Win Win for U.S./Many of the NINE million Expats who may start voting would forgo the relief checks (spent overseas)/They want Residency Based Tax as per Rep. Platform (Promise kept)/Most do not pay tax BUT pay expensive fees to file/Save $$ on checks/Google it
— Anthony Scaramucci (@Scaramucci) April 17, 2020
To see the replies click on the part at the bottom that includes “are talking about this”.
No evidence to date that the IRS is using FATCA data to proactively search for non-compliant non-residents. (FATCA also easily avoided in some countries, though obviously not others.)
Does the “no evidence to date” argument calm you? Remember, there was “no evidence to date” that FBAR would be used for 40 years.
In case differs, of course, but as it looks like I am eligible for assistance from Japan, not a good idea to double dip, methinks.
@Barbara
I think there’s no issue with anyone who’s been dutifully filing suddenly receiving the stimulus money – as you said, it’s not like they can decline to accept it (though they could always tear up an actual paper cheque if it really offended them). Obviously a bit stupid for the US government to send overseas money that was meant to stimulate the domestic economy, but they needed to do this quickly and don’t seem to have considered the possible existence of non-residents.
What’s more up for debate is whether it’s wise or “ethical” for someone previously non-compliant to file in order to collect their slice of pie, and whether they file accurately or just fill out the simple single-with-low-income non-filer form to do so. That’s an individual decision. The money could be spent on renunciation, food and rent, or fun toys, as each person’s situation dictates. I don’t think this issue will have any impact on any domestic US discussion about CBT or FATCA because, as far as I can tell, there is no such discussion.
@Japan T
I have no reason to be calm or not calm because I’ve not let myself be subject to FATCA reporting. If I were, I’d be calm for as long as the current tax treaty is in place. If that showed signs of changing I would renounce, pronto.
Lucky for you.
And the discussion of tomorrow is always the same as the discussion of today …
@Japan T
Indeed. But you asked.
1. The Person: Is there a difference between those who have been noncompliant because they simply didn’t know/understand and those who knew all about their U.S. tax obligations and chose to ignore them?
2, The Process: “Wise or “ethical””? – these are separate issues (it would be neither wise nor ethical to treat them as the same).
3. The accuracy of the information: If this were not an IRS form, would you view the accuracy of the information provided to be an issue? Is it a good idea to do things that would/could reinforce the notion that Americans abroad are cheats?
@maz57 Not to forget the 50% SS spouse benefit.
@RH.
No worries, I am happy for you and for all who need not be concerned about this.
@USC Abroad
I would answer “No.”. to all three of your questions.
I want nothing to do with them, whether they are working to deprive me of money and time or if they are trying to throw. money at me. Just leave me be.
@Ron Henderson I have no US assets but my parents live there so at some point I’m likely to inherit a house and/or money (unless the American one dies first and the Canadian one cashes out and moves back). We’re not talking a gigantic amount of money, but I’d hate to screw it up.
I’m in a bit of a mess with FATCA because I have money spread out over 3 institutions, 1 of which knows I’m American. I know I need to close these accounts and move the money, but they made me fill out a US withholding form for my RRSP so I’m not sure if that information sticks with the money in some way (I know the actual account isn’t reportable but what happens with taxes on the funds in the account?). And there’s also the concern of never being able to be honest with a financial advisor or a lawyer, and if that somehow comes back to bite me or my spouse.
@cee
I’m not sure that being “halfway compliant” is a great strategy here. It fuels the full suite of anxieties.
@cee
There seem to be no points given for effort.
I don’t think it’s a great strategy either. (Though what’s now “halfway” compliant was “actually compliant” for a while just because of my age and life stage: making minimal money and not contributing to any retirement accounts.)
I’m kicking myself for not renouncing when I had an appointment in 2018 – I broke down crying and ran away. Last year I was just like “Screw it, not filing anymore” but I’ve kind of made a mess of things by 1. asking for my stimulus money and 2. not moving my money out of my reportable accounts. So I don’t know what to do.
