US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
@Sam Fenn, I only did mine up to the renunciation date. I wasn’t a citizen after that date so what was in my bank account post after I renounced was none of the US’s business.
http://blogs.angloinfo.com/us-tax/2014/09/08/too-many-days-in-the-us-they-know-everything/
Too Many Days in the US? They Know Everything!!!
September 8, 2014
……”…Tracking Your Every Step
Did you know that the U.S. Department of Homeland Security is tracking your entrance to and exit from the USA? What better way for the IRS to determine if you should be treated as a US “resident” for income tax purposes?
The arrival and departure date records of nonimmigrant aliens entering and departing the United States are maintained in the U.S. Customs and Border Protection’s Nonimmigrant Information System, available on the I-94 website. You can access these records quite easily (and so can the IRS). If you are a nonresident alien, NRA, for US income tax purposes, you should carefully monitor your days of physical presence in the US. You can now view the dates that you have entered and exited the US on the U.S. Customs and Border Protection I-94 website. Simply enter your name, date of birth, and passport details: Travel records are available for the past 5 years.”……….
@Badger
I knew from what people have told me that border guards can look back into your crossing history. What this means is that should they integrate with IRS, some Canadians will have some whopping tax bills, as the time allowed to file a closer connection form or to make a treaty election has LONG EXPIRED! I predict an amnesty program for hapless snowbirds in the not too distant future.
@bubblebustin,
it may be that the US entrapment of snowbirds via the mismatch between the tax rules and their desire to attract more Canadian snowbird tourism dollars ( http://www.ntaonline.com/articles/index.cfm?action=view&articleID=2810§ionID=31 ) will result in an embarassment that will get substantial media coverage like this http://www.thestar.com/business/personal_finance/retirement/2013/05/31/us_law_could_be_a_snowbird_tax_timebomb.html . Canadians really don’t understand the mismatch in the US rules, and either US politicians don’t either ( ex. https://www.govtrack.us/congress/bills/113/hr1354 ), or the entrapment is deliberate.
On the other hand, international developments may put a spoke in JOLT’s wheel http://thehill.com/policy/transportation/215813-fears-mount-of-isis-infiltrating-america , even for Canadian tourists.
out of curiosity I looked mine up. it doesn’t appear to be very reliable.
Montreal Pierre Elliott Trudeau airport is listed as ‘Mon-Mount Cook Airport’ Mt Cook is in New Zealand
Pearson in Toronto is listed as ” TOR- Torrington” Torrington is a hamlet in Alberta
Yvr, Vancouver is listed as “VCV-George AFB” George AFB is a decommissioned airbase in California
Palm springs is listed as unknown.
So, no land crossings from Canada in that online database?
@The Mom, why would you think that? All crossing points will be linked to the online database. It’s not much good if it isn’t.
Does anyone understand where the ‘exit’ info comes from?
As far as I remember my passport is not screened on exit, only the airline desk agent has that info.
Do the airlines pass exit info onto I 94 homeland security?
@Heidi,
I don’t know about the rest of the world but in the case of Canada, the two countries exchange entry information:
http://www.moodysgartner.com/canadian-snowbirds-beware-2014-border-crossing-rules-increase-stakes-for-day-count/
@Medea,
“@The Mom, why would you think that? All crossing points will be linked to the online database. It’s not much good if it isn’t.”
Something I read yesterday made me think it would not work for those checking on frequent land crossings, like cross border shoppers, snowbirds that don’t fly, etc.
I checked the database and it provided no land crossing information on me. I travelled into the country by land this year, staying for a week before departing by land. Result was “not found”.
@The Mom,
As indicated in the article I posted above, it didn’t become active (with Canada) until June 30. When did you travel by land?
@WhatAmI, it was early in the year. I thought I had read yesterday that it would go back 5 years. I will check with someone I know and see if their crossings show up by land.
There are many residents in my city that cross several times a week for gas and groceries. Just getting gas weekly would give many residents 52 days in the US for tax purposes. Add in vacations and other shopping excursions for border cities, and those days add up quickly. A member of my husband’s family gets gas weekly, has a golf membership just across the border and goes sometimes twice a week, goes camping there several weekends a year, visits snowbird family members in AZ, etc.
@The Mom,
Maybe the 5 years of history started June 30 going forward, and old data is not there? Having said that, I checked her new passport issued in May, and a trip to LA in mid-June (before June 30) shows up. It says arrival into the US was in Calgary (because of the US customs clearance in the YYC airport). The departure says LA, which I assume is provided by Canada Immigration under the agreement, or maybe the airline?
The I-94 look-up is by passport number. As the years roll by and passports are renewed, you need old passport numbers to find previous records. I checked my daughter’s previous passport and there were no records even though she had other trips to the US in the last 5 years.
There is information in the FAQ about departure recording:
https://i94.cbp.dhs.gov/I94/request.html
Keep in mind that Canada also uses this information. For example, to see if you are out of Canada longer than allowed for provincial health care eligibility (which varies by province).
@duke, yes I am listed as having landed in that hamlet in Alberta (YYZ), and the decommissioned airbase in CA (YVR). What is especially bothersome is that I have driven from Vancouver to Seattle twice this summer, staying 2-3 nights then returning. My entry via Blaine is recorded but my return is not. So on their records, I have been in Seattle for two months ongoing now.
