A frequent contributor, Em, e-mailed her story to me.
I am Canadian (born in Canada). My husband is American (born in the USA) and became a Permanent Resident of Canada in 1996. We lived in the USA for 12 years after we got married in 1982. I was issued a green card that year which I never used — did not earn any wages in the USA — did not access any USA benefits — did not pay into Social Security and will not therefore be claiming it for myself in retirement. We came to Canada to visit my parents in the spring of 1994. My mother was taken to the hospital just hours before we arrived. Several weeks later she passed away but my father was not able to take care of himself and his home so I stayed to help.
I only got back to the USA on brief trips (a couple of weeks each) 3 times after that — all before the end of 1997. We had to winterize our house in the USA, bring belongings to Canada and prepare our USA house for sale (finalized in l997). I have not travelled into the USA in the past 15 years but my husband still makes frequent trips to the USA to visit his elderly mother. The years 1994 to 1997 were a particularly stressful time (my father also passed away) and the last thing on my mind was my green card status but it was a few years after I returned to Canada that I heard or read that if you did not keep your green card “active” when absent from the USA for a long period it would become null and void. All these years I have felt certain my green card was null and void. I put the card away — never used it — never realized I should have returned it and filled out a form of some kind. I just found my old green card recently and happened to discover that the IRS has a classification called “US person for taxation purposes”. Now this card has become kryptonite in my hands.
RE: USA tax filing … My husband and I have filed jointly all through the years (we included a note saying I am a Canadian citizen, formerly a resident alien of the USA) but now we’re thinking it might be best for him to file separately to allow me to be completely free of the system (I hope it’s possible). We didn’t really know how to untangle his income from mine so we just did what we thought was the right thing and declared both of our incomes on the 1040s so the numbers would match those on our Canadian returns. (We have always included a copy of our Notices of Assessment with our 1040s.) Like most couples, our accounts (merely chequing, saving and GIC), were all jointly held for many years but not so now as we decided a few years back to completely separate them with my husband having no signing authority over my individual accounts (not what we would like to do but we sensed it was better that way when we saw the change in the FBAR form).
RE: FBAR filing … My husband has always completed a FBAR with all of his individual and our joint accounts listed. I never did a FBAR for my individual accounts because I did not think I was “US person” of any kind since 1994 or at least 1997 (my last visit to the USA). Apparently the IRS considers me to still be a “US person for taxation purposes” because I still possess what I believed to be a null and void green card. I have never professed to be anything but a Canadian and I cannot afford to pay an “expert” to explain to me a safe way to disentangle me from this mess.
If I try to return my old green card at this late date to get an ALPRS (I-407) I think it might put up red flags and expose both my husband and myself to some “unknown unknowns” (audits?, penalties?, more intrusive forms?, IRS and/or Treasury Dept. harassment?). Whatever I do, I cannot jeopardize my husband’s ability to visit the USA to see his mother. (I decided years ago that I would never go to the USA for any reason.) Now FATCA hangs over our heads and yet another intrusive form (i.e. 8938) has arrived on the scene with penalties as severe as FBAR. We are in a Catch 22 despite our attempts to maintain IRS compliance. Meanwhile, the IRS continues to churn out complexities which are beyond all reason and ken and threatens everyone (including those who owe no tax) with bankrupting penalties. I simply want and believe I am entitled to complete freedom from the USA tax system. For now all I can do is tentatively trust the Canadian government to protect me from IRS penalties and hope some degree of sanity prevails in the USA regarding the large net the IRS casts out to catch the big offshore tax evaders (i.e. the “whales”) while entangling innocents living abroad (i.e. the “minnows”).
Note:
FBAR = Report of Foreign Bank and Financial Accounts
FATCA = Foreign Account Tax Compliance Act
ALPRS = Abandonment of Permanent Residence Status
Form 8938 = Statement of Foreign Financial Assets
Good idea @Em. I think an important point is that if a Canadian household has even one person in it with US status – it effects everyone – as assets and potential liabilities (as per the ongoing threat of double taxation, inability to hold joint accts because of IRS arrogant demands to know even about those held with non-US citizens – compromises Canadian-only account holder spouses, inability to hold TFSAs, PRPPs, etc.). The toxic US status drags the whole household down – it is not just the effect on the US status individual. For every one of those > 1 Million US persons in Canada, there are spouses, children, joint acct holders, business accts, employer accts, Power of Attorney issues for end-of-life planning/estate issues, etc.). Each one of those households would be spending money on specialty US tax accounting and legal fees annually for a lifetime – money not being saved for retirement, or spent on necessities. If you cite those examples, they cannot dismiss it as an issue that Canada has no responsibility to ameliorate. The faster we can renounce, the faster our entire household is freed from the shackles.
