



nobledreamer said:


> http://www.treasury.gov/press-center...nts/tax598.pdf
> 
> Currently, DOS collects and sends to IRS each applicant’s: (i) full name; (ii) Social
> Security number; (iii) mailing address; and (iv) date of birth. IRS processes through the IRP.......the information it receives from DOS to validate the Social Security number furnished by the applicant for use in the various IRP-based compliance programs.
> ...
> "Current law generally does not require the sharing of information between executive branch agencies with respect to individuals living abroad who retain their U.S. citizenship."
> 
> "..... . . IRS should not be given the names and addresses of Amcits [American citizens] registered at overseas posts because the mission of OCS [Overseas Citizens Services] to encourage the registration of Amcits with posts could be adversely impacted if the Amcits were aware that data regarding their whereabouts would be reported to IRS. This *human safety objective *of OCS *is paramount *to the fiscal objectives of the IRS."


That was BEFORE they put the statement on the passport renewal form.

Obviously, they have now included the statement that your information can be shared with IRS on the form to get around any legal issues.

I don't think US public opinion is going to continue condoning the "protection of US citizens" who do not fulfill their tax requirements (even though we know these are unreasonable for those living abroad). From a US point of view this has changed and any information from 1998 is horribly, horribly out of date.


----------



## eucitizen

*check every single person flying or driving - YES*



Vangrrl said:


> This would apply equally to US citizens at home who travel. Do you really think they will stand for a blanket check of every single American who flies/drives in and out of the country's tax status? Is that even practical?


It will not be hard for them to do.

(1) First of all, the "high risk" group is those of us who renewed passports abroad. It clearly stated on your passport where it was issued/renewed. So perhaps they would only check those people who have renewed abroad.

(2) Linking a kind of "green light" (filing in order) or "red light" (non-filer or back taxes due) to your passport would really be quite easy and no leap of technology would be required to do so.

They already link many things in their computer system. My friend has the same name as a convicted murderer who left the country. Every time she passes the border they stop her for questioning. Luckily the convicted murderer was not the same race / skin color as my friend so she only gets detained for a few hours;

I know we are all in denial but why on earth would they NOT do these checks, they cannot repay China and have to find somewhere to get the money from.

Also see:



» New U.S.-Canada border plan raises privacy concerns Alex Jones' Infowars: There's a war on for your mind!


----------



## eucitizen

As for Ladyhawk question about passport renewal information being sent to IRS...

It doesn't say Can or Will.... it says MUST!!

Back in 1998 there was some debate about whether the state department and the IRS could share info; no mention of taxes or treasury used to appear on the passport renewal forms.

This has changed here is the current text:

Section 6039E of the Internal Revenue Code (26 USC 6039E) requires you to provide your Social Security Number (SSN), if you have one, when you apply for a U.S. passport or renewal of a U.S. passport. If you have not been issued a SSN, enter zeros in box #5 of this form. If you are residing abroad, you must also provide the name of the foreign country in which you are residing. *The Department of State must provide your SSN and foreign residence information to the Department of Treasury. *If you fail to provide the information, you are subject to a $500 penalty enforced by the IRS. All questions on this matter should be directed to the nearest IRS office.


----------



## Peg

eucitizen said:


> From what I have seen about Bev's posts, in my own opinion and without wishing to offend, she has no first hand experience and has posted some quite erroneous information showing that she is just learning about the whole issue, so I wouldn't use her as a reference.


You are out of line. Bev is most definitely knowledgeable and not "just learning about this issue".


----------



## Peg

eucitizen said:


> ...


Why does your flag now say "Expat in Canada" when you have stated before that you live in Europe?


----------



## 416

eucitizen said:


> From what I have seen about Bev's posts, in my own opinion and without wishing to offend, she has no first hand experience and has posted some quite erroneous information showing that she is just learning about the whole issue, so I wouldn't use her as a reference.


Thanks, Peg, I missed this the first time around. eucitizen, you're way out of line.


----------



## eucitizen

*apologies*



416 said:


> Thanks, Peg, I missed this the first time around. eucitizen, you're way out of line.


I apologise, if I could delete my last post I would but I can't; perhaps you can ask Bev to do it she is a moderator.

I just get very upset when people say things that could endanger other people. 

Bev published a post recommending people to call or go and ask as the consulate about tax issues and ask them to check if your taxes are up to date. I think this is a very bad idea and could lead to huge problems for whoever follows that advice.

I even sent her a private personal message asking her to delete that post, I don't know if she did.

Bev also deleted my post where I tried to warn people who were considering a move to the USA, about FBARS and FATCA, saying it was irrelevant. As a result I referred her to the Expat Tax section, which is when we started seeing her posts appearing. And yes indeed she is one of the only people who is upbeat and positive on this thing. 

Why not send a private message to Bev the moderator and ask her (a) does she have any first hand experience such as realizing she is in noncompliance and-or starting the renunciation process and (b) when did she start posting on this forum and why.

I apologize and wish I could delete that last post, but it does have some background and was not just our of "meanness".


----------



## eucitizen

*why does my flag say expat in canade*



Peg said:


> Why does your flag now say "Expat in Canada" when you have stated before that you live in Europe?


In my country, public outcry has not yet started.

The number of renunciations is still low.

If I choose a country in the scroll down list, anybody interested could identify me based on what I have disclosed on this website.

That is why I cannot choose my country on the scroll down list and I put Canada instead. I cannot choose "EU" which would give me some sort of anonymity.

I have shared my experience and first-hand knowledge in the hopes of helping you guys.

Perhaps I should stop.


----------



## Guest

eucitizen said:


> In my country, public outcry has not yet started.
> 
> The number of renunciations is still low.
> 
> If I choose a country in the scroll down list, anybody interested could identify me based on what I have disclosed on this website.
> 
> That is why I cannot choose my country on the scroll down list and I put Canada instead. I cannot choose "EU" which would give me some sort of anonymity.
> 
> I have shared my experience and first-hand knowledge in the hopes of helping you guys.
> 
> Perhaps I should stop.



Please don't stop -- you have provided a lot of excellent information, eucitizen. And, your apologies have been heartfelt and explanatory I believe. 

I know I've certainly learned things from your posts. ( I've wanted to delete a couple of my posts too. ) 

calgary411
The Isaac Brock Society | Liberty and justice for all United States persons in Canada and abroad


----------



## Peg

eucitizen - Bev has posted a lot on the IRS topics and has helped many of us many times! Challenging a specific comment is less offensive in my opinion than saying someone is inexperienced and does not know what they are saying when clearly you have not ready her thousands of posts.


----------



## Vangrrl

eucitizen said:


> It will not be hard for them to do.
> 
> (1) First of all, the "high risk" group is those of us who renewed passports abroad. It clearly stated on your passport where it was issued/renewed. So perhaps they would only check those people who have renewed abroad.
> 
> (2) Linking a kind of "green light" (filing in order) or "red light" (non-filer or back taxes due) to your passport would really be quite easy and no leap of technology would be required to do so.
> 
> They already link many things in their computer system. My friend has the same name as a convicted murderer who left the country. Every time she passes the border they stop her for questioning. Luckily the convicted murderer was not the same race / skin color as my friend so she only gets detained for a few hours;
> 
> I know we are all in denial but why on earth would they NOT do these checks, they cannot repay China and have to find somewhere to get the money from.
> 
> Also see:
> 
> 
> 
> » New U.S.-Canada border plan raises privacy concerns Alex Jones' Infowars: There's a war on for your mind!


I'm looking at my own passport right now, issued in 2005 and it says "Issued by National Passport Center". My son's passport, issued this summer, says "issued by Department of State". What does it say on a resident USC's passport? 

In the past, a US passport issued abroad was a different colour and easily identifiable (my original passport was green) but now through my understanding is that they are all issued in the same central location.

My point is that these rules about taxation have been in the passport renewal form at least since 2005 when I renewed my passport. And I have NEVER been asked about my tax status by anyone anywhere. I live 15 kms from the US border and probably cross once a month, if not more than that and have done so since 2005. 

Besides which, what does "tax compliant" even mean? Just sending in a 1040? If someone sends in their 1040 every year but is deliberately under-reporting their off-shore earnings, are they tax compliant? What about a person who was under the income theshold and legitimately doesn't have to file a tax return? Tax compliance is a very nebulous concept, and hardly one that the dude at the border who has about 1 minute to spend with me has time to assess.

In the US there seems to be a huge discrepancy between what is written on paper and what is enforced. Are the rules AS WRITTEN draconian? YES. Are the rules APPLIED? Not as far as I can tell, unless you are a tax CRIMINAL. Most of us are bona fide tax filing dual citizens living abroad with the protection of a second government behind us. It would be a diplomatic nightmare for the US to pursue undue penalties against us.

Maybe my approach (I chose to become tax compliant but I'm not going out of my way to get every single detail correct) is not for the risk-averse. Maybe I'll be posting from Guantanamo once I get caught. I guess my 5 year old USC son will be joining me there as well as the fifty or so people in my border town that I can name off the top of my head who are all USCs but haven't even chosen to file taxes like I have. Everyone needs to find a solution that works for them. Renouncing is not the one size fits all answer for everyone here.


----------



## Madonna

*Coming Out*



Peg said:


> eucitizen - Bev has posted a lot on the IRS topics and has helped many of us many times! Challenging a specific comment is less offensive in my opinion than saying someone is inexperienced and does not know what they are saying when clearly you have not ready her thousands of posts.


Since I have "liked" a few posts, I think its time to come out in the open. I've lived in Canada for 37 years, became a citizen in 2007 and did not know that I was to file income taxes and FBARs. I first heard about it on a CBC radio news report and the floor dropped out of my world! I found this forum and it was Bev's posts that calmed me down. Since then I have found so much information by reading posts from all of the expat forum contributors. I am still in the "figuring it out" process, but I thank all of you for the information and the assurance that we will all be OK!:clap2:


----------



## Vangrrl

Madonna said:


> Since I have "liked" a few posts, I think its time to come out in the open. I've lived in Canada for 37 years, became a citizen in 2007 and did not know that I was to file income taxes and FBARs. I first heard about it on a CBC radio news report and the floor dropped out of my world! I found this forum and it was Bev's posts that calmed me down. Since then I have found so much information by reading posts from all of the expat forum contributors. I am still in the "figuring it out" process, but I thank all of you for the information and the assurance that we will all be OK!:clap2:


Welcome! Lots of great info here (and a wide range of opinions). Its always reassuring to know you are not alone!


