# 8938 trouble



## canadian4567 (Apr 16, 2021)

Hello,

Just posting here for some advice, and if someone reads this hopefully they handle the situation better than me.

I am a Canadian citizen that has been in the USA since 2015. I am a green card holder. This year was the first year I realized I had to fill out 8938. I have 5 Canadian accounts totaling about 220k USD. 3 Regular savings accounts 1 TFSA and 1 RRSP. They generate about 2k in interest per year which is about 600 dollars in tax. I have not added any income to these accounts since moving to the USA. I plan on moving back to Canada early next year.

When I realized the 8938 requirement I panicked. I amended the 2018 and 2019 tax returns with the 8938 and 600 dollars in missing income. In the 2020 tax return I included the foreign income but still didn't include the 8938. The amendments are currently in progress.

I have also filled out FBARS for the last 6 years, I wasn't aware of that either.

Does anyone know what kind of trouble I am looking at? Is the IRS going to come after me? The anxiety this has caused has literally ruined my life. I feel like a criminal for not filling out these forms.


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## Nononymous (Jul 12, 2011)

This is an unanswerable question, unfortunately. Have you dealt with a tax specialist or did you just amend returns yourself? If you really are only talking about $2000 in unreported income each year (was there any Canadian tax paid on that, which could be used to offset US tax with FTC?) and some forgotten FBARs then hopefully it just gets filed and dealt with.

There is a domestic version of the streamlined program that would have allowed you to declare all this under a sort of amnesty, though I believe there were mandatory penalties. The "quiet disclosure" approach you've taken is cheaper - if it works.

It's a pity you figured this out before moving back to Canada, I'm afraid. I don't want to further twist the knife but there can be potential complications with the TFSA, depending on what's in it. You don't want to be dealing with PFIC paperwork.


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## canadian4567 (Apr 16, 2021)

Yes I may have also messed up the TFSA reporting. They are in mutual funds but I didn't collect any dividends and the value is less than 25k. I'm not sure if that matters for PFIC. They would have to audit me in order to find this out though since it's not reported with FATCA. I'm hoping theres a slim chance of audit since the 2k interest is less than 1% of my gross income.


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## Nononymous (Jul 12, 2011)

Fingers crossed you're back home before any issues arise. The IRS is not in a good place these days so maybe that mitigates (or delays) the audit risk. Will you be leaving assets behind in the US - a 401k or similar? 

When you leave, don't forget to properly renounce the green card. You should be out before the exit tax deadline, which I think is 8 years, but don't quote me on that.


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## canadian4567 (Apr 16, 2021)

I have only had my green card for 1 year, and I definitely plan on renouncing it. Yes I am going to completely remove all of my assets from the USA. The only exception is some private stock in a startup company I work for. I have to talk to a lawyer about that.


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## Jca1 (Aug 7, 2019)

canadian4567 said:


> Hello,
> 
> Just posting here for some advice, and if someone reads this hopefully they handle the situation better than me.
> 
> ...


Worst news first: With the 8938s, the main thing I'd worry about is automatic penalties of $10k per year per form for late filings without going through one of the streamlined disclosure programs. I don't know if the IRS automatically assesses penalties on late filings of this form on an amended return, but with some of the other international information return forms like 5471, they tend to. It seems to depend on who processes the form or something random -- there is no consistency and many are accepted quietly without penalties. The 8938 for 2020 is not late yet, as you probably know. 

If the amended returns get processed (I believe your transcript online should show) and you don't get a penalty, I guess you're good. Other people would probably benefit from hearing what happens.

With the FBARs, you should be fine; the procedure for submitting late FBARs is just to file them with an explanation of why you didn't file them before, and something essentially like "I didn't know" seems to be acceptable.

The missing income seems like no big deal.

I don't think the PFIC stuff is going to be a problem. There appears to be no penalty for not filing form 8621, and they'd have to do a detailed audit of you to figure out that you own PFICs that don't qualify for one of the exemptions to PFIC reporting, and even then you might owe a pile of forms 8621 but possibly not much tax. I doubt it's worth the trouble to the IRS.

I think the odds of something worse than the above happening are roughly 0.


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