@ badger
Thanks for those additional points to include. Everyone in Canada could be merely 6 degrees (or less) of separation away from a FATCA victim and the shockwave from the FATCA bomb would spread over all of Canada. This isn’t just our problem, it’s everyone’s problem.
A small update: My husband’s application for Canadian citizenship just changed from “Received” to “Being Processed”. That took 9 months. OTOH, I just sent yet another inquiry to USCIS (snail mail this time) to try to find out the status of my I-407 application. I get niggling thoughts sometimes that I might have sent it to the wrong office but the US Consulate in Calgary did reaffirm that the address is correct so who knows. (All I have is a registered mail tracking screenshot to show that someone signed for it.) I expected this to take no more than 8 weeks but it is now over 8 months. It’s a very simple form so I don’t know how I could have screwed it up so badly that they have to ponder over it for so long.
@Em,
Thanks for the good news of your husband’s Canadian citizenship “Being Processed”. May it soon be complete!
Keep that screen shot to show someone signed for your I-407 application. You did nothing stupid. Their pondering has nothing to do with your sensible steps.
@Em, good news! And according to a friend, the notice can come not too much later – and then not having to take the test could speed him on to the ceremony apt. – since there wouldn’t be the wait for a test spot first (the test, and the ceremony is done in batches of perhaps 50 or more). We’ll cross our fingers that it all goes faster from here on!
One more river almost crossed.
Thanks calgary411 and badger. Maybe my husband’s citizenship ceremony will come sooner than we were expecting (no test required). And then it’s onwards to the renunciation and finally the CLN. And yes I am definitely keeping that screenshot. It’s on the computer (plus backed-up) and printed out too. I’m getting to be fanatical about keeping copies of everything now.
*@Em, Congratulations to your husband, I don’t know where you live in Canada but I spoke with a rep about my Canadian Citizenship on Monday and he told me it makes a big difference where in Canada you live how fast the Processing Stage goes.
He said Ontario is slower than other areas, more applications to process. My application has been in the process stage since August, so maybe if you are not in Ontario your husband will hear something soon!! Finger’s crossed for him.. meanwhile I just have to wait, it has now been 14 months for me.
@ saddened123
We’re in Alberta so fingers crossed here too. Yours has been 5 months “in process”? Well that seems quite a long time and I really hope you are soon “in ceremony”. Patience is my husband’s virtue … not mine. 😉 In emoticons we want to see your 🙁 become 🙂 … very soon!
@Saddened, hang in there yourself too, sounds like you should hear something soon.
*@em&Badger, Thank you, I am trying to hang in, but getting more and more impatient by the day. I think I will cry,scream and jump up and down when the day finally comes, I will be so happy!!
*Em Stop worrying about your form. They probably had no idea what the h*** they were supposed to do with it as they probably lost any previous record of you. Well done for your husband.
@ Duke of Devon
I have made my last attempt with that letter I sent this week but even if USCIS had lost track of me you have to remember we filed joint 1040s (plus FBARS from husband, none from me) although I always sent a note saying I was a former resident alien … because that’s what I felt certain I was. I messed up on many levels I’m afraid but I really will try to worry less. I just wanted an I-407 as a back-up for the bank, in case I needed it. The IRS does not play by the rules of reason so it’s hard to understand what the heck they want.
UPDATE: Taking Stock
Unfortunately my husband inherited stocks in two US companies from his mother last year. Never having had such things before (we keep our finances simple — chequing and savings, that’s it) it took him 4 months to finally get the stocks sold. One company assigned new stocks while he was in the process of getting rid of the original inherited ones so then those had to be sold too. It was quite a learning curve as to how to accomplish all of this online. Finally a deposit was made directly into my husband’s US bank account and there were deep sighs of relief all round.
Dealing with the other company was easier because it could be done by phone but the money transfer was a bit scary. The company mailed a cheque to Canada and then my husband had to sent it back to the USA to be deposited into his US bank account so that he could finally disburse a good portion of his inheritance to his US relatives. The disbursing part was fun. We spent an afternoon preparing cards to mail off with a photo of my husband’s mother and the cheques included. We even got especially pretty stamps for the envelopes.
Now we are facing the tax filings for the CRA and the IRS for those stock sales. The forms must first be comprehended before they can be completed. The CRA forms turned out to be not too bad. They are relatively straight forward and although my husband was unsure of what exchange rate to use (transaction time or annual average) it only took one phonecall to the CRA to get an answer — do it either way, just be consistent. He plans to simply fill in the gains on Schedule 3 and attach a spreadsheet to explain how he arrived at that number. He had to do a spreadsheet anyway just to get a handle on the 1099-Bs sent to him recently.