----------



## Mona Lisa76

eucitizen said:


> Some people can perhaps find a compromise and remain outside of the country and still comply.
> 
> I would guess if you really don't have any assets, if your employment and investments are straightforward, and if you do not have any estate to pass on to your children or spouse, it could be possible.
> 
> But you will have to keep your antennae up and keep informed about changes to regulations every year, you will have to structure your family finances, your marriage contract, etc etc in a way that perhaps puts you at a disadvantage or in a fragile position, you will perhaps have to pay loir she's.really sharp and stays on top of the game.  I'd imagine that things will settle down within a couple years especially as people will have got familiar with the compliance rules.
> 
> If I end up with around a million quid, I'd owe quite a bit of British estate taxes but only a small amount US estate taxes..asI hav no children and my husband is fifteen years my senior, I am not going to unduly worry about potential death duties.


----------



## eucitizen

*bar code and electronic chip*



Vangrrl said:


> I'm looking at my own passport right now, issued in 2005 and it says "Issued by National Passport Center". My son's passport, issued this summer, says "issued by Department of State". What does it say on a resident USC's passport?
> ...


The information contained in your passport, is not only printed on your passport.

It is also contained in the barcode and/or electronic chip that is integrated in the document.

When you pass the border they swipe your passport thru the computer.

They can put all kinds of info on that chip such as where the passport was issued.

Again, the debate about whatever may or may not be there today is sort of irrelevant.

You have to have the mindset going forward that all of this information will be shared and available on your passport chip, or easily available when linked with your SSN (which I'm certain is going to be part of your passport chip if it is not already today).


----------



## eucitizen

*dealing with it*



Madonna said:


> I first heard about it on a CBC radio news report and the floor dropped out of my world! I found this forum and it was Bev's posts that calmed me down. :


Join the club. I sympathise with you; I remember the day my world dropped out from under me, and I imagine the millions of other people to whom it is going to happen over the next few months.

That is something that is pretty much common to almost all of us; one day, at a party, on the phone, over the radio, we randomly learn that we are "living a lie" and our entire life is in question.

I'm sorry but this is absolutely not normal and the amount of anxiety caused by all this should be taken into account somehow even if the feared penalties don't materialize for everyone.

Indeed we have to collect information and remain calm, above all get some professional help before doing anything rash. And please read thoroughly the posts of the different people, to get a feel for who has really done research and had first hand experience with lawyers, etc.. and who may be reassuring but unaffected themselves by this circus.

I am generally very pessimistic (well, I think I'm REALISTIC but up to you to decide), but let me say a few encouraging things for Canadians who are on this forum:

- First of all so many people in Canada are affected by this, your government cannot ignore it and will have to address it; in other parts of the world they could care less about their US expats.

- Second of all if you are on this forum now, you are going to be able to regularize your situation and eventually renounce if you choose, during a time when hundreds of thousands of people are doing the same. The chances you will stand out of the lot, if you play your cards right, are probably relatively small.

- Thirdly, Canada has for the most part higher taxes than the US and usually no taxes are due* and probably the IRS will let most files pass through unless there are large amounts in play or blatant discrepancies.

- Fourthly, think of all the people around the world who are in even more dire straights; US expats who just happened to be living in low tax countries, not to avoid US tax but because their life brought them there for other reasons... Foreigners who have been living and working in the USA and who have accumulated US assets, but who have always planned on moving back home (and who perhaps did not remember to fill in FBARS for their home accounts), green card holders who have forgotten to terminate their green cards after moving back home, etc etc etc. Then of course you also have the true authentic tax cheat who was indeed hiding millions of US money in foreign bank accounts - paradoxically this category of person is probably the minority of all the people caught up in this mess.

- Fifthly, there are still - even in Canada - people who totally ignore the situation and even apparently lawyers who are recommending their US customers to ignore it. These late bloomers are perhaps the ones who will be faced with a huge problem when FATCA goes through and their nonfiling status becomes glaringly obvious. I think it is much better to be one of the people on this forum today dealing with the issues right now.

On the whole, I guess I don't truly believe in the massive confiscation of everyone's assets.

However, I believe that everyone is at risk for the total confiscation of his assets. That is the difference.

And I don't believe that things will always be "fair"; some people will have a huge problem that they did not deserve.

Good luck to everyone, keep your cool, do what you have to do. Don't be lulled by false assurances but don't panic and do anything rash either.


*(although this is not true for every Canadian; if you had a tax-free investment, if you had an inheritance, if you gave gifts to a Canadian citizen, if you had large investments and you had to pay tax on the USD exchange rate.., you may well be Canadian and still owe US taxes).


----------



## eucitizen

*Not that simple*



Mona Lisa76 said:


> eucitizen said:
> 
> 
> 
> If I end up with around a million quid, I'd owe quite a bit of British estate taxes but only a small amount US estate taxes..asI hav no children and my husband is fifteen years my senior, I am not going to unduly worry about potential death duties.
> 
> 
> 
> Dear Mona Lisa, it's unfortunately not that simple.
> 
> The legislation is more complex than you can imagine and it changes every year. Even 700$ an hour tax lawyers may not be aware of all the requirements.
> 
> Different rules and higher taxes apply to you as you live abroad.
> 
> For example, gifts and inheritance between spouses is not taxed if you are both US citizens. However if you are a US person and your spouse a foreigner, then you must declare anything you get from him on a special IRS form that is also used for income from foreign trusts. If you did not file this form within a year of getting the gift, you must pay 30% of the total amount to the IRS.
> 
> Another example is the exchange rate gain tax. As you know the USD has greatly devalued over the past year and many predict this trend is only the beginning.
> 
> If you have a UK pension fund in sterling, you are supposed to evaluate it every year end in USD and pay a tax on the USD gain (for you, there is obviously no gain since your investments are in sterling and you are living in the UK, but from they eyes of the US there is a gain on the exchange rate).
> 
> Another example is the rules on reporting and tax of offshore funds.
> 
> If you hold any kind of mutual fund (any plain vanilla popular investment that any bank in the UK would sell everyone), you must mark to market every year and declare the unrealized capital gain; if you don't, when you do sell the fund, they will tax you not just on the overall capital gain, but on the interest every year on any unreported capital gain in the past; this way of calculating the tax can completely wipe out any gain you may have depending on the history of your account.
> 
> It will be virtually impossible for you to do any retirement planning. Retirement planning within the fiscal framework of one country is already daunting. Trying to do it faced with 2 country's ever changing rules is nearly impossible.
> 
> These are just a few of the obstacles that I am aware of, I'm sure depending on your situation there could be many more and worse.
> 
> 
> Coming into compliance is a good thing and obviously the first step.
> 
> 
> But don't rule out one day having to make the big choice: either you will have to move back to the US to avoid the discrimination, or you will have to renounce.
> 
> Good luck
Click to expand...


----------



## Lovecheese

*Back Years Taxes*

Does anyone know if its OK to go back a couple more years from taxes I just filed in order to comply with renounciation?
I filed 2008,2009 and 2010 in Sept. I would like to now file 2006 and 2007 in Jan so I have my 5 years for sure in time for March renounciation....then of course I will file 2011.


----------



## KalC

Lovecheese said:


> Does anyone know if its OK to go back a couple more years from taxes I just filed in order to comply with renounciation?
> I filed 2008,2009 and 2010 in Sept. I would like to now file 2006 and 2007 in Jan so I have my 5 years for sure in time for March renounciation....then of course I will file 2011.


Perfect.


----------



## 416

Lovecheese said:


> Does anyone know if its OK to go back a couple more years from taxes I just filed in order to comply with renounciation?
> I filed 2008,2009 and 2010 in Sept. I would like to now file 2006 and 2007 in Jan so I have my 5 years for sure in time for March renounciation....then of course I will file 2011.


I don't think you need 2006 if you're renouncing in March 2012: file 8854 in 2012 having filed 2007-11. This is basically what I'm planning to do (for better or worse).

The trouble with renouncing near the end of the year is that you end up having to file a partial year return that for the work involved might as well be a full year, but doesn't count as a full year for your 8854.


----------



## a_lee

Hi everyone,

I am new to this Forum. Information on this thread is very useful indeed!

I do have a different questions. I was on H1B in the US and left for Canada in 2004, and have stayed here since then. I did travel to the US for business once in a while. I just found out that in 2005, I had been physically in the US for 40 days. Since I was living in the US in 2003 and 2004, this 40 days makes me a tax resident for 2005. I didn't file my US tax return for 2005, but I did pay my taxes to CRA after I moved to Canada. I have not been US tax resident since 2006.

My question is, should I do anything with the 2005 tax return, as well as the FBAR thing? I understand there is a 6 year statutory limit. 2012 is around the corner, and 2005 will out of the 6 year limit. My inclination is to give IRS as much information as they need, but no more.

Thanks in advance!
Alan


----------



## Bevdeforges

a_lee said:


> Hi everyone,
> 
> I am new to this Forum. Information on this thread is very useful indeed!
> 
> I do have a different questions. I was on H1B in the US and left for Canada in 2004, and have stayed here since then. I did travel to the US for business once in a while. I just found out that in 2005, I had been physically in the US for 40 days. Since I was living in the US in 2003 and 2004, this 40 days makes me a tax resident for 2005. I didn't file my US tax return for 2005, but I did pay my taxes to CRA after I moved to Canada. I have not been US tax resident since 2006.
> 
> My question is, should I do anything with the 2005 tax return, as well as the FBAR thing? I understand there is a 6 year statutory limit. 2012 is around the corner, and 2005 will out of the 6 year limit. My inclination is to give IRS as much information as they need, but no more.
> 
> Thanks in advance!
> Alan


I suppose you didn't file a "sailing permit" when you left the US for Canada. (That would have made things much simpler. It's basically a "hail and farewell" statement that you are leaving US residence and no longer subject to US taxation.) 