@cee
There is no problem with an Alien inheriting from a US estate. If I were you I would change the American flagged account and renounce whenever this is possible. The IRS were short staffed and underfunded before covid so its unlikely you will ever hear from them. You are still a US person so fully entitled to your stimulus money, just put it towards your renunciation .
@cee
At very least close accounts at the one bank that knows of your US citizenship. Then return to full non-compliance. If you need to renounce to sleep nights, do so. Otherwise you can simply behave as a non-US person. The IRS doesn’t seem to car3 about non-residents, one way or the other. Your inheritance should not be in jeopardy (though might be easier if your parents sold the house while alive, then the estate just cuts you a cheque).
I already told them not to make me executor of their estate, whether I’m still a citizen or no.
Would it be an issue moving an RRSP with US withholding tax information into a clean RRSP? I took money out of it a couple years ago for a down payment, so I’m extra worried about that because the US probably wouldn’t appreciate it if they knew. I’ve met with financial advisors and a lawyer with all these questions but they’re all useless because obviously they can’t recommend that I do something illegal.
I can’t see why there would be an issue because of FATCA – the old bank won’t inform the new bank that you are a US person. You will want to ensure that you transfer the RRSP without simply cashing it out, for obvious (Canadian) tax reasons.
Stop worrying about what the IRS does or doesn’t know. It can’t touch you.
@cee
Banks don’t communicate, they are in business to serve only themselves.
@ cee
In my experience, institutions don’t like it when someone tries to transfer their RRSP somewhere else and quite often charge a hefty fee to transfer out. If you discuss your plans with the new institution they will often agree to offset a portion or all of that fee in order to attract the new business.
If anyone asks why you want to transfer, just tell them that the performance was underwhelming and you are looking to do better. No red flags; its just business and happens all the time. Naturally, you already know the correct answer when the new outfit asks the inevitable question about “are you a tax resident of any other country” or whatever form it takes.
Remember that under the IGA, Canadian registered accounts are not FATCA reportable. Even if something is reported, nothing will come of it because income in those accounts is not taxable by either the US or Canada until funds are actually withdrawn from the account. (Even converting to a RRIF at age 71 doesn’t trigger tax liability until the mandatory withdrawals begin.)
If you have years to go before hitting age 71 and are planning to renounce, you could opt to do nothing, inform the institution when you have your CLN so as to remove that US taint, skip the final tax return/Form 8854 rigamarole, and consider yourself home free. Meanwhile, feel free to stop filing US returns; the IRS will never miss you. (I stopped suddenly a number of years ago and have heard absolutely nothing from them since.) The IRS doesn’t care about this and they are powerless to do anything about it even if they did care.
One question . Is the US withholding tax on rrsp done at the source (immediate after minimum witdrawal) . Never heard of such a beast.
As per Cee’s reference.
Cree You are overthinking this and worrying for nothing. A Canadian RRSP is not reported to the IRS. There is no such thing as a RRSP. with “US tax withholding information “. I have no idea what you are talking about. If someone withdraws from an RRSP it is taxable income in both countries but the US has absolutely no way of knowing about it. If you chose to file US taxes and declared a withdrawal, there would be an offsetting foreign tax credit. The rule of thumb is don’t tell them anything they don’t already know.
The IRS is a paper tiger. Contrast them with CRA. I e filed my Can tax return yesterday morning. By the afternoon it was listed as ‘assessed’. I know they can go back and ask for more information but they seldom do.
If money is withdrawn from an RRSP, by a tax resident of Canada then, the whole amount is generally included as Canadian taxable income.
If money is withdrawn from an RRSP, by a U.S. citizen living in Canada, then the amount withdrawn that represents income earned by the RRSP itself would be taxable in the United States.
The US does not allow a tax deduction for the contributions made to the Canadian RRSP. Under the tax treaty income earned (growth) inside the RRSP is deferred. The portion of the withdrawl that is a return of the RRSP contribution is not income from a U.S. perspective. This is because the amount that represents the contribution was subject to U.S. taxation at the time it was earned.