Peter Dunn, blogger, Canadian citizen, Petros, former US citizen
or
Peter Dunn, Pete the Planner
You decide.
I’ve been called a number of things: but this is the first time I’ve been called “the other Peter Dunn”. I think that is just about the most hurtful thing of all.
Today, a certain Peter Dunn, a famous media figure who is both a comedian and financial adviser (isn’t that tautology?), wrote at his blog, A minor PR disaster for Pete the Planner (emphasis mine; hat tip Pacifica):
Things were going so great…until I was mistaken for another Peter Dunn.
While I try to help people take responsibility for their financial lives, the other Peter Dunn encourages people to leave the United States in order to avoid paying taxes. This mistake was originally brought to my attention by a Twitter follower, but then I noticed the increased web traffic on my website today. People have been Googling “Peter Dunn don’t pay taxes” all day. Ugh.
So for the record. I pay taxes. You should pay taxes, and the other Peter Dunn needs to stay out of the news. The world doesn’t need two Peter Dunns.
****Update: To be fair, I don’t know the ins and outs of the “other Peter Dunn’s” perspective. I’m not trying to insult him or his cause. I just wanted people to make sure they understood that we weren’t one in the same.
As far as I’m concerned, I am Peter Dunn, and he is the other Peter Dunn. Here my reasons:
- I am older; so I have the prior claim to being Peter Dunn Prime.
- Being older, wiser and more experienced, I would not suddenly panic if people confused me with another Peter Dunn, seeing as it is a pretty common name.
- Age before beauty. I am not sufficiently photogenic to be on TV. (That’s why my gravatar is Tertia kitty, covering my face!)
- I am Canadian.
- William Shatner, Michael J. Fox, and Steve Nash are also Canadians.
- Canada is bigger than the United States.
- I grew up in Alaska, which is much larger and colder than any state that Pete the Planner ever lived in.
- I never use three dots … when I write.
- Last but not least: my website has a better Alexa ranking.
Here is the poll. (Hint: the correct vote is for Pete the Planner).
@ Blaze Did you vote twice? You know what they say, “Vote early. Vote often.”
@Petros, yes, I voted twice. Is that cheating? It seems you can use all the help you can get.
Petros, I believe I voted correctly… Please, please, if he’s serious about this, please do the radio show. You are a wonderful spokesperson for those of us caught in this nightmare. You know your stuff, but you also have a sense of humour!
@the other Peter Dunn, I hope you are serious and do bring ‘our’ Peter Dunn on your show. I think it’s hard for mainstream Americans to understand the nightmare we’re caught in. If you can help publicize that we are not tax evaders, that we are not criminals, that we are law abiding folks caught in an unfair and simply ridiculous IRS trap, it would help our cause a great deal.
The offer is real, and as of about a half hour ago, I believe the real Peter Dunn has agreed to come on the show. It will air at 7pm est on 93 WIBC FM Indianapolis. You can listen online at WIBC.com. It will also air on Sunday morning at 10am in Indianapolis. The good news is this: people listen to the show, and well, they listen to me too. In January of 2012, I was named the fourth most influential personal finance broadcaster in the United States. Mainstream America is about to hear you loud and clear.
Enfin!!! YES!!!
(that’s finally!!! in our other official language)
@Peter The Planner, Thank you so much! This is great news!!
Hey all, I just found this text on taxation. Can you help me understand how it does/doesn’t apply to your problems?
“However if you are a US citizen that lives in Canada either part time or full time for the purposes of employment then you are considered a resident of Canada..Then you must file two returns each year: a Canadian return because you live there full or part time, and a U.S. return because you are a U.S. citizen. Fortunately, this does not necessarily mean you’ll have to pay taxes to both countries but depending on your income you may be required to pay taxes in both countries..
You may be able to exclude up to $85,700 from income for US tax purposes by completing Form 2555 and attaching it to your return. Form 2555 is a special form excluding foreign earned income from taxation in the United States. To claim this exclusion you must be a bona fide resident of Canada or must have been living in Canada as a aprt time resident for at least 330 days out of the last 12 months.
You are also allowed to claim a foreign tax credit on your U.S. return for taxes you are required to pay to Canada. To claim the credit, you must complete Form 1116 and attach it to your U.S. return. Alternatively, you can claim the Canadian taxes you paid as an itemized deduction. Both the deduction and credit are limited to foreign income that is subject to U.S. tax, so neither can be claimed for income excluded on Form 2555.
If you live outside the U.S., you have an automatic extension of two months to file your U.S. tax return. In other words, your U.S. return is due on June 15 each year, rather than April 15. This provides time for you to complete your Canadian return and determine your Canadian tax liability. This is needed in case you have to claim the foreign tax credit on your U.S. return. Note that while you have until June 15 to file your US tax return if you live in Canada, the IRS will begin assessing interest on any unpaid balances on April 15th.”