But at this point, I wouldn't bother. If they haven't "found" your mistake in all this time, it's doubtful they will. Plus, with only 40 days in the US in 2005, chances are you owe little, if any, taxes. (Any money you earned in Canada that year would be subject to the FEIE and exempted.)
Cheers,
Bev


----------



## a_lee

Bevdeforges said:


> I suppose you didn't file a "sailing permit" when you left the US for Canada. (That would have made things much simpler. It's basically a "hail and farewell" statement that you are leaving US residence and no longer subject to US taxation.)
> 
> But at this point, I wouldn't bother. If they haven't "found" your mistake in all this time, it's doubtful they will. Plus, with only 40 days in the US in 2005, chances are you owe little, if any, taxes. (Any money you earned in Canada that year would be subject to the FEIE and exempted.)
> Cheers,
> Bev


No, I didn't file a sailing permit. But I did file my 2004 tax return and paid my 2004 taxes. Thanks for your advice, Bev!

Alan


----------



## dualtax

*US citizen and tax questions*

Sorry for the long post...
My journey started a few days ago after seeing an H&R Block ad regarding new tax laws for US citizens and I’m somewhat concerned after reading up on the subject on all 110 pages of this informational forum thread.

In my case, I’m not 100% sure I have US citizenship. I always thought I was a dual citizen but after a discussion with my mother yesterday on this tax issue, I’m not so sure. I was born in Canada in the early 70’s and was registered at birth with the US consulate by my American parents. I’ve never had a US passport but I do have a social security number. My mother believes that by being registered, I received the right to apply for US citizenship in the future since Canadian law prohibited dual citizenship at that time. I have a query out to the US consulate as I cannot find a definitive answer on the internet.

To my surprise my mother knew that US citizens had to file taxes... I had no idea. I thought she had become Canadian soon after I was born, but apparently this did not happen and she had been doing her US taxes, and paying them. She has renounced her citizenship since she doesn’t believe in paying taxes to the US when she doesn’t live there and would never move back there.

If I am indeed a US citizen, I plan on back filing instead risking any future surprises. I’m going to attempt this myself in order to avoid outrageous fees I see are being paid to do these taxes. As much as I like having the potential future benefits of being a US citizen should I ever decide to move there, I don’t know if it’s worth it to pay 100’s or 1000’s of dollars a year to tax professionals, and potentially pay US taxes when I don’t even live there.
Are there any web sites out there with guides to filling out these forms that are geared towards American citizens that have always lived in Canada and work for Canadian companies and only have Canadian tax documents? The IRS publications are confusing.

To get the process started I believe I need to complete the 1040, 8891 RRSP Deferral, 3520 for TFSA and 2555 Foreign Earned Income Exclusion forms for the IRS and the FBAR for the Treasury Department for each year.
For US forms, what dates should be used to determine the amounts to be entered? Can I use the same amounts from my Canadian tax slips which are based on the Canadian tax year or do I need to figure out the amounts per calendar year? 
Could I be taxed by the US when I withdraw from my RRSP when I retire if I remain a US citizen? 
On the 2555 Foreign Earned Income form it looks like it allows for no tax implications if my income is below $91,500 (for the 2010 tax year). Does this really mean that I won’t pay any taxes if my income is under that amount, and should my income on that form include investments as well? Is it a one-time deduction or can I claim it for each year? I’m not sure where to put investment income that I would get on a T5 slip.
Thanks in advance for any assistance and the excellent information provided on this forum!


----------



## pwdunn

dualtax said:


> Sorry for the long post...
> My journey started a few days ago after seeing an H&R Block ad regarding new tax laws for US citizens and I’m somewhat concerned after reading up on the subject on all 110 pages of this informational forum thread.
> 
> In my case, I’m not 100% sure I have US citizenship. I always thought I was a dual citizen but after a discussion with my mother yesterday on this tax issue, I’m not so sure. I was born in Canada in the early 70’s and was registered at birth with the US consulate by my American parents. I’ve never had a US passport but I do have a social security number. My mother believes that by being registered, I received the right to apply for US citizenship in the future since Canadian law prohibited dual citizenship at that time. I have a query out to the US consulate as I cannot find a definitive answer on the internet.
> 
> To my surprise my mother knew that US citizens had to file taxes... I had no idea. I thought she had become Canadian soon after I was born, but apparently this did not happen and she had been doing her US taxes, and paying them. She has renounced her citizenship since she doesn’t believe in paying taxes to the US when she doesn’t live there and would never move back there.
> 
> If I am indeed a US citizen, I plan on back filing instead risking any future surprises. I’m going to attempt this myself in order to avoid outrageous fees I see are being paid to do these taxes. As much as I like having the potential future benefits of being a US citizen should I ever decide to move there, I don’t know if it’s worth it to pay 100’s or 1000’s of dollars a year to tax professionals, and potentially pay US taxes when I don’t even live there.
> Are there any web sites out there with guides to filling out these forms that are geared towards American citizens that have always lived in Canada and work for Canadian companies and only have Canadian tax documents? The IRS publications are confusing.
> 
> To get the process started I believe I need to complete the 1040, 8891 RRSP Deferral, 3520 for TFSA and 2555 Foreign Earned Income Exclusion forms for the IRS and the FBAR for the Treasury Department for each year.
> For US forms, what dates should be used to determine the amounts to be entered? Can I use the same amounts from my Canadian tax slips which are based on the Canadian tax year or do I need to figure out the amounts per calendar year?
> Could I be taxed by the US when I withdraw from my RRSP when I retire if I remain a US citizen?
> On the 2555 Foreign Earned Income form it looks like it allows for no tax implications if my income is below $91,500 (for the 2010 tax year). Does this really mean that I won’t pay any taxes if my income is under that amount, and should my income on that form include investments as well? Is it a one-time deduction or can I claim it for each year? I’m not sure where to put investment income that I would get on a T5 slip.
> Thanks in advance for any assistance and the excellent information provided on this forum!


Why would you want to let the IRS know you even exist? Are you planning to move to the United States at some point, get a job there or something? Or do you plan to stay in Canada. Do you have significant assets in the states? 

I would do nothing if you don't plan to go to live in the US or if you don't have any assets that you plan to keep in the US. Otherwise, you have to weight the risk of giving the IRS financial information (the only way they can assign any tax or penalties) with doing nothing--which I think is virtually risk free in your case (esp. since you claim never to have filed in the US).


----------



## Peg

PetrosResearch said:


> Why would you want to let the IRS know you even exist? Are you planning to move to the United States at some point, get a job there or something? Or do you plan to stay in Canada. Do you have significant assets in the states?
> 
> I would do nothing if you don't plan to go to live in the US or if you don't have any assets that you plan to keep in the US. Otherwise, you have to weight the risk of giving the IRS financial information (the only way they can assign any tax or penalties) with doing nothing--which I think is virtually risk free in your case (esp. since you claim never to have filed in the US).


dualtax said that the parents registered his/her birth and also has a social security number. In addition, dualtax said he/she already contacted the consulate.

Personally, if I was in that situation, I too would file and renounce now rather than wait and see.


----------



## Peg

dualtax said:


> On the 2555 Foreign Earned Income form it looks like it allows for no tax implications if my income is below $91,500 (for the 2010 tax year). Does this really mean that I won’t pay any taxes if my income is under that amount, and should my income on that form include investments as well? Is it a one-time deduction or can I claim it for each year? I’m not sure where to put investment income that I would get on a T5 slip.


The Foreign Earned Income exclusion may be used each year but only for Earned income. If you have other income then you may use the Foreign Tax Credit form.

In years where I had both Earned and non-earned income (e.g., RRSP withdrawal, self-employment) I used the Foreign Tax Credit.

The years with solely earned income are easy!

If you have RESPs you have to calculate a phantom gain/loss too since the US does not consider them sheltered like here.



dualtax said:


> For US forms, what dates should be used to determine the amounts to be entered? Can I use the same amounts from my Canadian tax slips which are based on the Canadian tax year or do I need to figure out the amounts per calendar year?


I'm not sure what you mean by this --- I used the calendar year for my Canadian and US returns. For the IRS returns I used an end of the year exchange rate. Canadian tax slips are usually for the calendar year. 

For the FBARs, I did everything by the quarter and used the exchange rate for the specific quarter - e.g., if my quarterly statement for June 2009 had the highest balance of the 4 statements for that year I used the June 2009 amount with the exchange from that date.

Odd that I spent 2 months working on my 5 years of them but now it is tough to remember - actually I guess that is good although I do need to complete the 2011 returns...


----------



## pwdunn

Peg said:


> dualtax said that the parents registered his/her birth and also has a social security number. In addition, dualtax said he/she already contacted the consulate.
> 
> Personally, if I was in that situation, I too would file and renounce now rather than wait and see.


I see. That is provided that dualtax gave over his name. But nevertheless, I would stick with what I said. (1) They cannot assess tax or penalties without information that dualtax would give them; (2) even if they could do that, then the Canadian government would collect them; (3) why renounce when dual tax can't be made to pay and taxes or fines. The only reason to worry is if he were to be indicted for a FBAR crime--but the only evidence they have for that is information that he gives them.

I'll admit, however, that I am less cautious than others on this forum. But if I were in his situation, I'd be very happy. My situation is more difficult--I have filed tax but no FBARs; so they know I have an unreported RRSP! I wonder what the FBAR fine is going to be?


----------



## pwdunn

that should have been: the Canadian government would NOT collect them. Sorry.


