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*Given your facts, I believe very, very few people here would bother. Cheers, Duke
@Old&Simple, here are the things that could go wrong with your plan: (1) You could win the lottery; (2) you could inherit a bunch of money; (3) you could decide to travel to or through the United States and be stopped from entering on your CDN passport — this is becoming more likely every day. None of these things are worth losing sleep over.
With the level of income and assets that you have, none of the problems of US expats are particularly threatening unless you hand your neck over for decapitation. As a Canadian citizen in Canada, you are out of the reach of the United States tax system. Best thing is to keep it that way.
You may wish to obtain a CLN. I don’t think it is risky for you, but it may be more trouble than it is worth, since you may have to deal with not infrequently obstinate and stupid people at the State Department (US consulate) who know neither the laws of the United States nor your civil rights. My own experience was without a hitch but others who have tried to relinquish have run into trouble, especially in Ottawa. But it is free to tell them you relinquished, and it isn’t a particularly time consuming process (fill out a five page form, make an appointment, take the appointment–should be around 3-5 hours not including travel to and from the consulate), unless the imbeciles at the Consulate start to give you trouble.
*Hi Petros.
In the unlikely event of 1) or 2) , IRS still couldn’t collect, right?
One more question…are there official threshhold amounts that financial institutions are supposed to use to establish which accounts or customers to report under FATCA?
*O&S. Can’t collect. The new hampshire state lottery and power ball taxes are deducted at source. I disagree with Petros about travelling to the US on a Canadian passport with a US birth place. Hundreds do it every day. A very few times it is mentioned So far no Canadians have been stopped that we know of.
Last question- under $50,000 are exempt , under 1 million are subject to ‘an electronic search for US indicia” They don’t have your place of birth & they have you down as Canadian-> no worries .
RRSPs will be exempt.
*By the way, The 1Million dollar figure should give all you worry warts a good idea who this jihad is directed at. The irony is that most millionaires will know how to protect themselves thus causing this whole FATCA fiasco to have been for naught.
It’s so comforting that the written law might be difficult to enforce
http://www.irs.gov/pub/irs-news/ir-98-59.pdf
Here’s a good one–
NEW IRS MISSION STATEMENT EMPHASIZES TAXPAYER SERVICE
WASHINGTON — The Internal Revenue Service on Thursday unveiled an
overhauled mission statement to reflect the agency’s new emphasis on serving
taxpayers.
The new statement is simple and direct. The IRS mission is to “provide America’s
taxpayers top quality service by helping them understand and meet their tax
responsibilities and by applying the tax law with integrity and fairness to all.”
The new language represents the new direction for the IRS, which is working to
transform itself into a customer-oriented organization. The mission also reinforces the
agency’s duty to administer the tax laws fairly for everyone.
“This mission statement reflects the new attitude at the IRS,” said Charles O.
Rossotti, Commissioner of Internal Revenue. “Our top priority is putting the interests of
the taxpayers first, and this is spelled out simply and clearly in the mission statement.”
@MarkTwain- balderdash. This is just government propoganda that is meant as a ready defence for the IRS in its pursuit of citizenship based taxation. They can’t deny that citizenship based taxation is oppression but they will quickly roll this out to any foreign government that opposses having it applied to their residents.
They are totally evading the whole problem.
What will do this do for the deceptive practise of the, “last in time rule”? What will this mean for the elimination of the, “savings clause”? This mission statement is meaningless without actual changes being made to the law.
gosh. How could we not Believe it. THey are telling us how nice they are going to be
@Mark Twain
1998 – 2013. RIP How quickly they forget their mission!
