Canadian citizen with green card has not been filing 8891, TDF or maybe 5471 forms -

Canadian citizen with green card has not been filing 8891, TDF or maybe 5471 forms

Hello David,
I am needing some help to bring myself into compliance with the IRS requirements for reporting foreign accounts.  I have RRSP's and a Trust account that have been over $10,000 for most of my time in the states.
I think that I will need help to change my income tax returns (amended 1040x) and file the TDF-90 (I understand that I cannot file the TDF-90's retroactively).  I also understand that this is due June 30th and has to be sent to Detroit.
I have been in the states on a NAFTA Trade visa (1997) then green card (2002).
I plan to call and schedule an appointment - it would be helpful to know what documents you may require.  Of course I am also very nervous as I have been reading about the kinds of penalties that can be assessed; I really just want to take care of this in the correct manner.

david ingram replies:

If you have been remiss, I can assure you that no one I have dealt with has been fined when they have come forward voluntarily.

However, you should be filing retroactively for the past six years plus the current year which means 2001 to 2007 for the TDF-90.

The form 8891 did not exist for three of those years but we use it for the reporting.

What I need is the Dec 31, year end statements for 2000, 2001, 2002, 2003, 2004, 2005, 2006 and 2007 for each of the RRSP accounts for the TDF and 8891 forms. 

This is because we (you) need to report the difference in US dollars on form 8891.

The TDF 90-22.1 forms are much simpler.  They require the highest balance for each of the years in US currency. Each RRSP requires a  8891 and a TDF.  The trust account only requires a TDF.

The other thing you may be affected by is the possibility that you are a signer on parent's or other relative's bank account for estate or 'just in case' reasons. If so, these accounts have to be reported and another person from Seattle had to report his signing authority over a non-profit skiing club's bank account at Whistler. 

Or, you may be a 10% or more shareholder in a family business in Canada.  If so, you will also need to file US forms 5471 and schedules. this has a minimum penalty of $10,000 for failure to file.  If the IRS sends a specific request to file, and you fail to file, the penalty is $10,000 for the first 90 days and $10,000 every 30 days after to a maximum of $50,000 which added to the first $10,000 makes $60,000 in total.

I can not see you easily until after June 15th unless an absolute necessity and then it will likely be 9 PM.

The following older email from June 2007 shows why the six years is necessary.

This is not the result of a question but is the result of an IRS Tele-conference on June 20, 2007. 

The subject was the reporting of foreign banks on form T D F 90-22.1 and RRSP and RRIF accounts on form 8891.  .

In particular, the tele-conference made the point that  June 30th  "IS" the deadline for the TDF forms and that fines are being increased and in particular, there are / will be severe penalties for non-compliance. TDF forms have to be filed for any and all non USA accounts you have signing authority on which means if you had a rental condo in Mexico or Fiji, that account would have to be reported as well.

It would seem that there is NOW a minimum $10,000 penalty for failure to file the TDF form although that is in the policies somewhere and not on the form. The maximum penalties of $500,000 plus 5 years in jail remain as before.

I know from other sources that some 1,000 clients of former advisor Jerome Schneider are in the process of  being fined as I write this.

I also admit that I have not worried much about the June 30th filing date in the past.

However, the teleconference made the point that practitioners (that's me!) are subject to fine for not following up on these filings.

As I write this Terry or Phyllis from the IRS is making it very clear that RRSP accounts must be reported but that the Company Pension does not have to be reported on form 8891.  The penalties for failure to file form 8891 are 35% of the money in the RRSP PLUS 5% for every year not reported PLUS the tax on the full amount -- OUCH!

So--- if you have not being reporting your foreign accounts - report now.

AND, they also made the point that everyone with foreign accounts MUST file schedule B, even if there is no earnings form the accounts.

AND, they (the IRS rep) also made the closing  remark that if you have NOT been filed in the past, taxpayers should file back SIX years.


david ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no rental
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.



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