GIVING UP US CITIZENSHIP to avoid US Income Tax. Canadian-US-Global Income tax help - david ingram expert US CANADA cross border
XXXXX XXXXXX wrote:
Thanks for this, I'll be in touch.
david ingram replies:
I am putting off cleaning my office so that is the only reason this is being answered.
Be really careful about a decision to give up your US citizenship. In your job, it could be a disaster if you could not attend a conference in the US as one example.
This three year old Q & A will give you an idea..
From: David Ingram [mailto:firstname.lastname@example.org]
Sent: Monday, December 14, 2009 11:54 PM
To: xxxx xxxxxxxx
Subject: US and Canada tax advice for Canadian resident with estate coming from the USA - Canadian-US-Global Income tax help - david ingram expert US CANADA cross border non-resident immigration - income tax help - preparation by five tax experts' years of experience
xxxxxx xxxxx wrote:
Would your firm be able to assist in advising me?
david ingram replies
What you are looking for is what we do. I have actually been sitting at the same desk in this house for 40 years and 3 days and at the same desk for about 45 years doing US / Canadian Income Tax Returns.
If you have been doing your own returns, I trust that you have been filling in your TDF 90-22.1 forms to report your Canadian Financial Accounts to the US Treasury (see question 7 on schedule B which has a $10,000 penalty for not answering yes OR no) And that you have been filing form 3520 or the preferred 8891 as required if you have a Foreign Trust (an RRSP) as asked about in question 8).
If you have not been filing these forms, it is easy at this time to make a voluntary disclosure and catch up the next 6 years without penalty. If you have been filing these, good going.
You can call (604) 980-0321 M to Friday from about 10:10 AM to 3:30 PM to make an appointment by phone or in person.
Read the following to see what I mean about the foreign account reporting rules. People do not always 'hear' what they are told.
Dave, This kept being rejected by centa.com when I sent it from my account , so I asked a friend to send it from his account. Here it is: Yes, the general requirements for a person to use Schedule B are listed at the top of the instructions, but, as with most tax rules, there are exceptions. This exception is shown at the BOTTOM of the instruction page (http://www.irs.gov/pub/irs-pdf/i1040sa.pdf below the final TIP box) and it says to answer NO to the question of whether the filer has a foreign bank account if "the combined value of the accounts was $10,000 or less during the whole year." I think what you have written is that, in effect, a person who has only $10 in a Canadian bank would have to file Form B and answer yes to question 7a, but that is contrary to the IRS instructions. The H&R Block "Tax Cut" program does not select Schedule B or check the YES box unless the $10,000 threshold is reached. (I tried it out to see, by answering YES to foreign account, but NO to $10,000 or more.) Doing a Google search on "SCHEDULE B" "FOREIGN ACCOUNT" "7a", I find many articles stating that 7a only applies to accounts of $10,000 or more. Examples: http://bankrate.com: "Line 7a is straightforward. Basically, if you had a foreign account, check "Yes" here. Even if you did have such an account, the IRS says you can check "No" if the average balance in the account was less than $10,000 during the whole year."
"...the answer to question 7a only applies where the total of all foreign accounts exceeds $10,000 at any time in the taxable year." Do you still say that ALL persons who have to file U.S. taxes and have a Canadian account have to file Schedule B and check YES to question 7a? Regards, Fxxxxxxx -------------------------------------------------------------------------------- david ingram replies:
I NEVER EVER SAID THAT!
I challenge you to show me where I said that a person with 'any' foreign account had to check off yes to question 7a. You only have to say yes to 7(a) if the combined totals of all foreign financial accounts was over $10,000 US at ANY ONE TIME in 2007. Because of the change in the exchange rate in 2007, if you had $9,500 Canadian in the account at the end of 2007 when the rate was 1.10 Cdn to a US dollar, you would have to say yes. even if the rate dropped back to 99 cents.
What I said and still say is that you have to file Schedule B if you have a foreign account whether it is in England, Spain, Iraq or Switzerland. In other words, if you have foreign accounts and they were always less than a total of $10,000 US in 2007, you have to answer "NO" to question 7a on Schedule B but YOU HAVE TO FILE SCHEDULE B..