@the other Peter Dunn : That’s wonderful. I did agree and it is confirmed. And the fourth most influential financial broadcaster is pretty great. I look forward to it. But it puts a kink in things for me. I don’t think I’m nearly as famous as you, so may be you do have a claim to be Peter Dunn Prime. (better stop the poll while I’m ahead).
I voted for Pete the planner. Did I donut right?
Damn u autocorrect!
@PetethePlanner and Petros – YES YES YES YES YES YES YES YES YES YES! FANTASTIC! Heartfelt thanks to you both.
@bubblebustin – LOL!
Is the interview/speech archived somewhere. i am looking in
http://www.wibc.com/podcasts/Episodes.aspx?PID=2276
@petetheplanner;
: )
Oh no, there goes another chance to close that storied ‘taxgap’ then!
Don’t want to wear you out when we’ve just met, but thought that I might chime in to clarify the US ‘tax’ issue vs. the IRS ‘reporting’ and penalty burdens.
It has already been established that the vast majority of those reporting from ‘abroad’ don’t actually end up owing any US tax. Canada and the US already have a longstanding tax treaty in force. So it is not as if those of us born in the US, or born in Canada with a US parent are escaping taxes. Often, we pay more in Canada.
We don’t want to ‘volunteer’ to pay tax twice though – or to report once to Canada, then twice or more again to the US (FATCA plus FBARs plus all the other incidental IRS forms depending on the type of account, plus the actual tax return).
The reporting burden for those outside the US is vastly more complex and elaborate than for those in the US – even in the absence of any actual US tax owed – which is the case for the vast majority filing from abroad. See the 2011 IRS Taxpayer Advocate report to Congress for corroboration http://www.irs.gov/advocate/article/0,,id=252216,00.html .
Our TFSAs alone (taxfree saving accounts) require a 6 page IRS form 3520? – and two (or is it 3 now?) kinds of reporting deadlines and forms annually. Here they’re just a kind of innocuous term deposit – registered with our tax number, government regulated, approved, and highly recommended by the Canadian government. The IRS however, in it’s wisdom, has declared them to be ‘foreign’ ‘trusts’, so the reporting is labyrinthine – even without any distributions. The potential penalties exponentially exceed the amounts in the accounts, (again, even in the complete absence of US tax owed, and on entirely legal assets – already post-tax or post-reporting and post-registration with the Canadian Revenue Agency. According to the IRS website, the estimated time to complete form 3520A: “The time needed to complete and file the form will vary depending on individual circumstances. The estimated average time is:
Recordkeeping . . . . . . . . . . . . . . . . . . . . . 37 hr., 18 min.
Learning about the law or the form . . . . . . 2 hr., 40 min.
Preparing and sending the form to the IRS 3 hr., 24 min.
the matching Form 3520 is:
Recordkeeping 42 hr., 48 min.
Learning about the law or the form 4 hr., 50 min.
Preparing the form 6 hr., 40 min.
Sending the form to the IRS 16 min. ”
Paying someone knowledgeable to do the form would wipe out the actual asset. Doing it yourself correctly would be a nightmare. Making a mistake earns you a huge penalty. “Penalties if not timely filed or incomplete or incorrect is up to 35% of the value of the property”. That applies to our RESPs too – the Canadian government regulated and registered education savings – our children’s college fund. This ain’t the Caymans.
Now add FATCA, to FBARs, and the other form penalties, and two or more penalty structures are to apply to the same asset.
FATCA estimated time to complete:
“Asked how long it would take the average filer to complete the Fatca form, Mr. Ruchelman laughed. “Forever,” he said.” (“tax lawyer in New York who once worked at the I.R.S. helping to negotiate international tax agreements.”).
and,
“Mr. Horton, who has already helped a few clients fill out Form 8938, said that for most individual filers, “even if we’re talking about a modest set of accounts, it’s going to take a full Saturday to do it.”
http://www.nytimes.com/2012/04/16/business/global/for-americans-abroad-taxes-just-got-more-complicated.html?_r=1
And, remember – all that reporting is not about calculating any actual tax owing.
But, the US Treasury says: “When taxpayers overseas avoid paying what they owe, other Americans have to bear a disproportionate share of the tax burden,” Emily McMahon, the Treasury’s acting assistant secretary for tax policy, said in the press release. “FATCA is an important part of the U.S. government’s effort to address that issue and these regulations implement FATCA in a way that is TARGETED AND EFFICIENT.”
