Tax Questions
Ask your questions about Tax and FBAR here.
This thread will be focused closely on tax questions and answers. If the conversation starts to ramble, those comments will be moved to another thread.
Related threads:
Tax Discussion Thread. Instead of focusing on specific questions and specific cases, broader ideas can be discussed on the Tax Discussion Thread.
Tax Compliance (or not) Discussion Thread
Sub-threads (more will be added as they occurs):
Previous Tax thread:
US Expat Tax and FBAR discussion thread, part 1
US Expat Tax and FBAR discussion thread, part 2
Frame them as a keepsake?
As far as I can tell, if you get US SS benefits, you get the cheques. Since you asked, here’s my advice. Deposit the cheques into a US dollar account instead of converting to Canadian.
If you don’t have them already, open a US dollar account and get a US dollar credit card. Now go shopping on Ebay.com or Amazon.com, pay in US dollars, and have the stuff shipped to Canada. Presto. The US economy gets stimulated, and you get free cool stuff, and everybody’s happy. What’s not to like?
Don’t worry about the ramifications re: loss of US citizenship. They’ll never figure it out.
Deposit the cheques to a US dollar account. In the unlikely event that the bank is alert to potential US person status, explain that you are not a US citizen but this came to you as a Social Security recipient. You may receive more cheques – potentially up to $3200 each.
If you are worried that the IRS will want its money back, don’t touch the money for a few years. If you think its unethical to accept the money, donate it to a worthy US charity. Or spend it on holiday south of the border.
@RR
“Is Treasury sending stimulus to all those receiving SS pensions?”
Yes.
https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know.
I wouldn’t worry about it.
@BirdPerson
That is one possibility. However, if I was Treasury and handing out cheques,I might consider that whatever cheques weren’t returned were simply cashed and where is the satisfaction in that?
@maz57
Nice suggestion ,but I have no interest in boosting the US economy and, in really,would prefer the opposite to happen.Also,I do have a current USD acct for my SS .
@RH
As for the bank deposit , no one normally asks about the the automatic SS deposits but someone seeing two cheques of a recognzable or familiar sum and at this point in time may raise eyebrows. That being the only obstacle, otherwise. As far donating it ,anything but to a US charity. I have zero trust in Canadian banks or any bank for that matter.
@ Heidi
This article suggests that the IRS determines when and what to give based on the 1099 forms. Interesting in that,in my more than fifty years in Canada,I’ve never USfiled and also the only information that I ever receive is through the 1042s form for NRAs. Both of us are considered NRAs and therefore should not be receiving the stimulus.
IMHO,the ideal solution would be to determine if I am currently ”considered” a US citzen . If I’m not ,my decision is much easier to make. Is the DS-4079 the only way to determine one’s status ? I would think
there must be an easier way.
Thank you all for your input.
@RR
You know the drill. If you think you lost your US citizenship when you naturalized many decades ago, you can prove this by documenting your relinquishment and obtaining an CLN. This will cost you $2350. Then you can return the the stimulus cheques – potentially $6400 for the two of you. Overall a net loss of up to US$8750.
Or you just cash the cheques and spend the money on whatever you please. Uncle Sam is not going to ask for his money back.
@RR
I know renunciants with CLN’s who have received this latest payment but not the previous ones. The common factor seems to be they all receive US SS pensions.
@RR
I agree with what you are saying but would like to clarify my thoughts a bit. At the time that I came to Canada there was the war and some individuals who evaded the conflict by coming here were stripped of their citzenship and others were sent warning letters if not responded to resulted in loss of citzenship . Now ,if that is what happened to me ,then I shouldn’ t need to pay to renounce something that I no longer have. There should be some paper trial somewhere in time . You are suggesting to pay the extortion with their own money and use the LCN as a proof or validation which ,of course,makes total sense .
.
@ Heidi
You are suggesting that Treasury is sending stimulus to all SS pensioners. Hopefully,that may be the case or that they aren’t properly checking pensioners status.
Regarding your citizenship or lack thereof, it’s quite simple. If you want the State Department to tell you that you are no longer a US citizen, it will cost you $2350 for them to confirm this and send you the piece of paper. Is there any particular reason why you need them to do this? If not, forget about it. The SSA doesn’t seem to think that you are a citizen – presumably this is based on what you told them in the past.
There have been multiple reports from various countries of non-citizen SS recipients also receiving stimulus cheques. Most amusingly an elderly Austrian who worked two years in the US as a waiter while a student in the 1960s. I assume he was receiving SS via totalization agreement with Austria. One day he discovered two wholly unsolicited $1200 cheques in his mailbox, one for him and one for his wife. He seemed quite pleased by this, in the news story, and with a twinkle in his eye said nothing about not cashing them.
@RR
Seems all roads lead to Rome or rather to the $2350USD extortion .Cashing- in makes sense and a wait -and- see afterwards.Appreciate the encouragement. Thanks.
@Heidi
Thanks for your help.
@ R. Ross: Seems to me a way to test if the DOS views you as a citizen is to apply for a US passport, •if• you can exit before actually paying for it. I suspect that if a) you have a SSN and b) cannot recall a specific official document informing you that you have lost your citizenship, you are. (I came to Canada in ’71 and saw a few threatening letters American men had received but that’s all they were, threats.) Those who returned under amnesty found that their citizenship was intact.
Establishing whether you are a citizen or not is IMO even more important that the question of your stimulus money. Many decisions flow from that.
@ Robert Ross: I should clarify, if you can exit •the passport application process• before paying for it.
Why is it important to establish your US citizenship? Once you are a Canadian citizen living in Canada, provided of course that you have no US assets, it basically doesn’t matter.
Don’t tell your bank that you were born in the US. Don’t file US tax returns. End of story. So easy.