----------



## KalC

dualtax said:


> Sorry for the long post...
> My journey started a few days ago after seeing an H&R Block ad regarding new tax laws for US citizens and I’m somewhat concerned after reading up on the subject on all 110 pages of this informational forum thread.
> 
> In my case, I’m not 100% sure I have US citizenship. I always thought I was a dual citizen but after a discussion with my mother yesterday on this tax issue, I’m not so sure. I was born in Canada in the early 70’s and was registered at birth with the US consulate by my American parents. I’ve never had a US passport but I do have a social security number. My mother believes that by being registered, I received the right to apply for US citizenship in the future since Canadian law prohibited dual citizenship at that time. I have a query out to the US consulate as I cannot find a definitive answer on the internet.
> 
> To my surprise my mother knew that US citizens had to file taxes... I had no idea. I thought she had become Canadian soon after I was born, but apparently this did not happen and she had been doing her US taxes, and paying them. She has renounced her citizenship since she doesn’t believe in paying taxes to the US when she doesn’t live there and would never move back there.
> 
> If I am indeed a US citizen, I plan on back filing instead risking any future surprises. I’m going to attempt this myself in order to avoid outrageous fees I see are being paid to do these taxes. As much as I like having the potential future benefits of being a US citizen should I ever decide to move there, I don’t know if it’s worth it to pay 100’s or 1000’s of dollars a year to tax professionals, and potentially pay US taxes when I don’t even live there.
> Are there any web sites out there with guides to filling out these forms that are geared towards American citizens that have always lived in Canada and work for Canadian companies and only have Canadian tax documents? The IRS publications are confusing.
> 
> To get the process started I believe I need to complete the 1040, 8891 RRSP Deferral, 3520 for TFSA and 2555 Foreign Earned Income Exclusion forms for the IRS and the FBAR for the Treasury Department for each year.
> For US forms, what dates should be used to determine the amounts to be entered? Can I use the same amounts from my Canadian tax slips which are based on the Canadian tax year or do I need to figure out the amounts per calendar year?
> Could I be taxed by the US when I withdraw from my RRSP when I retire if I remain a US citizen?
> On the 2555 Foreign Earned Income form it looks like it allows for no tax implications if my income is below $91,500 (for the 2010 tax year). Does this really mean that I won’t pay any taxes if my income is under that amount, and should my income on that form include investments as well? Is it a one-time deduction or can I claim it for each year? I’m not sure where to put investment income that I would get on a T5 slip.
> Thanks in advance for any assistance and the excellent information provided on this forum!


you have a number of mistakes in your assumptions. Firstly, you are an American in their eyes but I agree with Petros that unless I planned on going there to work or live ,I would do nothing. Once you start a relationship with them, you are in a very dark place- income taxes, gift taxes, death taxes, and on and on forever.


Canada never prohibited dual citizenship. Canada simply couldn't be bothered.

The tax year in both cases is the calander year unless you have a business. If you have a business, your problems are multiplied 10 fold because you have to report the business income as well and you won't have a Canadian tax credit offset- don't go there!

How many years to you plan to file? I have seen recommendations for 1,3,5, and 6 years. 3 or 5 seem to be advisable.

8891 does not get you a deferral if it is filed late. You could file it for the early years anyway and hope they don't care-especially if it's a small amount. Otherwise you report the phantom or accrued gain in your RSP as income except for the current year where 8891 would be valid. In any case you cannot deduct your RSP contributions.

3520 does not apply to your TFSA. Any income within your TFSA is taxable in the US.

The earned income exclusion works for any salary. The Canadian tax paid on investments should cover any investment (interest, cap gain and dividend income) Any other income just makes it harder.

*IF* you don't owe any taxes for the years you file, and then file fubars, there are not supposed to be fbar penalties, according to the US ambassador. If you decide to file, I would file and then renounce. It's only going to get worse.

You shouldn't take my word for any of this. If your case isn't simple, you should have professional help. If it's dead simple you could try it yourself. There were a few posts, but I can't find them, from a member from NB or NS who had his 1040's done very reasonably by an accountant in Maine. Maybe someone can remember who it was.


----------



## dualtax

PetrosResearch said:


> I see. That is provided that dualtax gave over his name. But nevertheless, I would stick with what I said. (1) They cannot assess tax or penalties without information that dualtax would give them; (2) even if they could do that, then the Canadian government would collect them; (3) why renounce when dual tax can't be made to pay and taxes or fines. The only reason to worry is if he were to be indicted for a FBAR crime--but the only evidence they have for that is information that he gives them.
> 
> I'll admit, however, that I am less cautious than others on this forum. But if I were in his situation, I'd be very happy. My situation is more difficult--I have filed tax but no FBARs; so they know I have an unreported RRSP! I wonder what the FBAR fine is going to be?


Thanks for the quick responses and the information. 
My query to the consulate was to see if I am a US citizen or not (general question based on the details I provided in the forum), and didn't mention anything related to taxes. 

If they say I'm not, I can forget about this whole mess. 
If I am, and I don't do any filing, my worry is that someday in the future I could be fined, or at some point the US gets access to Canadian accounts (FACTA I think?) especially if I decide to move or work in the US at some point or I could get detained at the border. If I do file, I could end up having to pay taxes although I think I'd be OK based on my current income. If I never actually have to pay taxes then I could live with doing them myself each year but If I start having to pay, as happened to my mother, then I would consider renouncing as it seems many people are doing.

How are accounts solely owned by a non-American spouse, and joint accounts, (RRSP or Savings Accounts) handled? If you report on FBAR do their accounts need to be reported? I don't think the US should need to know about these but I don't know the rules.


----------



## dualtax

KalC said:


> you have a number of mistakes in your assumptions. Firstly, you are an American in their eyes but I agree with Petros that unless I planned on going there to work or live ,I would do nothing. Once you start a relationship with them, you are in a very dark place- income taxes, gift taxes, death taxes, and on and on forever.
> 
> 
> Canada never prohibited dual citizenship. Canada simply couldn't be bothered.
> 
> The tax year in both cases is the calander year unless you have a business. If you have a business, your problems are multiplied 10 fold because you have to report the business income as well and you won't have a Canadian tax credit offset- don't go there!
> 
> How many years to you plan to file? I have seen recommendations for 1,3,5, and 6 years. 3 or 5 seem to be advisable.
> 
> 8891 does not get you a deferral if it is filed late. You could file it for the early years anyway and hope they don't care-especially if it's a small amount. Otherwise you report the phantom or accrued gain in your RSP as income except for the current year where 8891 would be valid. In any case you cannot deduct your RSP contributions.
> 
> 3520 does not apply to your TFSA. Any income within your TFSA is taxable in the US.
> 
> The earned income exclusion works for any salary. The Canadian tax paid on investments should cover any investment (interest, cap gain and dividend income) Any other income just makes it harder.
> 
> *IF* you don't owe any taxes for the years you file, and then file fubars, there are not supposed to be fbar penalties, according to the US ambassador. If you decide to file, I would file and then renounce. It's only going to get worse.
> 
> You shouldn't take my word for any of this. If your case isn't simple, you should have professional help. If it's dead simple you could try it yourself. There were a few posts, but I can't find them, from a member from NB or NS who had his 1040's done very reasonably by an accountant in Maine. Maybe someone can remember who it was.


I will most likely file 6 years of 1040's and FBAR's if I can find all the information. I need to get some legal advice first on the implications of renouncing and decide if it worth it to keep citizenship. Thanks for the tip on using an accountant in Maine. I'll see if I can find the post.


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## Peg

dualtax said:


> How are accounts solely owned by a non-American spouse, and joint accounts, (RRSP or Savings Accounts) handled? If you report on FBAR do their accounts need to be reported? I don't think the US should need to know about these but I don't know the rules.


Anything solely owned by a non-US citizen is none of the US' business.

I recorded joint accounts on my FBARs and specified whether they were a chequing account or RRSP etc. I never put my husband's name - just NRA for non-resident alien. 

As a signing authority for a few volunteer organizations I included basic details on them too - not specific names or account numbers - just "Parent Teacher Organization" etc.

I included everything for 2 reasons - firstly just to cover myself in the event they ever come back and say "you did not include that $17 account" and secondly because, in error, I joined OVDI and had given them basic details in the OVDI letter. 

If I had not joined OVDI and needed to opt out I actually don't know if I could just wait it out because I just wanted to get rid of my US citizenship the more I learned about what the US expects from us!!


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## pwdunn

dualtax said:


> I will most likely file 6 years of 1040's and FBAR's if I can find all the information. I need to get some legal advice first on the implications of renouncing and decide if it worth it to keep citizenship. Thanks for the tip on using an accountant in Maine. I'll see if I can find the post.


I would consider this a stone not worth turning over. The critters underneath my rise up and bite you.

Why inquire about US citizenship only to renounce? What would be the purpose of that? I think you are just making trouble for yourself. Now if you really want to work in the United States, that's a different story. But let me ask you this: is it worth up to half your wealth? The maximum fine for FBAR violation is 50% of an account (per annum actually, so the fine could theoretically be 300% of your financial wealth).

Before you do anything more, I suggest you read Phil Hodgen's blog including the comment streams often by very knowledgeable people including lawyers (and I mean the whole blog--you owe it to yourself to be informed). He tells the story of voluntary disclosures that went very badly. You have to know what you are getting into when you voluntarily give the IRS information and furthermore you admit that you might be a US citizen. If you are born in Canada, you don't have to go through this, at least not if you don't move to the US (then why are you contemplating renunciation--makes no sense to me), or as long as the United States doesn't invade or annex Canada--in which case all Canadians will become US person for tax purposes, not just one's whose parents registered them at birth.

I am really serious that we have to start a group called Expats Anonymous. If you feel the urge to give your information to the IRS, you call someone else in the group who talks you out of it.


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## KalC

dualtax said:


> I will most likely file 6 years of 1040's and FBAR's if I can find all the information. I need to get some legal advice first on the implications of renouncing and decide if it worth it to keep citizenship. Thanks for the tip on using an accountant in Maine. I'll see if I can find the post.


you were born in Canada. It says so on your passport. canadian financial institutions will know you as a Canadian and will not report you to the US unless you are foolish enough to tell them you are a dual citizen. You will not be hassled at the border because your Canadian passport says 'born in canada" Let sleeping dogs lie.


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## Bevdeforges

If you're looking for somewhat understandable instructions for filing from outside the US, you can download Publication 54 http://www.irs.gov/pub/irs-pdf/p54.pdf

I tend to agree with Petros here, though. If you've gone this long without filing and you most likely don't owe any US taxes, you may want to consider simply remaining under the radar. But it's a call you have to make based on your intentions of what to do or not to do with your US citizenship.

As far as the form 2555 exclusion is concerned, you can only exclude "earned income" which is, for practical purposes, salary or self-employment earnings. Investment and retirement income is considered "passive" income and winds up being taxed. HOWEVER, your Canadian retirement is taxed first by the Canadians, and you take the credit against any US taxes due. Technically, you shouldn't be taxed twice on any income, but in practice it can be tricky to make it work the way it should. 