And then onwards to the never before seen 8949 and Schedule D for the IRS. This was not so simple for us with 3 categories for short term gains/losses and 3 for long term to choose from. My husband’s stocks separated out into 3 types so 3 separate pages were required. There were a lot of numbers to transcribe accurately from the 1099-Bs. The entries were made and tallied up but then came Schedule D and constantly getting detoured to worksheets and dealing with wordage like, “When figuring which amount is smaller, treat both amounts as positive numbers.” Didn’t need that line item but there goes one’s instinct to treat a negative amount as less than any positive amount. One worksheet seemed to demand that he enter the same number over and over again and then eventually subtract the same number from itself with the resulting entry on another part of the 1040 being zero. That was a bit of head scratcher.
We’re using both our heads to get this all figured out (we hope) and now at least the capital gains/losses parts are done “in rough” for both the CRA and the IRS but my hand will be shaking when I fill in the 8949, Schedule D and actually all the usual forms for the 1040 “in good” and mail them off in June or perhaps later if my husband elects to get an extension again. It never used to be this traumatic but an ill wind our way came and we’re playing in a whole new paradigm shift now. This was an unintended dip in the stock pool for us and when this is over we will happily watch others swim and play there but not us. It used to be just my husband who had formaphobia but now it’s me too. The FATCA terror op has taken its toll. It will be quite awhile before either of us can “move on” because there are still many hoops ahead that we will have to jump through.
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What a surprise! Yesterday my husband’s notice for his interview and citizenship ceremony arrived (both scheduled for the same day). I didn’t get to tell him until today (cell phone mostly out of range while he was on the road). The trouble is, he is 1000 miles across the border in the USA right now (left 3 days ago) and it will be a terrible rush for him to get back. This was to have been his final trip to clear up the loose ends from his mother’s passing last year (i.e. mainly a storage unit full of her belongings). So yippee, with a tinge of anxiety. Here’s hoping that he can get everything done down there and make it back to Canada in just over 2 weeks. If you miss the interview you apparently have to re-apply.
May it all come together for your husband’s wrapping up things from his mother’s passing in the US and return in time for the double-header day. All the best!!
@Em, Congratulation to your husband, FINALLY! I am so happy for you both!!
All the best for your husband’s coming citizenship ceremony. Glad that your household is that much closer to freedom from the USofArrogance.
Thanks calgary411 and saddened123
Not great timing for us but the same thing happened when my husband got called in for his PR interview. I have been just bursting since yesterday waiting for a call so he would be the second one to know.
And thank you badger too!
@Em, I’m so pleased for you that your husband will soon become a Canadian citizen!
@ monalisa1776
He’s lived longer in Canada than the USA so he will soon be donning his true colours.
It was the first major step down the road to freedom. My husband became a Canadian citizen today. It was a perfect day. We spotted a red-tailed hawk on the drive to the city, Canada geese everywhere, bees still working the blooms in the city park and a heron diving in the lake. Nature was definitely onside with our elevated spirits.
I had never been inside a courtroom before so it was an interesting experience for me. I set off the metal detector with my Canadian maple leaf broach. My husband set it off with some forgotten coins in his pocket. We’re definitely not old hands at going through security. Neither of us has flown anywhere since the late 90s.
The interview was not much more than presenting the originals of the documents my husband needed years ago when he got his PR card and then later signing some paperwork. The best part was that when we asked if anyone would be able to sign my husband’s homemade declaration of intent to relinquish his American citizenship. the Citizenship Officer was absolutely delighted to do so. It is apparently something he feels strongly about — having allegiance to only one country.
For any Brockers who might be thinking of getting a document of intent signed at the time of obtaining citizenship this is what my husband used:
I, [,,,], on this date […], in the city of […], affirm my allegiance to Canada and in so doing it is my intention to relinquish my citizenship in the United States of America to avoid any conflict of allegiances. Signed […] Witnessed […]
The ceremony was beautiful — 64 people from 26 different countries were Canadianized. It was standing room only in the courtroom. After the oath the judge handed out the citizenship documents and that’s when we both got a teensy bit anxious because it turned out my husband was called up third from the last. Afterwards we celebrated with a drink and an early dinner in an excellent restaurant which features panoramic views of the city. We drove home with big grins on our faces knowing that we are both Canadians now.
Sounds like the perfect day, Em and Mr. Em. Congratulations on the Mr. becoming a Canadian citizen today and kudos for the Citizenship Officer signing his ‘declaration of intent’!!
Brings back the memory of this good day: http://isaacbrocksociety.ca/2011/12/12/relinquish-dont-renounce-if-you-can/comment-page-3/#comment-38114.
All the best!!!!!!!!
Em and Mr.Em, Congratulations, Finally the days has come! I know you must be so happy!
I am so happy for you!! YAY!