*Hey All… I am a USC who has been living and working in Hong Kong since 2001. Up until this year, I have been pretty cool w/ my tax situation. Specifically, the money I made came well within the foreign exclusion thresholds, and I simply filed and forgot. It didn’t hurt that my dad was a CPA and able to advise for some basic stuff. All that changed last summer when my Dad passed away, and we decided to move back to the US to help out my Mom. Suddenly, things are looking complicated. First, we sold our flat in HK, and thanks to a crazy property market, were able to bank about 600K. Unfortunately that put us into Form 8938 territory. At first I considered getting “creative” with the gain reporting before realizing my real tax impact on the gain after exclusions and foreign tax credit is under US$10K… and decided it’s not worth it. However, I’m finding full disclosure to be a nightmare of it’s own. In HK we are forced to put part of our earnings (w/ employer contributions) into a retirement fund (Mandatory Provident Fund aka MPF, which operates similarly to a mutual fund). I have always reported my own contributions as income but not my employers (it doesn’t show up on our payslips, and to be honest, I never really worried about it). From what I have learned – and there’s still a lot of ignorance – my best bet is to declare my MPF holdings for last year as a PFIC via form 8612 along w/ the 8938. I have always been very diligent with FBAR, except for the fact that I haven’t included the MPF holdings… not sure if I’m even supposed to. The gains on the MPF are maybe 1K per year tops. I also hold some local HK stock (an actual cert) but it’s worth less than 5K USD.
I’m already a Hong Kong permanent resident and have at least one bank account which has absolutely no evidence to me being a US citizen, and have been thinking of just liquidating everything which is a pain to report and dumping it in there. On one hand, the IRS knows I’m in HK, and in ten years hasn’t chased me about having an MPF.. On the other hand, I’m sure they’re happy to unpleasantly surprise me, which is why I’m leaning toward honesty.
My primary goal at this point is to be able to repatriate my HK money back to the US with as little pain and cost as possible. I’m willing to do whatever works best, from being totally honest (provided my past ignorance doesn’t catch up to me) to being completely corrupt (provided I can get away with it). I’m not a whale by any means… I make around 100K per year and the home sale is the most money I’ve ever had in my life. I’m not even sure how visible I will be to the IRS given my situation… I just worry what will happen when they see 100K wires being initiatied all of a sudden.
With all of the above in mind, I’d by very appreciative to hear your thoughts on how I might best proceed. Thanks so much in advance, and sorry for the long post!
@HKGS
Oh my god, your story gives me a headache. The poster child for the complications of Citizenship taxation. We have a blogger here who lives in Hong Kong, (Eric) and since it is well past my bedtime, I will tweet him to see if he can take a look at your comment with suggestions. In the meantime, please sign the petition and get all your HK USC mates to also do so.
I will check in in the morning and see if you get an more specific answer, and welcome to IBS.
@HKGS, it sounds like you just need to find a competent cross border accountant who can help you make the disclosures in the least painful way. I wouldn’t, under your circumstances, enter an OVDP! You are not a criminal.
Most of us here are not planning to return to the US, and so your scenario is not typically one we’ve dealt with. In most of our cases, the goal is to escape the jaws of the beast. Seems to me like you are flying fast back into the jaws. Good luck with that.
@ Just Me… thanks and it was Eric’s posts that helped lead me to my current state of paranoia and dread. I am hoping my ace in the hole is that I’ve been a good boy and filed all my stuff each year, and that having a PFIC magically appear (or not :P) will not set off alarm bells. What I’m really afraid of is that SFCP and OVDI may have turned on some lights in the ole’ IRS as to what kinds of income to look for from those living and working in HK. I’m still debating whether I was happier being blissfully unaware of FATCA, or having some knowledge of it so that I can try to work around it.
I recalled previous posts that green cards expiring still mean that a US person exists. Is my memory right? Where would that be referenced in tax code? (I met 3 US persons at my new bank today—one of them was the banker)
Hello
I am really impressed by the information present on this website. I am very stressed with certain doubts that I have and hope that I can get some help here. Additionally I am already talking with my CPA.
I completed my MS in 2011 and started working in June. I moved to H1B in october 2011. At present I am in India visiting my family and father gave me details of certain investments that he has done for me. Following is a brief snapshot
1. Public Provident Fund in India
2. LIC(Life Insurance Company) Policy in India
He has been putting money in these two on my behalf since I was a minor and continues to do so. I should point out that I have not invested a single paisa in these accounts and its all his own income.
Now I am in a fix on what is the process of disclosing these investments. Everything I read is basically dealing with NRIs investing money and not family members on there behalf.
Any help or information would be really helpful
@Mark Twain: I recalled previous posts that green cards expiring still mean that a US person exists. Is my memory right?
