advice re Canadian Inheritance - help and advice Canadian-US-Global Income tax help - david ingram expert cross border non-resid


I have been referred to you by Transition Financial Services who were not able to provide me with assistance.
I am Canadian living in the US.  I am about to receive a bequest for $200,000 Canadian and I want to understand the tax implications with the Canadian and US governments.  I will happily pay for an hour's information and advice, if that is necessary.  Can you help me?


I have been referred to you by Transition Financial Services who were not able to provide me with assistance.
I am Canadian living in the US.  I am about to receive a bequest for $200,000 Canadian and I want to understand the tax implications with the Canadian and US governments.  I will happily pay for an hour's information and advice, if that is necessary.  Can you help me?

david ingram replies:

Since the minimum penalty is $10,000 if you do it wrong, it is likely worth your consulting me.  I also have to tell you that the penalty has not been levied much in the past.  However, since last March, enforcement has been stepped up.

I charge $450.00 for such a consultation by phone or in person and yes, I am sure I can help you.

If you would like to proceed, call us at (604) 980-0321 from 10:30 to 3:30PM  Monday to Friday and we will be happy to set up a phone consultation

Give my thanks to the people at  Transition Financial Services. 
This following older email may give you more information.

Dear Mr. Ingram,

I was recently advised by a CPA in Texas that  when I pass on and my estate wishes to give part of my estate to my son ( a Canadian citizen holding a Green Card and resident in Texas) that my estate must be very careful to pay my son into a Canadian bank account in his name. Then he could transfer his money to his USA account free of tax. The advice of the CPA was that an inheritance direct from my Canadian Estate to my son's USA bank account could be deemed taxable by the IRS. Do you have any knowledge of this ??

Thank you,

david ingram replies;

I do not understand what the CPA had in mind.

As a US resident with a Green card, your son must report any and all income to the IRS and any foreign accounts to the Department of the Treasury on form T D F 90-22.1   Failure to file the TDF file to report the foreign account that the money was deposited in would have a minimum penalty of $10,000 and a maximum penalty of $500,000 plus 5 years in jail if Treasury became aware of it and they will as you will see later on.

In addition, if your son receives $100,000 or more from a foreign estate, he has to file US form 3520.

I am putting this out to my list and we will see if anyone else has a comment to make.

In my opinion (I could be wrong) following the advice you were given could leave your son liable for BIG problems.  Anytime a resident of the US uses foreign accounts to move money around, it raises eyebrows.  In addition, the Canadian bank will report its sending the money to the US to Canada's FINTRAC AND the US bank will report the transfer in of the money to the Department of the Treasury (where  your son should file his TDF 90-22.1 forms with) in Detroit.

You can, of course, talk to me. 

And, of course, if your son happens to have an RRSP left in Canada, he needs to fill in that TDF form and an 8891 form for the RRSP as well.

He should go to and read the Oct 1995 newsletter in the top left hand corner.  then read the US Canada tax section in the second box down on the right hand side.

see the following:

I have lived in the US for 17 years, originally with a green card, and became a US citizen last year.  I have not filed a Canadian tax return since approx 1992.  I had an RRSP in Canada which I switched to an investment company in Alberta – partially into mutual funds and partially into an RSP.  I received a T3 – do I need to file a Canadian Tax return? If yes, what would be my first step after being away so many years?

Thank you,

david ingram replies:

You do not need to file a tax return but you do need to pay the CRA 10% on any interest you received under Art XI of the Tax Treaty and 15% on any actual dividends you received under Article X.

I can bet that you have lived in the US for 17 years and never reported your Internal earnings on the RRSP to the US on your schedule B.  If you look at the instructions for schedule B now, you will see that you have to fill it in if you have any foreign accounts.  An RRSP is both a foreign account (question 7) and more importantly a foreign trust (question 8).  Assuming you had / have more than $10,000 total in your foreign account(s),failure to fill in schedule B and answer "yes" and fill in the required T DF 90-22.1  (any account, not just an RRSP)  carries a minimum penalty of $10,000 and a maximum of  $500,000  PLUS up to 5 years  in jail.

If your foreign account (or one of them) happens to be a Canadian RRSP, failure to file from 3520 or the new substitute 8891 carries a fine or penalty of 35% of the amount in the RRSP PLUS 5% per year that it was not reported.