Something to consider for those who think the IRS doesn’t have the resources to go after minnows as well as whales: “The IRS And Big Data” http://taxconnections.com/taxblog/the-irs-and-big-data/#.VBAKjqNH0-U
@notamused
You have to wonder though- thinking that these processes should lead to a world which is less corrupt- and in the end result- don`t we find a world which is MORE corrupt than ever? Is this big information gathering and transparency really making our world a better place? One would hope so, but it just feels like things are getting worse.
@Polly
I’m not advocating what they’re doing at all. I think it’s safe to say that, yes, things are indeed getting worse. (Not just with respect to the IRS either.)
notamused does well to problematize a too-prevalent tendency to find security in minnowhood. Never forget that humongous sea creatures thrive on a steady diet of miniscule sea creatures.
Prophecy: The brief and receding present is a golden age of confusion for cowering extraterritorial US persons. Laws and policies are being woven into a terrible tapestry of the IRS and the Dept of State — their tax forms, account tracking, passport administration, and border control are still in rare turmoil. But systems will integrate. The cover will smother.
Take the quintupling of $450 as a sign of things to come. Two fundamental questions for noncompliancers: (1) Can you and your heirs forever stay clear of the United States? (2) Can you always count on your current extraterritorial state to protect you?
When authorities like lawyers and courts and financial institutions pick over your pecuniary remains, what disposition procedures will they require and be constrained by? This longer view leads straight to an emerging truism — that willful noncompliancers would do well to be persons of zero net worth at time of death.
Sauve qui peut.
@Calgary411 and @Medea Fleecestealer – Thank you very much.
@All
I know that this is not a tax preparer blog, but maybe somebody is able to give mea quick answer because they currently are in this particular situation. Lets assume that an expat has always been 100% tax / FBAR compliant. The income they reported to the IRS always included their foreign earned salary + their contributions to the foreign SS + their contribution to the mandatory pension plan + the employers contribution to the mandatory pension plan + payments in to a foreign IRA including the yearly interests earned in the IRA. The expat turns 65 and starts collecting their foreign SS, pension and IRA. To make the math a bit easier lets say that each of the institutions pays out 10K USD per year to the expat for a total of 30K USD.
What does the expat have to include on his US tax return if all the previous contributions have already been reported to IRS?
Thanks in advance for any and all responses 🙂
I placed this also on Just Me’s now classic thread
http://isaacbrocksociety.ca/2012/01/28/the-ovdi-drudgery-for-minnows/
Another OVDI (2011 version) opt out story – inspired by ij, moby and Just Me’s recountings of their experiences. Useful for immigrants residing in the US with pre-existing accounts – who entered the OVD program before the SDOP (Streamlined Domestic Offshore program) became available this year ( June 2014 ).
http://ovdioptingout.blogspot.ca/2014/06/summary-of-my-ovdi-2011-case.html
Which was posted somewhere on here:
http://federaltaxcrimes.blogspot.ca/2013/11/should-you-opt-out-of-ovdip-11513.html
See also various threads here:
http://federaltaxcrimes.blogspot.ca/2014/06/comments-by-irs-personnel-on-new.html
http://federaltaxcrimes.blogspot.ca/2014/08/new-irs-internal-guidance-on-processing.html
http://federaltaxcrimes.blogspot.ca/2014/08/tidbits-on-new-streamlined-procedures.html
http://federaltaxcrimes.blogspot.ca/2014/06/irs-issues-more-liberal-streamlined.html
There are many from the 2011 OVDI program still being processed by the IRS. Some may have tried or be trying to ‘transition’ into the new new Streamlined Domestic (for US residents) SDOP or SFOP (for those outside the US) http://federaltaxcrimes.blogspot.ca/search/label/Offshore%20Streamlined%20Filing%20Procedure
And other relevant threads on that blog.
Caveat:
Discussions by readers and blog author Townsend often useful – but not necessarily always definitive as per your own unique facts and circumstances – so readers attempting to use this info – must do your research and weigh what you read.
I am not endorsing the practitioner although his blog has proved very useful for some. Although he usually refrains from criticizing FATCA and OVD programs, he has provided very useful information and often responds to reader questions – within practical and professional limits.
Situation:
– Dual Citizen Canadian resident
– fully IRS compliant (as far as I can tell!) and would not be a covered expatriate
– Considering renunciation
– Has RRSP’s that were deferred and are reported annually via IRS 8891.
Do I correctly understand that the FULL balance in the RRSP will be taxed at 30% when the person renounces?
Tired. Not if your net worth is less than 2 million. In that case you are not a covered expat and don’t owe any exit tax. It is important to expatriate before your net worth exceeds 2MM.
Hey @Duke.
Thanks. It is so impossible to read these IRS instructions. Just re-read those 3 more times. I think I see my reading mistake about the exception on pensions under section 877A. So then just to be clear, all of Section 877 (including 877A) only applies to COVERED expats? THis would mean that for someone who has no normal (i.e.1040) tax liabilities on the year of renunciation, there are no taxes due at all?