Yes. From the horse’s mouth:
http://www.irs.gov/pub/irs-pdf/p4588.pdf
Big ad here for the TFSA – that all of us in Canada with the US indentured tax slave status are prevented from using – since the US and IRS treats it punitively as a ‘foreign trust’, and taxed despite the ‘taxfree’ status conferred on it by the Canadian government and CRA.
http://www.moneyville.ca/article/1311349–finance-minsiter-jim-flaherty-on-his-totally-fantastic-savings-account
Absolutely no mention of the dangers to us of having a TFSA (3520 and 3520A form requirements and usual draconian and confiscatory IRS penalties). That’s in addition to the usual FBAR reporting and penalty regime.
Flaherty and the federal government just keep flogging the TFSA (and RESP, and PRPP) despite knowing that they’re involved in talks to implement FATCA, and that the current IRS jihad against those in Canada and elsewhere means that holding any registered savings accounts come with IRS burdens, endless incomprehensible forms, and are subject to layers of penalties that can eat up or exceed any possible savings and principal invested in them.
I’m a Canadian-U.S. dual citizen because my mother was U.S.-born and took out papers a couple decades ago listing all her natural children when I had a sister move to the U.S. for work. I obtained a U.S. passport and was issued a Social Security number. However, I’ve never lived, worked or paid taxes in the U.S. and my economic situation is modest with 50K or less annual income and under 200K in net assets outside of RRSPs. I was under the impression that under the tax treaty I didn’t have to file U.S. taxes and I’ve become really alarmed over the past couple years reading all the articles published about the FBAR and FACTA, which I had heard little about and at first didn’t believe applied to me. One accountant I talked to told me to stay under the radar for the time being until the rules change, but I wonder if this is a safe strategy? I simply don’t travel into the U.S. anymore, even to visit siblings and other relatives, as I’m afraid of being stopped at the border. The situation is really stressing me out especially as I inch closer to retirement.
@Dazed, thank goodness for your accountant. If you were Canadian born, it is probably unnecessary to do anything, since (1) the United States cannot establish a tax liability against you; (2) even if they could, they would not be able to collect it.
If asked to prove you’re not an American by your bank (which hopefully will never happen) show it your Canadian birth certificate.
Also, you will want to avoid investments in United States, especially property.
*Dazed. Echo Petros’s post. When did this all occur? Is your US passport current? Above all don’t panic or do anything rash. You are in a very safe position compared to many who post here.
@Petros, I’ve taken the accountant’s advice, so far. But it’s like I live on one side of a new “iron curtain” as I feel that I can’t travel into the U.S. anymore to visit my relatives or for any other purpose. Since about one-half of my relatives live there this imposes a psychological burden of sorts. It’s really quite sad that the U.S. treats its own citizens this way. I would comply with the U.S. regime were there a reasonable way to do so. I thought the U.S. was going to come out with new rules sometime in 2012 but I find so much confusing information on the internet that I don’t know what to think. Were such changes made? For those with modest income and/or assets the U.S. should come out with a plan that allows for declaration of status and imposes filing obligations going forward. But to insist on filing backwards with the threat of unknown penalties when so many of us didn’t understand the filing regime is draconian and inhumane.
@Dazedandconfused
Your accountant seems to have a lot of faith that the rules will change. So far that faith is unfounded, by all estimates. It takes people to make change and the US’s extraterritorial taxation of its citizens has a built in silencer of political dissent. Would you be willing to sign the petition?
White House Petition to Replace Citizenship taxation with a Residency Based System
Any choice you make (or don’t) will have a price.
@bubblebustin, the rules changing on the US side won’t make a difference because CRA will not collect for the IRS.
The issue of crossing the border is for now ok, meaning that you can cross and they can’t arrest you. If you use your US passport, they may ask if you’ve been filing your taxes, etc. Just ask then, is that a prerequisite for crossing the border? You don’t have to answer that question and it is none of their business. They can only detain you and they would have no grounds on which to arrest you. That you didn’t file taxes? How do they even know that you made money? They don’t. So just go across the border and if you don’t want any problems use your CDN passport. Then let us know if you have any problems.