The good news is that although I know of over 1,000  $10,000 fines for failure to file the TDF-90 forms, I have never seen anyone fined who came forward voluntarily and filed six years of back forms.  Same thing for the 8891.

What I think you have done now is taken out $5,000 or $10,000 out of your RRSP using a Canadian address so that they only withheld 10% tax because some financial advisor or friend has told you to do that.  They have then set you up with a Canadian Mutual fund which unless they are one of about ten qualified people in Canada, they are not legally allowed to deal with you because you are a US resident.

You should not have received a T3 slip.  It means that you are not being shown as a non-resident of Canada and are using a Canadian address for your account.  As a non-resident of Canada you owe 15% tax on any dividends received and 10% tax on any interest received.  You may want to keep the Canadian address because you have been told that your broker or Canadian financial representative can not deal with you if you are a non-resident and that is correct.  If you are involved in a wink, wink, nudge, nudge kind of deal, your financial person is risking their own securities licence and that of their company.  In addition, the US Securities Commission can fine them for selling to someone in the US without a US Securities licence. 

In the meantime, you owe Canada another 15% tax on the withdrawal (deregistration) from the RRSP and have to do a rather complicated calculation to decide how much of the withdrawal is taxable on your US return. 

Get it fixed, you (and your husband Axxxxx?) are subject to massive US fines if my assumption is correct and I am 99% sure i am correct based upon your question.

We can do it for you if required.

PS and tongue in cheek for sure but if your financial person in Alberta knows you are living in the US and is still dealing with you in this situation, he  or she should be reported to their company and fired or re-qualified or something serious.  If he or she knew that you are living in the US and did not tell you that  you had these specific US reporting  rules, they should just be shot and put out of their misery because they have left you exposed to big fines and penalties.  I think, that by now, every financial organization has made sure that their personnel understand these rules.

The record I saw was a 105 year old lady in the Lynn Valley nursing Home with a $10,000 fine for not reporting a Royal Bank of Canada account on form TDF 90-22.1.

This older question will help you a bit as well


We have watched the Cdn$ rise against the US$ and now wonder what the impact is if we cash in the RRSP's and bring the cash back to the USA.  It seems that the exchange rate would offset the tax impacts 9presuming of course that the exchange rate is temporarily high).

Logically there is Cdn penalty withholding and then the cash would be taxed at non resident rates.  Can we cash in smaller amounts to get reduced rates? 

In the US what would happen?

david ingram replies:

I am one of the people that thinks the Canadian Dollar will be worth $1.20 US.  However, I have been wrong before and will be wrong again.  However, you might want to hedge your bets and just transfer 50% and be happy you did not do it three years ago.

A non-resident of Canada owes the Canadian government 25% withholding tax when he or she withdraws an RRSP as a non-resident.

The principal part of the RRSP is not taxable in the US.

The total withdrawal (including the tax deducted) goes on line 15a and the taxable portion goes on line 15b on put zero on 15b and put the actual growth on schedules B and D if you know what the interest, dividends and capital gains portions of the increase are.  The increase in exchange will go on Schedule D for instance.

The taxable portion is the increase in value since the day you crossed the border to the US and will be the part you have been reporting and exempting every year on form 8891 and the previous reporting you did under 89-45 and 2003-57, etc., etc.

Any tax paid to Canada will be deductible as a foreign tax credit on US form 1116 on a pro-rata basis.
You have also, of course been reporting the existence of the RRSP on form TDF 90-22.1  -  the hint about these two forms are the two questions at the bottom of schedule B. The 8891 is a new simpler form for the last three years and takes the place of the draconian 3520  mentioned in the bottom question.

This older Q & A will help you I hope.

I am a Canadian citizen and legal US resident. I've lived in Florida for 25 years and now, at 65, I'm considering taking distributions from a spousal RRSP with Royal Bank.
Unfortunately, income tax information I've received from different sources is terribly conflicting and, at worst, indicates that my nest egg will be gobbled up by governments. Is this something you can steer me straight on?

david ingram replies:

If you roll the RRSP into an RRIF (Registered retirement investment Fund), The payer will have to deduct 15% non resident withholding tax under the terms of Article XVIII of the US . Canada Income Tax Convention (Treaty).