@RR
If you became a Canadian or (any other )citizen before Feb 6 1995 with the intention of losing US citizenship and did nothing ‘American’ since ( like applying or using a US passport) then you automatically lost your US citizenship. It does not need to be documented.
http://isaacbrocksociety.ca/2011/12/16/did-you-relinquish-before-february-6-1995-then-you-did-not-have-to-inform-the-state-department/
The only reason it would need to be documented (at a cost of $2350) is if your bank was having a FATCA meltdown at the sight of a US birthplace and refused to accept your explanation of how relinquishment works. Fortunately that is not a problem in Canada because banks will take “no” for an answer. (In other words, once can safely forget about this.)
Yikes! I just got a check from the US Treasury for $1400 US. It’s for the Economic Impact Payment. I renounced in 2014. My intuition tells me to send it back. It would be very intimidating to have any consideration as a US citizen again. I’m quite content to be 100% Canadian. I will likely contact US Dept. of Treasury, Bureau of Fiscal Service as they sent the check to my address in Canada. Or maybe I should cash it as a deduction from my renunciation fee? Any thought on this?
@PatCanadian
Congratulations! Did you receive the two earlier cheques, $1200 and $600, that were sent last year? Are you receiving Social Security.
It seems to be completely random and bonkers, who receives these and who doesn’t. Follow your conscience here. What are they going to do if you cash the thing – take away your US passport?
@Ron Henderson
This is the first check that I received and I’ve been receiving Social Security. Sending the check back will give me more peace of mind so will go with that. I do travel south of the border to visit relatives on my Canadian passport in normal times.
Thanks for you feedback. It does seem to be random and bonkers with these checks.
Here are my thoughts: I’d cash it:
1. Its certainly fair to consider it as a partial refund for the extortionate renunciation fee. They took unfair advantage of you in your time of need and now fate has delivered a bit of justice to your mail box that will help right that wrong.
2. No way accepting it would cause them to re-instate US citizenship. At the time, they went to great lengths to explain how irrevocable renunciation was. Do you perchance receive SS benefits? These cheques seem to correlate with being a SS recipient; many NRAs who collect SS report receiving them.
3. This whole COVID payment program is a total boondoggle anyway. I’m not sure anyone knows what the criteria for receiving the payments are. They’ll never figure it out.
4. The State Department is supposed to notify the IRS when a person renounces. Perhaps the IRS didn’t read the memo or they didn’t get it in the first place. (Or they forgot they got the notification.)
5. I’m sure its a little shocking to receive any communication from the US government after all these years but at least its good news.
6. I’ve gotten a couple of those cheques and my local credit union doesn’t so much as bat an eyelash when I deposit them. Got that US dollar account handy? Even if they did ask, you’ve got a CLN, anyway.
@Heidi.
You responded to my similar queries five years ago and for that I’ll always be grateful . What changed is that renunciation became the entire emphasis and upon receiving the cheques ,I began to wonder again.Besides, I do know that the guidelines still allow for a reasonable excuse to the banks for not having a LCN.
@RH
As for the banks bothering me, it would be vey foolhardy to mention any connection to the US,since I am foreign born.
@maz57
Good points. The renunciation fee is extortionist and the State Department is supposed to notify the IRS when someone renounces.
I have also cashed US checks at my local credit union with no problem and have a US checking account due to receiving US Social Security.
My only hesitation is keeping my status safe as far as visiting relatives in the US when the COVID situation is better. I wouldn’t want US authorities to think that I owe them anything. Not with their history of bullying.
Anyway, this situation gives me
another reason to continue supporting the lawsuit.
@Duchesse
Regarding requesting a new passport to find out if your are still a citzen, I fear the fee ($80) comes before the answer.No money,no candy,as they say. Hypothetically, if I submit my docs,they may simply issue a new passport, which I ,by the way,never had in the US . What you are saying is very interesting, for a small fee I would get a US passport and the knowledge of being a US citzen and a clear idea of what to do next.
The reason also why they would most assuredly issue a passport would be that they have no interest in
the INA rules at that time.
As you have well noted ,knowing one’s status determines what to do with the stimulus. However, not
knowing creates ambivalence.
Honestly, if your life is entirely in Canada it matters not one bit whether you obtain a US passport or not, cash the cheque or not, renounce or not. It doesn’t matter if you’re a US citizen or not, or born in the US or not. Keep mum at your bank, don’t file a tax return, and all will be well. It requires no further thought.
@PatCanadian
You could always cash the cheque and then donate a hefty sum to the lawsuit. Using the US government’s stupidity to help fund the lawsuit against the Canadian government’s stupidity would be a nice bit of poetic justice, no?
P.S. Don’t worry about your US status. You have a CLN and they can’t take that away from you. All receiving the cheque means is that someone at Treasury thinks you collect SS, which is actually true. Besides, the border guys won’t have a clue whether or not someone got one of those cheques any more than they have a clue who does or doesn’t collect SS.
https://grow.acorns.com/stimulus-checks-irs-says-over-1-million-americans-havent-claimed/
https://sa.www4.irs.gov/irfof-wmsp/notice
I’ve lived in a number of different provinces and at multiple addresses since moving to Canada close to 30 years ago. The last year I filed a return with the IRS was 1999, I believe.
I never received the Bush bonus after 9/11 nor have I received free money/cheques from Trump or Biden.
I am a self-documented relinquisher (so no CLN).
Given that I don’t have a CLN, I was curious whether a cheque might have been sent to a long ago address where I no longer live.
According to the second link (IRS) which I came across in an article this week (first link), the Treasury has made no attempt to send a Biden bonus my way which is just fine by me.
I am attaching the links in case anyone else who hasn’t received a cheque is similarly curious and would like to look himself or herself up.
Cheers,
BC Doc