In any event, read through Pub 54 before you make any decision. 
Cheers,
Bev


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## kenskyfish

*The long arm of the IRS*

The other replies cover the question nicely, but I have a few things to add...

1) Renouncing US citizenship for tax evasion purposes is a crime. Find another reason to renounce citizenship and stop talking about doing it in the context of taxes immediately to avoid incriminating yourself.

2) Renouncing doesn't get you off the hook for taxes. You'll have to prove your taxes are paid up in full for something like five years up until you renounce, and you'll have to prove your net worth is less than something like two million USD. If you don't, then you will be liable to pay US taxes for 10 years AFTER renouncing citizenship.

3) You can fly under the radar for now, especially for US citizens who've never lived or worked in the USA. However, as the rich folk with offshore accounts in the Bahamas and Switzerland are finding out, in the information age what used to be considered untraceable has become digitally available to the IRS. All the US has to do is form a "tax treaty" or threaten to make trouble for a foreign country's assets or citizens if said country won't hand over information on US citizens.

4) If you take the initiative and come clean about what you have and file your taxes, especially if you aren't worth millions, the IRS so far appears fairly forgiving. But the longer you delay the bigger the potential problem you may one day find yourself in. If a few thousand bucks and some paperwork can get you free and clear of it now, why not?


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## pwdunn

kenskyfish said:


> The other replies cover the question nicely, but I have a few things to add...
> 
> 1) Renouncing US citizenship for tax evasion purposes is a crime. Find another reason to renounce citizenship and stop talking about doing it in the context of taxes immediately to avoid incriminating yourself.
> 
> 2) Renouncing doesn't get you off the hook for taxes. You'll have to prove your taxes are paid up in full for something like five years up until you renounce, and you'll have to prove your net worth is less than something like two million USD. If you don't, then you will be liable to pay US taxes for 10 years AFTER renouncing citizenship.
> 
> 3) You can fly under the radar for now, especially for US citizens who've never lived or worked in the USA. However, as the rich folk with offshore accounts in the Bahamas and Switzerland are finding out, in the information age what used to be considered untraceable has become digitally available to the IRS. All the US has to do is form a "tax treaty" or threaten to make trouble for a foreign country's assets or citizens if said country won't hand over information on US citizens.
> 
> 4) If you take the initiative and come clean about what you have and file your taxes, especially if you aren't worth millions, the IRS so far appears fairly forgiving. But the longer you delay the bigger the potential problem you may one day find yourself in. If a few thousand bucks and some paperwork can get you free and clear of it now, why not?


Before concluding that the IRS is forgiving (LOL), please read Phil Hodgen's voluntary disclosure stories, especially the earlier ones before the Tax Advocate Service became involved (in the most famous case in the Amy Feldman article, the TAS got the OVDI victim's fine down to a mere $25,000 from $170,000!).

Your fourth point reads like an IRS talking point: if I come clean? Listen buddy, I am clean. The IRS is the dirty scoundrel. I am a law abiding Canadian citizen and a patriot willing to die for my country.

Your first point is wrong. The right to expatriate is a fundamental right. Remember that 13 colonies expatriated from King George over taxes! It is not illegal to expatriate for tax purposes, but there are consequences, that are now related to paying an "exit tax". But nobody who has all their assets in a foreign country can be forced to pay an exit tax.

Your third point is not true of a Canadian born person whose bank cannot know that he is an American unless he informs it--short of the United States invading every country in the world, but then its not just citizens but everyone will pay taxes to the United States.


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## Guest

_8891 does not get you a deferral if it is filed late. You could file it for the early years anyway and hope they don't care-especially if it's a small amount. Otherwise you report the phantom or accrued gain in your RSP as income except for the current year where 8891 would be valid. In any case you cannot deduct your RSP contributions._

This is not a true statement. A lot of back filers are producing the 8891 with no problem from thje IRS


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## Guest

8891 does not get you a deferral if it is filed late. You could file it for the early years anyway and hope they don't care-especially if it's a small amount. Otherwise you report the phantom or accrued gain in your RSP as income except for the current year where 8891 would be valid. In any case you cannot deduct your RSP contributions.

This is not a true statement. A lot of back filers are producing the 8891 with no problem from .

My mistake...for claification although the private letter ruling would apply, the IRS has been content on accepting 8891 forms without the PLR for back filed 1040S. 

An amended 1040 for a stand alone 8891 would require a PLR


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## smccarth

You shouldn't take my word for any of this. If your case isn't simple, you should have professional help. If it's dead simple you could try it yourself. There were a few posts, but I can't find them, from a member from NB or NS who had his 1040's done very reasonably by an accountant in Maine. Maybe someone can remember who it was.[/QUOTE]

That would be me! I used a lawyer and accountant in Maine to comply with OVDI. If you send me a personal message, I'll give more details.

I concur with the posts that advise to not pursue your U.S. status if the Consulate pretends not to know you. I can't imagine how they could find someone with your pedigree.


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## Peg

When this started, my sibling and I talked to a lawyer we know personally and he said that since I had a Social Security number he thought it was prudent for me to file but debatable for my sibling who did not have a social security number. We were both born in the US but have lived in Canada since we were kids.

Please note this was not a personal tax lawyer who said that but definitely a high regarded long-time Canadian lawyer who has dealt with the IRS and CRA and talked to colleagues in the US on our behalf.


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## 416

kenskyfish said:


> 1) Renouncing US citizenship for tax evasion purposes is a crime. Find another reason to renounce citizenship and stop talking about doing it in the context of taxes immediately to avoid incriminating yourself.


1) No, it's not. 2) There's a huge distinction between renouncing to avoid taxes (which you can hardly be accused of doing if you live in a higher-tax jurisdiction and owe no US taxes) and renouncing to avoid the administrative burdens connected to taxation. 

And actually 3) when push comes to shove you don't have to give State a _reason _for renouncing at all.


----------



## Baird68

Bevdeforges said:


> If you're looking for somewhat understandable instructions for filing from outside the US, you can download Publication 54 http://www.irs.gov/pub/irs-pdf/p54.pdf
> 
> I tend to agree with Petros here, though. If you've gone this long without filing and you most likely don't owe any US taxes, you may want to consider simply remaining under the radar. But it's a call you have to make based on your intentions of what to do or not to do with your US citizenship.
> 
> As far as the form 2555 exclusion is concerned, you can only exclude "earned income" which is, for practical purposes, salary or self-employment earnings. Investment and retirement income is considered "passive" income and winds up being taxed. HOWEVER, your Canadian retirement is taxed first by the Canadians, and you take the credit against any US taxes due. Technically, you shouldn't be taxed twice on any income, but in practice it can be tricky to make it work the way it should.
> 
> In any event, read through Pub 54 before you make any decision.
> Cheers,
> Bev


I'm wondering if his identity will be revealed when dualtax inherits money from his tax compliant mother. If he want to remain under the radar, he might want to consider the consequences of receiving an inheritance from a U.S. citizen.


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## 416

Baird68 said:


> I'm wondering if his identity will be revealed when dualtax inherits money from his tax compliant mother. If he want to remain under the radar, he might want to consider the consequences of receiving an inheritance from a U.S. citizen.


I thought he said his mother renounced -


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## 416

Baird68 said:


> I'm wondering if his identity will be revealed when dualtax inherits money from his tax compliant mother. If he want to remain under the radar, he might want to consider the consequences of receiving an inheritance from a U.S. citizen.


I thought he said his mother renounced -


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## Baird68

416 said:


> I thought he said his mother renounced -


You're right! Smart mom.


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## dualtax

Baird68 said:


> You're right! Smart mom.


She is smart and she did renounce.
I still can't believe this is actually real. After discussing with colleagues today, they also can't believe that you would need to pay taxes to a country that you have never lived in. I'll wait to see how the consulate replies before I make any decisions on what to do next.


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## dualtax

smccarth said:


> You shouldn't take my word for any of this. If your case isn't simple, you should have professional help. If it's dead simple you could try it yourself. There were a few posts, but I can't find them, from a member from NB or NS who had his 1040's done very reasonably by an accountant in Maine. Maybe someone can remember who it was.


That would be me! I used a lawyer and accountant in Maine to comply with OVDI. If you send me a personal message, I'll give more details.

I concur with the posts that advise to not pursue your U.S. status if the Consulate pretends not to know you. I can't imagine how they could find someone with your pedigree.[/QUOTE]

I'll wait and see what they say.


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## TooMuchCoffee

dualtax said:


> I still can't believe this is actually real


I know of one other "accidental American" who is still dealing with that reaction.

People who I have tried to explain the situation to have told me that I must not understand, that the situation I describe can't be what is actually going on.

Sadly (or, rather, infuriatingly) it is.


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## RødGrød

TooMuchCoffee said:


> I know of one other "accidental American" who is still dealing with that reaction.
> 
> People who I have tried to explain the situation to have told me that I must not understand, that the situation I describe can't be what is actually going on.
> 
> Sadly (or, rather, infuriatingly) it is.


Yeah, I get that all the time too. I wish I were still blissfully ignorant like most of the Americans over here.


----------



## Guest

kenskyfish said:


> The other replies cover the question nicely, but I have a few things to add...
> 
> 
> 2) Renouncing doesn't get you off the hook for taxes. You'll have to prove your taxes are paid up in full for something like five years up until you renounce, and you'll have to prove your net worth is less than something like two million USD. If you don't, then you will be liable to pay US taxes for 10 years AFTER renouncing citizenship.
> 
> IRS, Treasury Release Guidance on Expatriation Reporting Requirements
> 
> I read the requirements differently. There is no longer a 10-year tax requirement after renouncing. On form 8854,Your assets are assumed to be sold and you pay an exit tax based upon a mark-to-market figure. And you have to certify on the 8854 that you are up to date with all tax regulations.
> 
> After renouncing, if one remains in the US for more than 30 days, they will be required to pay tax....
> 
> You do not have to provide _*any*_ information whatsoever to the DOS with regard to renouncement.


----------



## Peg

nobledreamer said:


> After renouncing, if one remains in the US for more than 30 days, they will be required to pay tax....