You will then report it again on form 8891 of your 1040 and there may or may not be US tax to pay.  If your income is high enough that you are in a federal 28% tax rate, there 'will' be tax to pay on the RRIF. 

You will claim the 15% tax paid to Canada on US form 1116.
Now, you have been supposed to report the existence of that account to the Department of the Treasury in Detroit on form TDF 90-22.1 since 1989 when that law was passed and shown in bulletin 89-45.  Failure to report can be a penalty of a minimum of $10,000 to a maximum of $500,000 PLUS up to 5 years in jail for each year you did not report it.  See the bottom question on schedule B of your 1040 where your foreign trust requires the preparing and filing of a 3520.

Thankfully, you do NOT have to do a 3520.  the 8891 takes it place and is much easier.

The penalty for not also reporting the RRSP and its internal earnings to the IRS (it was the Dept of Treasury above)  is 35% of the principal plus 5% for each year it was not reported since 1989 when the reporting rules started.  The form 8891 is an exemption for paying the tax on those internal earnings.

See form 8891 at:


Although I know of over 1,000 people who have paid $10,000 fines for not filing form TDF 90-22.1, I (at this time) do not know personally of a single individual who has been fined under the 8891 / 3520 rules.  I also have NEVER seen a person fined for filing the TDF 90-22.1 forms late and voluntarily.

In my opinion, you should file the TDF 90-22.1 forms retroactively for six the Department of the Treasury.

See Form TDF 90-22.1 at Note the penalty of up to $500,000 plus five years in jail for failure to file.  The minimum fine is now $10,000.
You should file retroactive 8891 forms with a 1040X to the IRS for the same years.  Note that you are the BENEFICIARY so follow the Beneficiary rules.  The 8891 form is actually only 3 years old.  Before that, you just wrote out the information on a free form page but it is a convenient form to use retroactively.

Hope this helps and we would be glad to assist if needed.

Regarding the quality of your advisor -- the following explains the licensing problem.

I am a US Citizen and Landed Immigrant of Canada. Do I have any legal or other restrictions  for buying, selling, trading stocks, bonds, mutual funds, or having a broker on both sides of the border doing the same for me. I am getting mixed information from brokers on both sides and NEED an experts advice.

david ingram replies:

The restriction is NOT on you by government.

The restriction is on the people you are dealing with.  They are restricted by the Securities Commissions and their licensing as to whom 'they' can sell to.

In other words, if you live in BC, an Ontario Securities broker or Mutual Fund salesman can NOT deal with you.

Some like Fred Snyder are licenced in BC and Ontario and can deal with you but even two provinces is rare.

When you are talking about BC -  Arizona, or Ontario - Florida, you have a real problem.

The following older answers will likely help - Dan Walkow and Darrell Thompson HAVE gone to the effort to be able to deal with cross-border situations.

QUESTION: 1. have been trying to find ethical investment firm to go with in Canada and can not seem to get any unbiased answers We live in Red Lake Ontario (landed immigrants), but are also US citizens

2. Is this Stansberry & Associates legit, as they seem to have many different opportunities claiming great returns
Pinchot Retirement Plan,  Master Limited Partnership, Market Index Target Term Security , Oakmark Select Funds
Thanks greatly looking forward to your email

david ingram replies:
I have no good or bad knowledge about Stansbery and Associates. None of my clients deal with them to my knowledge.

>From looking at their website, they seem to be a newsletter operation as much as anything.  I have about 15 interviews with newsletter writers on gold (John Embry), oil, uranium (Martin Kafusa), silver (Sean Rahkimov) real estate (Ozzie Jurock), futures and commodities (Victor Adai), Resources in General (Elsworth Dickson, Publisher of Resource World)  etc at - mostly in the third column.
Two ethical people who specialize in selling securities, RRSPs, etc., to US citizens in Canada or Canadians in the US  are:

Dan Walkow
Seabank Financial
White Rock
Local     (604) 541-9952
L D        (866) 541-9952


Mr Darrell Thompson
Blackmont Securities
Local    (416) 874-8007
LD        (866) 775-7704
These two individuals and their companies have gone to the effort to get themselves registered just about everywhere so they can deal with a Canadian in Florida or California or Nevada, or Hawaii,  etc.

Note that because of their specialty, they tend to deal with accounts in excess of $200,000

However, both parties would welcome an exploratory call.



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