See what even the GAO has to say about the problems they already foresee with FATCA and FBAR duplicative and confusing reporting: http://www.gao.gov/products/GAO-12-403
“Reporting Foreign Accounts to IRS
Extent of Duplication Not Currently Known, but Requirements Can Be Clarified”
GAO-12-403, Feb 28, 2012
“What GAO Found”:
“Some of the information requested on the Form 8938 and FBAR is duplicative. Both forms ask for the same or similar information on the filer, foreign financial accounts, and financial institutions where accounts are held. Form 8938 asks for additional information not required by the FBAR, such as other foreign financial assets and income. Since the Form 8938 is a new requirement beginning after 2011, data are not yet available to determine the number of filers subject to these duplicative reporting requirements.”
“A variety of tax commentators, taxpayer representatives, and individuals stated that these duplicative reporting requirements have created confusion. They report being unclear about what and how information should be reported on both forms. Neither form provides filers any explanation as to why duplicative reporting is necessary, where the duplication occurs, or how the information being requested is the same or different.”
“Without data on Form 8938 filers, the benefits and costs of taking actions to reduce duplicative reporting cannot be determined. When Form 8938 filing data becomes available, Treasury’s Office of Tax Policy, IRS, and FinCEN would have the information needed to assess whether cost-effective steps could be taken, including allowing filers who would normally have to submit both forms to substitute the information reported on one to meet the requirements of the other.”
So, they’re going to implement it first, with the draconian fines for even accidental errors, and then maybe decide whether it’s ‘cost effective’ for them to do anything to make it easier for us to ‘comply’. If they get around to it. But it will probably be considered more cost effective to do nothing – just let us struggle with it – as we already do with FBARs, and the other forms (again, see 3520 and 3520A), or pay a US tax expert (multiply the hourly fee times the estimated time to complete = ?). Plus, as a bonus, the more mistakes we make, the more penalties will accrue – even in the absence of any US tax owed.
The duplicate overlaid penalty chart for FATCA and FBARs is a ‘must-see’ – but only if you’re in robust health and have nerves of steel.
That’s all in the absence of any US tax owed. Zero. Nada.
So, yeah, we don’t want to volunteer to pay taxes twice, but the real issue is the useless, duplicative, fraught-with-dangerous-penalties account and assets reporting.
Wherein every year is an adventure in a minefield. With no US tax owing. As my dad liked to say about things like this, (profanity warning) ‘it don’t make no t–d”
What’s not to like?
The $85,700 is adjusted for inflation so it is more like $92,000 now. It is for wages from an employer or self employed income, good for a working person like me, but not so good for a retired person. The foreign tax credit works hand in hand with the FEIE, you can not claim a tax credit for Canadian taxed paid on income that is excluded by the FEIE. The deductions also differ, I can not deduct contributions to my Canadian Retirement Account as I do in Canada, but I think I can claim my mortgage interest. I pay lots of taxes I pay Canadian Federal Tax, I pay a provincial tax, and I pay property taxes that I think also my be claimed. All at a higher rate than equivalent US taxes. When I file US taxes I will calculate only federal taxes as I don’t live in any of the 50 states. I have done some quick calculations, Canadian Federal plus my Provincial taxes are far and away higher than US federal taxes, for the sake of simplicity I will probably claim my Canadian taxes as a credit, and not even bother with any of the deductions I am entitled to and still owe zero.
@desi,
Perhaps :
Friday, April 20:
7p-9p Pete the Planner
@PetethePlanner, okay, I have to chime in, just can’t keep my mouth… and then there are those people who left the US decades ago, became citizens of other countries and thought they were done with the US, only to find the IRS wants to claw the back in order to penalize them for reporting penalties that can take their entire retirement savings (and more) and leave them destitute in their old age – and therefore a burden on the country they actually live in.
Even if this Peter the Planner is famouser than me, I have confirmed that he is younger. He is a gen-y, according to this website: http://petetheplanner.com/meet-pete/ Which says, “He has suffered through many of the challenges that other Gen Y-ers have.” Peter Dunn Prime (moi) is a late baby-boomer. So objectively speaking, he is the other Peter Dunn.
@Em
I will remember that bunkie. Thanks for the offer.
@Petros
What day will you be on Peter the Planner’s radio show. I don’t want to miss it.
To both Peter Dunns: you have made my day. Thanks from Denmark. 🙂
Well, it’s official; Karma is capable of a sense of humour! I’m really looking forward to the radio show – gonna’ make some popcorn!
@Petros: Go for it! The more we can get our story into the media in the US, the better chance we have of perservering. (I voted right, for Pete the Planner as the “other”).
Am thinking that cafreeb would want to know – if anyone can pass on the information.
@ the other Peter Dunn – Thank you for inviting the original Peter Dunn on your program. Perhaps more people in America will learn that taxpaying US citizens who were proud to be Americans are being forced to give up their citizenship to survive.
As an American residing overseas who has elected to maintain US citizenship in spite of the business case against it, I would like to advise you to please, please, never give financial planning advice to an American who is planning a move overseas or resides overseas. You will have to relearn almost everything that you knew about financial planning advice.