Where is this quote coming from? My understanding is that after renouncing I am just like my Canadian spouse - just a Canadian and I highly doubt there is a special vacation plan for Canadians: "Stay 30 days and owe the IRS"


----------



## byline

TooMuchCoffee said:


> I know of one other "accidental American" who is still dealing with that reaction.
> 
> People who I have tried to explain the situation to have told me that I must not understand, that the situation I describe can't be what is actually going on.
> 
> Sadly (or, rather, infuriatingly) it is.





RødGrød;682608 said:


> Yeah, I get that all the time too. I wish I were still blissfully ignorant like most of the Americans over here.


Yup, when I try to explain this to other Canadians, they're baffled. Same as when I explain it to my American parents and others. And everyone's first response is to become a Canadian citizen. While I have initiated that process, it's not a solution, as I still have dual citizenship. Then everyone gets really confused. Like, how can they do that? Because they _can_.

Emotionally, I suppose I wish I were still blissfully ignorant. I wouldn't have had to go through multiple meltdowns and all the other garbage that goes with this situation. But my rational self says it's better to know than not. I can only imagine how I would have felt, had I gone on in ignorance, only to have the IRS finally track me down and send me one of their splendid missives. Having been a past recipient (again, over no wrongdoing of my own), I know how I felt then ... and I was single back then. At least I was the only one affected. Not so now.


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## AmTaker

Peg said:


> Where is this quote coming from? My understanding is that after renouncing I am just like my Canadian spouse - just a Canadian and I highly doubt there is a special vacation plan for Canadians: "Stay 30 days and owe the IRS"


I think after 2005 and prior to 2008, there was a rule that certain expatriates could be subject to tax if they stayed in the US beyond 30 days. Even at that time, it held only for covered expats. Since 2008, there is no such restriction, even for covered expats, once they pay the MTM tax (for 'covered' expats only). For someone who is not covered, there should be no issue at all.


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## KalC

Peg said:


> Where is this quote coming from? My understanding is that after renouncing I am just like my Canadian spouse - just a Canadian and I highly doubt there is a special vacation plan for Canadians: "Stay 30 days and owe the IRS"


Copied from Site Overview | Renunciation of U.S. Citizenship: A Web Guide

<snip>


----------



## Peg

KalC said:


> Copied from Site Overview | Renunciation of U.S. Citizenship: A Web Guide
> 
> <snip>
> 
> --------------------------------------------------------------------------------
> Last edited by Bevdeforges; Today at 10:36 AM. Reason: potential copyright violation - I've left the link, but please either summarize or limit your quotes to "fair use"


KalC - could you give more specific on where it is at that link --- I read a few pages and could not find it. (and wasn't quick enough to read it before Bev had to edit  )Thanks!


----------



## Guest

Peg said:


> Where is this quote coming from? My understanding is that after renouncing I am just like my Canadian spouse - just a Canadian and I highly doubt there is a special vacation plan for Canadians: "Stay 30 days and owe the IRS"


Sorry Peg, I should have clarified, don't know why my mind trailed/didn't finish. 
I was looking to find/match what kenskyfish said about 10 years..."If you don't, then you will be liable to pay US taxes for 10 years AFTER renouncing citizenship." This seemed wrong to me when I read it. So I went looking.....

It does not apply to any of us since we all have/will expatriate after 
June 16 2008. However, it does apply to those who expatriated after June 3, 2004and before June 16, 2008.



Expatriation Tax June 3, 2_1

Expatriation after June 3, 2004 and before June 16, 2008

Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.

Note. If you expatriated before June 17, 2008, *the expatriation rules in effect at that time continue to apply.* See chapter 4 in Publication 519, U.S. Tax Guide for Aliens, for more information.


----------



## justbrowsing

*"present in the U.S. for more than 30 days, or 60 days"*

One interesting tidbit I found on the State site was that even a short layover for a flight or a same-day trip to the US was considered being present for the entire day. Something to think about for those who live close to the border.


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## KalC

Peg said:


> KalC - could you give more specific on where it is at that link --- I read a few pages and could not find it. (and wasn't quick enough to read it before Bev had to edit  )Thanks!


On first page. there is a row of tabs at the top. Tab 2 is Expatriation process. That includes 'rights after expatriation"


----------



## Peg

nobledreamer said:


> Sorry Peg, I should have clarified, don't know why my mind trailed/didn't finish.
> I was looking to find/match what kenskyfish said about 10 years..."If you don't, then you will be liable to pay US taxes for 10 years AFTER renouncing citizenship." This seemed wrong to me when I read it. So I went looking.....
> 
> It does not apply to any of us since we all have/will expatriate after
> June 16 2008. However, it does apply to those who expatriated after June 3, 2004and before June 16, 2008.
> 
> 
> 
> Expatriation Tax June 3, 2_1
> 
> Expatriation after June 3, 2004 and before June 16, 2008
> 
> Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
> 
> Note. If you expatriated before June 17, 2008, *the expatriation rules in effect at that time continue to apply.* See chapter 4 in Publication 519, U.S. Tax Guide for Aliens, for more information.


Thank you for the clarification!


----------



## justbrowsing

nobledreamer said:


> Sorry Peg, I should have clarified, don't know why my mind trailed/didn't finish.
> I was looking to find/match what kenskyfish said about 10 years..."If you don't, then you will be liable to pay US taxes for 10 years AFTER renouncing citizenship." This seemed wrong to me when I read it. So I went looking.....
> 
> It does not apply to any of us since we all have/will expatriate after
> June 16 2008. However, it does apply to those who expatriated after June 3, 2004and before June 16, 2008.
> 
> 
> 
> Expatriation Tax June 3, 2_1
> 
> Expatriation after June 3, 2004 and before June 16, 2008
> 
> Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
> 
> Note. If you expatriated before June 17, 2008, *the expatriation rules in effect at that time continue to apply.* See chapter 4 in Publication 519, U.S. Tax Guide for Aliens, for more information.


Several legal pundits have said in blogs that since that act creates 2 classes of people paying taxes, one which has the full rights of a USC and one which has no rights of a USC it would not stand up in a challenge.


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## Canadian Guy

justbrowsing said:


> Several legal pundits have said in blogs that since that act creates 2 classes of people paying taxes, one which has the full rights of a USC and one which has no rights of a USC it would not stand up in a challenge.


That is right! How can they tell me I must pay taxes on one hand, but have zero rights. The other thing that comes to mind is how can different government departments have different rules? What happens if a young man renounces and takes care of all taxes owing, is he still subject to being drafted if the US gets into a war because he did not notify the army and they still think he is a citizen under another set of rules.


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## kenskyfish

*Perhaps not*



416 said:


> 1) No, it's not. 2) There's a huge distinction between renouncing to avoid taxes (which you can hardly be accused of doing if you live in a higher-tax jurisdiction and owe no US taxes) and renouncing to avoid the administrative burdens connected to taxation.
> 
> And actually 3) when push comes to shove you don't have to give State a _reason _for renouncing at all.


I'm not a tax pro or an attorney, so I don't really know. I just repeated what my tax attorney advised me. She was adamant that expatriating for tax reasons is illegal. However, I did expatriate a while back, and they seem to change the rules often, so maybe it isn't illegal anymore, kind of like the being liable to pay taxes for 10 more years thing no longer holds. Or maybe she was just plain wrong about that.

During the actually expatriation interview, I was very surprised to discover that no questions were asked, in particular, they didn't ask "why don't you want to be American anymore?" They didn't ask anything really, except about the required documents being in order. Then you raise your hand and take a pledge that you relinquish your citizenship and associated rights of your own free will. Also, you have to wait about a month after renouncing to get the document saying you have renounced. The document is back-dated to the day you actually did the renouncing and the expatriation is effective as-of that date.

Another curious fact is your name will appear in a public document of people who expatriated. I apologize for not digging up the link to prove it. There's one list per year and only your full name appears on it, no other personal information.


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## kenskyfish

*What about 401K?*

Here's a hopefully relevant question...

I've expatriated already and paid up my final taxes. Then the following year I withdrew my 401K. It's taxable, so they take 20% straight away and I've got to file as a non-resident alien to get any of it back. However, there's supposed to be a 10% penalty as well, because I'm only 42. They didn't take that. I think what I'm supposed to do is file, in the filing it'll come out that I owe another 10% penalty, and then I pay it. The question is, what if I don't file? I.e., what if I let them keep the 20% they took off the top but never file and never pay the 10% penalty - bearing in mind I've already expatriated and paid up my taxes in full, apart from this 401K thing.

I suspect the answer is I'll probably get away with it but it could come back to haunt me, so I should file and pay the penalty according to the tax law. My dream answer would be that the 10% penalty doesn't apply to non-resident aliens, and I can file and possibly reclaim parts of the 20% they took upon withdrawal.

I expatriated in March 2010, and the 401K balance before withdrawal was about $80K USD. The check I got was for about $64K USD. I would owe another $8K USD as the early withdrawal penalty.


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## Bevdeforges

Sorry, but the 10% penalty applies to those who make an early withdrawal from their 401K, regardless of their nationality or residence at the time of the withdrawal.

If you simply don't file, the IRS will keep your 20%. (You're lucky - they were actually supposed to withhold 30% given that you are a "non-US person.") Depending on your other income and deductions, etc., you may or may not have owed 20% in taxes - especially if you're filing as a non-resident alien, since you only have to declare and pay based on US source income.

Up to you what you want to do. You can leave it sitting there or you can see if you're due a partial refund. 
Cheers,
Bev


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## pwdunn

kenskyfish said:


> I'm not a tax pro or an attorney, so I don't really know. I just repeated what my tax attorney advised me. She was adamant that expatriating for tax reasons is illegal. However, I did expatriate a while back, and they seem to change the rules often, so maybe it isn't illegal anymore, kind of like the being liable to pay taxes for 10 more years thing no longer holds. Or maybe she was just plain wrong about that.
> 
> ...
> 
> Another curious fact is your name will appear in a public document of people who expatriated. I apologize for not digging up the link to prove it. There's one list per year and only your full name appears on it, no other personal information.