Of course, if you have $10.00, 100, 1,000, 10,000 or 100,000 in an RRSP, you have to answer "yes" to question 8 and fill in the 8891.
And, if you had $10,000 in an RRSP, you would also be answering yes to 7(a).
And, if you are the contributor to a child's RESP, that adds to the amount for $10,000 and requires the filing of a 3520 because RESP accounts are NOT covered by the form 8891.
If you did not have 'any' other accounts but had put $1,000 into a grandson's RESP which you were the signing authority over, you would check NO to question 7a, leave 7b blank and say yes to question 8 and then fill in form 3520.
Your own question answers your own question.
The top says file the form if you have a foreign account or were the grantor of a foreign trust - the bottom says answer no if the total is less than $10,000. Tell me where it says you do not have to file the form if the answer is 'no'. You have missed the point that the IRS WANT S the 'no' answer in writing IF you have a foreign account. I was also told by the Treasury rep that there is a penalty for not filing Schedule B if you have a foreign account. that penalty is $10,000 but i have never seen it enforced. I have seen the $10,000 to $500,000 penalty for not filing a required TDF 90-22.1 imposed over 1,070 times now. My favourite was the 105 year old lady in a Lynn Valley Nursing Home who was fined $10,000 for not reporting an Edgemont Village Royal bank Account.
For those who don't have schedule B handy, you can find it at: http://www.irs.gov/pub/irs-pdf/f1040sab.pdf
The older bit is here.
Date: Mon, 11 Feb 2008 00:44:49 -0800 From: email@example.com Subject: Schedule B if you have a foreign account To: fxxxxxxxxxxxxxxx XXXXXXX wrote: BLU115-W16C96EC329AC4C1D5D30C8CD290@phx.gbl> David, In case you find this amongst the spam, I have a comment about reporting interest on Schedule B. You state: "AND, they also made the point that everyone with foreign accounts MUST file schedule B, even if there is no earnings form the accounts." But...the Schedule B instructions state that it is not necessary to answer YES on Schedule B if an account is less than $10,000. So, when you tell people to file Schedule B, shouldn't you add "if any of your accounts have been worth at least $10,000 anytime during the year"? Schedule B, part III instructions are here: http://www.irs.gov/pub/irs-pdf/i1040sa.pdf ----------------------------------- david ingram replies: The instructions for who must file a Schedule B (top right hand side of page B-1) that you sent clearly state that Schedule B must be filed if you have a foreign account. • You had over $1,500 of taxable interest. • Any of the Special Rules listed in the instructions for line 1 apply to you. • You are claiming the exclusion of interest from series EE or I U.S. savings bonds issued after 1989. • You had over $1,500 of ordinary dividends. • You received ordinary dividends as a nominee. • You had a foreign account 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. -
If you 'really' only have a single question requiring a 'couple' of minutes, you can try phoning me for free as part of the following.
-Most Wednesday evenings, from 6 to 7 PM Vancouver (Pacific - LA, Seattle) time, I interview others and answer US Canada, Great Britain, Spain, Indonesia, Mexico, etc. Tax and immigration questions. GOTO www.david-ingram.com - the North American phone number is (866) 980-0499 - the local number in the lower mainland is (604) 980-0321.-
- You might try calling Fred Snyder's weekly radio programs for an answer.
Fred Snyder's "IT'S YOUR MONEY" radio show.on CISL, 650 AM on the dial in Vancouver from 9 to 11:00 AM every Sunday - call 604-280-0650 or 1-877-280-0650 LISTEN LIVE IN SAUDI ARABIA AT WWW.AM650RADIO.COM (hit button in top left hand corner).
I guest on the shows on the First Sunday of each month. Jan 3, feb 7, Mar 7, Apr 4, May 6 and June 2, 2010
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation in connection with personal or business affairs such as at www.centa.com or www.garygauvin.com. If you forward this message, this disclaimer must be included."
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income Tax service help.