The rules for overseas Americans are unnecessarily different and cumbersome. It is expensive to comply with them. Penalties for innocent errors are life altering. The rules have been designed to prevent high net worth US residents from hiding their wealth overseas. The rules have also been designed as tax concessions for particular US industries. The interests and realities of the average American who lives overseas has never been considered.
While you mention the Foreign Earned Income Exemption (FEIE) of USD 92,500 that probably makes US resident Americans salivate and wish they could get something like that, realize we need this because we are taxed in our countries of residence already. It is a way of preventing us from being taxed twice. If taxes are lower than in the US, it is likely there is some kind of consumption tax in that country (which we do not have in the US) and overseas US citizens need this exemption to be able to live at the same standard their local counterparts do.
The FEIE only applies to earned income. When it comes to investments, here is where many Americans who were residing overseas following the financial advice that was ingrained into them from their time in America have been creamed. Just a few of the ways are (and I repeat, these are only a few):
• Mutual funds – never ever invest in a foreign mutual fund as an overseas resident. It is not illegal, but in a 1986 concession to the US mutual fund industry, the paperwork was made so complex that it is difficult to do the calculations yourself. The IRS estimates that per mutual fund, the time needed is: Recordkeeping: 13 hrs., 37 min; learning about the law or the form: 8 hrs., 38 min; preparing and sending the form to the IRS: 9 hrs., 14 min. So you run up expensive accounting fees. Additionally, the mutual fund needs to be taxed as if you sold it each year which can mean that you pay tax on phantom gains.
• Forget about retirement planning by joining a tax free retirement plan in your country of residence. The US does not recognize the tax free nature of foreign IRAs. So you get taxed on it every year by the US and taxed on it when you finally take the distribution by the country you reside in.
• So now you say, well then just invest your money in the US. Thanks to the Patriot Act and Know Your Customer rules, many overseas Americans are having their US bank accounts closed because they have a foreign address. Being a US citizen does not help you to obtain or keep a bank account in the US.
• Report every foreign bank account, life insurance policy, debit card (including foreign pre-paid phone cards and supermarket customer cards) and its highest balance to the IRS. This will also eat up your time in record keeping.
• If you make a reporting error with respect to your bank accounts and do like many hapless overseas US citizens did during 2010 and 2011 and follow the recommended procedures for correcting the omission, you will be told that the current policy is to treat anyone who makes this kind of mistake as the equivalent of a US resident tax evader and you will be expected to pay 5% to 25% of your overseas assets (and an overseas US citizen may only have foreign assets) – even when there is no tax loss or minimal tax associated with the error.
To add insult to injury, due to citizenship taxation, many foreign citizens who find that they have a US parent or even grandparent, even though they have never lived in America and have never requested any of the services supplied to US citizens, are now being told by the IRS that they are considered US citizens and their penalty for not knowing this will be to give the IRS 5% of all their life savings and all will be fine and good.
Amanda Klekowski von Koppenfels from the University of Kent, Brussels, has recently done a study of overseas Americans to find out more about them. She surveryed over 800 overseas Americans and found that the main reason they are overseas is because of their partner or their family. The second reason is employment. Americans overseas are mostly overseas because of family or work, not to evade taxation.
Citizenship taxation is bad policy. It is hurting decent tax paying law abiding US citizens who happen to reside overseas. It if forcing many to take actions they never thought they would take. As one recent renounciant told the State Department official when he told her she was no longer American, “I will always be American. I will always carry that with me. I am just no longer an American citizen.”
@petetheplanner
Thanks for interest in these issues! It’s a big story – and mostly ignored by mainstream media. For background, it’s important to note:
1) This is not about tax planning for Americans temporally residing in Canada! Many of the more than 600,000 US-born Canadians have been Canadian citizens for decades, and are deeply rooted in Canada, a nation of immigrants.Their only relationship to the US is birthplace; most have no US economic ties, income, residence, or assets. Under US law, many lost their US citizenship by swearing an oath of citizenship to Canada, only to be covertly “reclaimed” by the US decades later ex post facto. Many are also Canadians who were simply born in the US while their parents were visiting, or because of cross-boarder maternity hospital arrangements.
2) Through aggressive application of obscure US anti-money laundering laws, these Canadians awoke to find their everyday (and totally legitimate) Canadian banking, investment , education and retirement accounts were suddenly illegal “undisclosed offshore accounts” to the US.
3) While this has stirred up fear among hundreds of thousands of US-born Canadians, the Canadian government has assured them it will not assist in collecting any US taxes or penalties from Canadian citizens. The US has no actual power to collect tax in Canada, and Canadian courts will not enforce any foreign tax claims. However, the ill will and distress is vivid and growing.
Good luck and thanks for listening!