# Help for simple situation?



## albator73 (Jan 27, 2012)

Hi,

I just completed my tax and was wondering if I'm missing something. I'm dual citizenship Canada/US and leave in Quebec/Canada with my Canadian girlfriend (not married), it is the first official year we are consider living together based on Canadian law. Since we are not married, I believe I'm still consider single for the US tax. So I'm only filling myself.

My situation is simple, small house, no kid and have a few deposit accounts and retirement accounts (RRSP). 

Below are the form I used to do my tax this year:

1040 -> Basic Salary information
1040 Schedule B -> Part III Foreign account Yes/Yes/No
2555 -> Foreign Earned Income Exclusion. I'm under the $100,800 exclusion
8938 -> Deposit accounts. 

8891 -> Form for retirement account (RRSP) have been retired, so I didn't do for this year.

Is there anything I'm missing?
Thanks


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## BBCWatcher (Dec 28, 2012)

albator73 said:


> Since we are not married, I believe I'm still consider single for the US tax.


You are, yes. You would choose Single as your filing status.



> Is there anything I'm missing?


Yes. IRS Form 8965 (most probably you'll choose exception code C) and FinCEN Form 114 (filed separately) come to mind. Your Schedule B will almost certainly have more than Part III filled out if you're also required to file IRS Form 8938 -- that's a rather large sum in deposit accounts, and presumably they're paying interest, reportable on Schedule B. You can also take a Foreign Tax Credit (Form 1116) for the Canadian income tax you paid on that interest income. (Tax preparation software would be helpful for the 1116.)

IRS Form 3520, separately filed, is possible depending on the nature and construction of your RRSP, or if you've got something else reportable on that form.

A trip through IRS Form 6251 (Alternative Minimum Tax) is possible (and not fun -- tax preparation software shines here).

Don't forget to attach the overseas residence statement described in IRS Publication 54 (page 4, 2015 edition) so you get the two month filing extension (until June 15, 2016, for tax year 2015) since we're already well past the April 15 filing deadline as I write this.


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## albator73 (Jan 27, 2012)

Thanks BBCWatcher for your input. 


IRS Form 8965= First time I heard about this one and yes this will be exception code C. I thought soon you qualified for the FEIE you were automatically exempt and no action was need. I guess I took for granted "Automatically" didn't required filling a form. 

Schedule B and 8938= I had to filled 8938 because I went above the threshold this year due to the total assets of my retirement RRSP and my deposits but nothing important in my deposit that generate less than $10 of interest per year. Since RRSP interest are not tax and don't need to be report, I'm not sure what else should I put on Schedule B.

IRS Form 3520 = Since Oct 27,2014, the IRS have modify so Canadian have no need to report interest for RRSP. 

2 Month Extension= I thought this was automatic soon you were living outside the US and no action was required. _If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension_ 


FinCen= Already done.


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## BBCWatcher (Dec 28, 2012)

albator73 said:


> Since RRSP interest are not tax and don't need to be report, I'm not sure what else should I put on Schedule B.


Just the reportable interest income. If that's $10, so be it -- still reportable. You only mentioned Part III of Schedule B, so that's why I mention there's more to Schedule B. For example, if your ~$10,000 checking/current account paid $4 of interest (gross, before tax), then you dutifully report something like "Royal Bank of Canada Checking Account - $4" on Schedule B. Obviously that won't make a bit of difference to your tax liability, but it's reportable. You can choose to take a FTC or not, as you prefer. For a few dollars of Canadian income tax it's probably not worth the trouble.



> IRS Form 3520 = Since Oct 27,2014, the IRS have modify so Canadian have no need to report interest for RRSP.


It's not really whether the interest is reportable. (A RRSP is only tax deferred, by the way.) Form 3520 has to do with foreign trust reporting and has nothing in particular to do with income. Indeed, 3520 is an entirely separate filing, required (or not) whether or not you need to file a 1040. That said, I might be confusing 3520 filing requirements for certain TDSPs with RRSPs, so just triple check that. You could be correct.



> 2 Month Extension= I thought this was automatic soon you were living outside the US and no action was required.


Nope. You need to ask for it in a simple statement attached to your tax return. See Publication 54, page 4 (2015 edition) for details, as mentioned.

The IRS *might* grant you the extension if you forget to ask, but that's not guaranteed. It's best to follow the IRS's instructions. It's "automatic" in the sense that the extension is automatically granted upon request, just like IRS Form 4868.


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## maz57 (Apr 17, 2012)

BBCWatcher said:


> IRS Form 3520, separately filed, is possible depending on the nature and construction of your RRSP, or if you've got something else reportable on that form.


A Form 3520 is not necessary for a RRSP. The Canadian RRSP is a trust, the IRS already knows all about them, and (unlike most other country deferred-tax accounts), their treatment is specifically spelled out in the US tax code. The investments contained within the RRSP are of no interest to the IRS; they are only interested if and when there is a distribution. This was true even back in the Form 8891 era and it continues to be true now.


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## albator73 (Jan 27, 2012)

Thanks All again for your help. I'll definitely look at taxprep this week-end.


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## AKIF.M (May 24, 2016)

albator73 said:


> Thanks All again for your help. I'll definitely look at taxprep this week-end.


Form 3250 is not required for RRSP and neither is 8891. I agree with BBCwatcher, all interest income must be reported regardless of amount and source. 

The extension is automatic but must be asked by attaching a statement. 
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DISCLOSURE: This communication has not been prepared as a formal tax opinion within the procedures described in Treasury Department Circular 230. As a result, we are required by Treasury Regulations to advise you that for any significant Federal tax issue addressed herein, the advice in this communication (including any attachments) was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.


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## maz57 (Apr 17, 2012)

Just to be crystal clear.....many RRSPs will not generate any interest, but some may. If that is the case, that interest should NOT be reported on Schedule B. The reason? If it is reported on Schedule B, then it winds up being taxable income for that year, which it is not because it was earned in a tax-deferred account. (That means US tax deferred in addition to Canadian tax deferred.)

The taxation happens only when there is a distribution. Until then, the only reporting now required for the RRSP (post Form 8891) is to report the account's existence on FBAR and Form 8938.


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