Your attorney needs to learn something about Constitutional law and human rights. You cannot make "illegal" an action which is a fundamental right, recognized by the Declaration of Independence and the 1868 Expatriation Act in the United States and by United Nations human rights code. King George made expatriation illegal too because he thought the American colonies were his possessions.

If an act is illegal, like murder, kidnapping or theft--the moment you see somebody try to do it, you'd have to stop it, wouldn't you? Rather, the US can't make it illegal, but they have tried to discourage it by implementing unconstitutional barriers to it, such as the Reed Amendment (1996) and the HEART Act (2008).

Your name being on a list is good thing. That shows the world, the IRS and the banks that you are no longer a citizen. That's what you want people to know, isn't it? But it probably won't go on the list unless you square with the IRS. But since I'm not planning to file the 8854 which is unconstitutional, well then, I'm not going to get my name on the list.


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## Peg

kenskyfish said:


> I'm not a tax pro or an attorney, so I don't really know. I just repeated what my tax attorney advised me. She was adamant that expatriating for tax reasons is illegal. However, I did expatriate a while back, and they seem to change the rules often, so maybe it isn't illegal anymore, kind of like the being liable to pay taxes for 10 more years thing no longer holds. Or maybe she was just plain wrong about that.
> 
> During the actually expatriation interview, I was very surprised to discover that no questions were asked, in particular, they didn't ask "why don't you want to be American anymore?" They didn't ask anything really, except about the required documents being in order. Then you raise your hand and take a pledge that you relinquish your citizenship and associated rights of your own free will. Also, you have to wait about a month after renouncing to get the document saying you have renounced. The document is back-dated to the day you actually did the renouncing and the expatriation is effective as-of that date.
> 
> Another curious fact is your name will appear in a public document of people who expatriated. I apologize for not digging up the link to prove it. There's one list per year and only your full name appears on it, no other personal information.


Huge difference between tax avoidance and tax evasion. Avoidance is legal. e.g., use every available loophole. Evasion is hiding income from the government so you do not pay taxes. US Citizens who live in Canada and pay Canadian taxes are likely paying more than the US and therefore it is neither avoidance nor evasion in my opinion. 

At my renunciation appointment the Consul asked me many questions and gave many reasons why I should keep my US citizenship - still did it though.


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## AmTaker

kenskyfish said:


> Here's a hopefully relevant question...
> 
> I've expatriated already and paid up my final taxes. Then the following year I withdrew my 401K. It's taxable, so they take 20% straight away and I've got to file as a non-resident alien to get any of it back. However, there's supposed to be a 10% penalty as well, because I'm only 42. They didn't take that. I think what I'm supposed to do is file, in the filing it'll come out that I owe another 10% penalty, and then I pay it. The question is, what if I don't file? I.e., what if I let them keep the 20% they took off the top but never file and never pay the 10% penalty - bearing in mind I've already expatriated and paid up my taxes in full, apart from this 401K thing.


Its probably too late to do you any good, but I think in such a case, it would have made more sense to rollover the 401k into an IRA, then convert the IRA into a Roth IRA gradually over a few years keeping the amount converted each year into a small enough sum that it doesn't trigger extra tax (which should be easy as a non resident you would only be taxed on US source income). Withdrawals from a Roth IRA except for earnings are normally tax free, so after rollover, you could withdraw all the converted money for that year. 

The bottom line is that it might (I'm no US tax professional) be possible to withdraw money from a US retirement plan tax and penalty free assuming you're willing to let the money remain in the US for a few years.


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## Guest

kenskyfish said:


> Another curious fact is your name will appear in a public document of people who expatriated. I apologize for not digging up the link to prove it. There's one list per year and only your full name appears on it, no other personal information.


According to renunciationguide.com the public document is the US Federal Register. What, you say, you've never heard of the Federal Register? Most Americans haven't. It's the official US publication that lists all new government regulations, all proposed new regulations, drug approvals, probably legislation passed, etc etc. It's massive and most of it was written by folks who took their lessons in English prose writing from the same people who taught the folks who write the IRS manuals and regulations. 

It's great bed-time reading if you suffer from insomnia.

Picking that as the publication for the "name and shame" program (which is actually what some Congress creeps called it when it passed unanimously) is either hilarious or depressing, depending on your views of the IQ of the average Congress inhabitant.

People Magazine, or USA Today, or the National Enquirer, I could understand, because lots of Americans know where to find copies of those and many actually read them. The Federal Register???? Really. 

If you thought you needed more evidence of how out of touch Congress is with the rest of the world beyond the Washington Beltway, you need look no further than this.


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## 416

Schubert said:


> It's great bed-time reading if you suffer from insomnia.


In fairness, the Canadian equivalent isn't a thrill a minute, either.

The list isn't the easiest thing to find, (try the instructions here). Here is what it looks like. Renunciationguide adds some useful context.


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## kenskyfish

*Rollover would defeat purpose*



AmTaker said:


> Its probably too late to do you any good, but I think in such a case, it would have made more sense to rollover the 401k into an IRA, then convert the IRA into a Roth IRA gradually over a few years keeping the amount converted each year into a small enough sum that it doesn't trigger extra tax (which should be easy as a non resident you would only be taxed on US source income). Withdrawals from a Roth IRA except for earnings are normally tax free, so after rollover, you could withdraw all the converted money for that year.
> 
> The bottom line is that it might (I'm no US tax professional) be possible to withdraw money from a US retirement plan tax and penalty free assuming you're willing to let the money remain in the US for a few years.


Yes, it is too late, but the key element of this approach is I'd have to let the money remain in _USD_ for a few years. In short, I look at a ten year USD vs SGD (or silver, gold, etc) trend and assume given the deficit and currency printing that the situation won't be improving for the USD, but rather getting worse. I wanted out of USD as soon as possible. I won't know for another five or ten years if this was a wise move. I'm happy to discuss in more detail, but should be in another thread.

Regarding my 401K withdrawal last year, I think I'll have to go through the process of filing to see how much more I'll owe or if I'll owe, and then decide if I'll file and pay or just ignore it and risk the IRS chasing down a non-resident alien years later for a few thousand bucks. I'll probably pay just to ensure that dealing with the IRS is completely behind me.


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## kenskyfish

*Right to expatriate*



PetrosResearch said:


> Your attorney needs to learn something about Constitutional law and human rights. You cannot make "illegal" an action which is a fundamental right, recognized by the Declaration of Independence and the 1868 Expatriation Act in the United States and by United Nations human rights code. King George made expatriation illegal too because he thought the American colonies were his possessions.
> 
> <truncated>


As my attorney described it, the expatriation is a right and can't be made illegal, but the tax evasion part is. If the _sole reason_ I expatriate is to avoid taxes, then that is (according to her) an act of tax evasion, not tax avoidance. She did say the law is somewhat vague and it could be hard to make a case for evasion, but provided an example of a rich guy who expatriated and got nailed for it. I apologize for not being able to be more specific or provide a link. She did say I'm a small fish and it is unlikely the IRS would take notice or bother to prosecute, but in interest of not exposing myself unnecessarily, she strongly advised against taxes being any part of my reason for expatriating. I suppose her position on this depends entirely on the case(s) of individuals who got nailed for it, and unfortunately I don't have that and I'm not going to enlist her services again to get it. Just found an old email - the expat briefing she uses is from a London expat attorney who deals with 20 million pound minimum clients. If you are that rich and want to hire her for the briefing, here's contact info: American Expat Tax Services Pte Ltd - Home


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## Guest

I don't know how renunciation for tax reasons can be illegal when you have to pay and exit tax if you are a covered expat....


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## jimmyjam

*federal register*



kenskyfish said:


> Another curious fact is your name will appear in a public document of people who expatriated. I apologize for not digging up the link to prove it. There's one list per year and only your full name appears on it, no other personal information.


I have heard that the federal register is full of holes and incomplete.

Some say it only includes those who were "covered expatriate".

I'll have to go and see, in due time, if my name appears on it.

Anyone who has expatriated last year or prior, any news?

This year that register is going to be quite embarrassing for the sheer number of cases and we can imagine perhaps many names will be left off "accidentally on purpose"?


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## jimmyjam

*tax reasons*



Mach7 said:


> I don't know how renunciation for tax reasons can be illegal when you have to pay and exit tax if you are a covered expat....


you are absolutely right and that is why my lawyer says it would be virtually impossible for them to enforce the Reed amendment now;

the Reed amendment was made before the exit tax regime and as such is obsolete now.

however the 2007 tax treaties say that if tax avoidance was among your reasons for renouncing they can still tax you for 10 years i need some more info on this, anyone?


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## Arlington

Just read an article from today's Financial Post: 

Thinking of coming clean with the IRS? Read this | Personal Finance | Financial Post

This part could help me out if true . .I could file taxes for our three sons without getting social security numbers. 

*If you do not have a SSN, you can submit your tax return along with an application for an individual taxpayer identification number (ITIN). Links to information and application forms are found here: Forms and Instructions (PDF).
You don’t need a SSN or ITIN to file a foreign bank account report (FBAR).*


I'm not sure it's true . . it's not what I've read before which is that if you are an American citizen, you MUST use a social security number. I did read that FBAR's could be filed without one.

Dilemma of course - our oldest son now says he wants to relinquish. What to do? What to do?


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## Arlington

Just read an article from today's Financial Post: 

Thinking of coming clean with the IRS? Read this | Personal Finance | Financial Post

This part could help me out if true . .I could file taxes for our three sons without getting social security numbers. 

*If you do not have a SSN, you can submit your tax return along with an application for an individual taxpayer identification number (ITIN). Links to information and application forms are found here: Forms and Instructions (PDF).
You don’t need a SSN or ITIN to file a foreign bank account report (FBAR).*


I'm not sure it's true . . it's not what I've read before which is that if you are an American citizen, you MUST use a social security number. I did read that FBAR's could be filed without one.

Dilemma of course - our oldest son now says he wants to relinquish. What to do? What to do?


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## Guest

Arlington said:


> Just read an article from today's Financial Post:
> 
> Thinking of coming clean with the IRS? Read this | Personal Finance | Financial Post
> 
> This part could help me out if true . .I could file taxes for our three sons without getting social security numbers.
> 
> *If you do not have a SSN, you can submit your tax return along with an application for an individual taxpayer identification number (ITIN). Links to information and application forms are found here: Forms and Instructions (PDF).
> You don’t need a SSN or ITIN to file a foreign bank account report (FBAR).*
> 
> 
> I'm not sure it's true . . it's not what I've read before which is that if you are an American citizen, you MUST use a social security number. I did read that FBAR's could be filed without one.
> 
> Dilemma of course - our oldest son now says he wants to relinquish. What to do? What to do?


Thanks for this. It is what I would prefer to do in my son's situation (if you know my story) rather than the absurd circle of applying for a social security number in order to file back US tax returns (for which he will have zero owing) to be able to have the RIGHT to renounce his US citizenship. Mind you, he was born and raised in Canada and never lived in the US nor been registered with the US. Also because he has a disability and not the perceptual capacity to make the important decision of renouncement and I cannot influence his decision, it is a moot point, irrelevant. I cannot renounce on his behalf even with a court order I am told by the US Consulate.


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## Arlington

Calgary411 said:


> Thanks for this. It is what I would prefer to do in my son's situation (if you know my story) rather than the absurd circle of applying for a social security number in order to file back US tax returns (for which he will have zero owing) to be able to have the RIGHT to renounce his US citizenship. Mind you, he was born and raised in Canada and never lived in the US nor been registered with the US. Also because he has a disability and not the perceptual capacity to make the important decision of renouncement and I cannot influence his decision, it is a moot point, irrelevant. I cannot renounce on his behalf even with a court order I am told by the US Consulate.


Yes . .I am familiar with your situation. I'm thinking seriously about doing it this way . .but I'll do a little research when I get the chance and stay tuned for any advice submitted on this forum. 

Oh! I love this forum!


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## saddened

Arlington said:


> Just read an article from today's Financial Post:
> 
> Thinking of coming clean with the IRS? Read this | Personal Finance | Financial Post
> 
> This part could help me out if true . .I could file taxes for our three sons without getting social security numbers.
> 
> *If you do not have a SSN, you can submit your tax return along with an application for an individual taxpayer identification number (ITIN). Links to information and application forms are found here: Forms and Instructions (PDF).
> You don’t need a SSN or ITIN to file a foreign bank account report (FBAR).*
> 
> 
> I'm not sure it's true . . it's not what I've read before which is that if you are an American citizen, you MUST use a social security number. I did read that FBAR's could be filed without one.
> 
> Dilemma of course - our oldest son now says he wants to relinquish. What to do? What to do?


Hi Arlington, I was told this week by accountant that the ITIN would not work, it had to be a SSN number. I was very disappointed. But after reading your post, NOW I WONDER!! Who knows?? :confused2:


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## Guest

saddened said:


> Hi Arlington, I was told this week by accountant that the ITIN would not work, it had to be a SSN number. I was very disappointed. But after reading your post, NOW I WONDER!! Who knows?? :confused2:


I hate my life to be CONTROLLED by the US. For what ungodly reason should we not be able to do this? I bloody can't wait....

Hold that thought, I just checked the Financial Post article again and it has two new comments:


Steve_


There is a mistake in point #1 - US citizens are not eligible for ITINs, they must get an SSN - file an SS-5 at the local consulate or an SSA office in the US. Also point #2 doesn't mention the foreign exclusion limit which is probably the most important thing to know about as a US/Canadian employed by a non-US resident employer.

Also, reading this, I suspect a lot of dual citizens get scared and start thinking the best idea is to renounce US citizenship - DO NOT do this unless you are absolutely certain that is the best way to avoid a US tax bill. Generally speaking it would only make sense to do this if you are earning well in excess of the foreign exclusion limit (explained in the instructions for Form 2555) and you have no intent of ever living in the US.

Renouncing US citizenship is paperwork in itself, and if you have been a US citizen for eight years or more you are still subject to reporting requirements for ten years, but they are even more obscure so you end up in a worse situation.

For 80-90% of non-resident US citizens, filing in the US is a relatively simple procedure, you simply need to get familiar with it. Read IRS publication 54 to begin with - remember that RRSPs must be declared on Form 8891. Generally speaking for most people, you need to file a 1040, a 2555 (start with that), an 8891 and the FinCEN FBAR form. If you earn under the foreign exclusion limit and do not have less usual sources of income, the forms are pretty simple to fill in, name and address and a few basic facts.

Also bear in mind the FBAR can be filed electronically and this is simple to do: http://bsaefiling.fincen.treas...
show less


Peter W. Dunn


My cousin paid $5000 to get her taxes up to date--such fees are only becoming more expensive as the IRS now limits who can fill out a 1040. But my cousin isn't rich. She has a normal day job. Now let me ask you a question, is it more expensive to renounce or to pay accountants to do your taxes? Are you aware that the new Form 8938 requires that you detail your personal assets for the states on a yearly basis? How much time, money and frustration are people willing to expend in order to keep their citizenship?

Also, when the United States crack down on FBAR, and issued the HEART (which requires an exit tax of those with more than 2 million in assets), I decided the time was now. Get my Canadian citizenship and relinquish my US citizenship. The US is experience significant inflation. Soon my small Canadian fortune will be a lot of US dollars--and I am unwilling to share any of it with the IRS so that profligate politicians in Washington can continue their drunken party of spend, spend, spend. I pay enough taxes in Canada thank you very much.
show less


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## Arlington

saddened said:


> Hi Arlington, I was told this week by accountant that the ITIN would not work, it had to be a SSN number. I was very disappointed. But after reading your post, NOW I WONDER!! Who knows?? :confused2:


I know . .I've read it has to be a SSN number, too. The reporter may have been referring to people who are not US citizens but still have to file.

FBAR's are the real penalty maker . .what about just filing those? 

I'm not going to do anything for awhile.


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## saddened

Calgary411 said:


> I hate my life to be CONTROLLED by the US. For what ungodly reason should we not be able to do this? I bloody can't wait....


So much BS, I hate it also. When will it ever end??..It would make things so much easier. I hate getting the SSN for my son, so much trouble. I have been upset with this stuff for months now, it would be nice if it would just be over.


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## Arlington

saddened said:


> Calgary411 said:
> 
> 
> 
> I hate my life to be CONTROLLED by the US. For what ungodly reason should we not be able to do this? I bloody can't wait....[/QUOTE
> 
> So much BS, I hate it also. When will it ever end??..It would make things so much easier. I hate getting the SSN for my son, so much trouble. I have been upset with this stuff for months now, it would be nice if it would just be over.
> 
> 
> 
> How about a nice trip to Hawaii with your son. You could get the social security number while you're there. That was the plan for my oldest . .but now he doesn't want to.
> 
> I left the social security office in Honolulu a message last Friday and they said they'd respond within 48 hours. Why am I not surprised that I haven't heard from them?
Click to expand...


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## saddened

Arlington said:


> saddened said:
> 
> 
> 
> How about a nice trip to Hawaii with your son. You could get the social security number while you're there. That was the plan for my oldest . .but now he doesn't want to.
> 
> I left the social security office in Honolulu a message last Friday and they said they'd respond within 48 hours. Why am I not surprised that I haven't heard from them?
> 
> 
> 
> That would be wonderful Hawaii would be great! When I spoke on the phone to the accountant I told him my son has no ssn or passport and I did not even want him to file period.. but he was registered at the age of 2, but he said if in 2013 this FACTA crap happens the way they are saying it will, they may ask him about his citizenship or if either parents are US Citizens..and then what.
> 
> He said if he lie's about it and gets caught it would not be pretty.. This accountant is different from the one that did mine, he is sooooo much cheaper and said he would even show me how to do the FBAR if I wanted him too and I could do that part myself. He was very nice. He was not pushy at all about doing the taxes for my son, he didn't seem money hungry like the rest I have spoke too.
Click to expand...


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## Peg

I need a term for that look on an expat or expat spouse's face when they first hear of FBAR, FATCA and IRS requirements...

Today someone asked me to talk with another coworker whose husband is a USC. Their accountant said he did not need to file anything with the IRS. Um, wrong! Thankfully he left when he was 14 so the kids are not accidental americans.


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## Guest

_Renouncing US citizenship is paperwork in itself, and if you have been a US citizen for eight years or more you are still subject to reporting requirements for ten years, but they are even more obscure so you end up in a worse situation._

What do you mean by this statement? I thought that as long as we were 5 or 6 years tax compliant with the IRS we could relinquish/renounce.

Am I to understand that we are still attached to this Mafia for an additional 4 years?


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## Peg

Mach7 said:


> _Renouncing US citizenship is paperwork in itself, and if you have been a US citizen for eight years or more you are still subject to reporting requirements for ten years, but they are even more obscure so you end up in a worse situation._
> 
> What do you mean by this statement? I thought that as long as we were 5 or 6 years tax compliant with the IRS we could relinquish/renounce.
> 
> Am I to understand that we are still attached to this Mafia for an additional 4 years?


Isn't that only applicable to someone renouncing for tax reasons and with a net worth above a certain level?


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## Guest

Peg said:


> I need a term for that look on an expat or expat spouse's face when they first hear of FBAR, FATCA and IRS requirements...QUOTE]
> 
> Let's have some fun for a change and take suggestions for coming up with one! :tongue1:


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## Guest

Mach7 said:


> _Renouncing US citizenship is paperwork in itself, and if you have been a US citizen for eight years or more you are still subject to reporting requirements for ten years, but they are even more obscure so you end up in a worse situation._
> 
> What do you mean by this statement? I thought that as long as we were 5 or 6 years tax compliant with the IRS we could relinquish/renounce.
> 
> Am I to understand that we are still attached to this Mafia for an additional 4 years?


I believe that comment was made by the first person to respond to the article "Steve" and that he simply is wrong. 

I have absolutely no clue where he gets this "8 year" idea but no one who renounces on or after June 16, 2008 is subject to any 10-year requirement.
As I understand it, the whole point of the expatriation tax is to replace the previous business of continuing to file for 10 years. 

And you can renounce whether you are tax compliant or not. The issue is whether you want to have the non-compliance hanging over your head, possibly interferring with travel, etc. But there is nothing to interfere with renouncing if you have not filed. 

Fortunately for us, they have yet to fix this loophole (Congress, that is). More than a few of this fear this will be a result of this continuing mess......


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