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
“I personally think that entering the US tax system for a mere $1200 cheque is as dangerous as playing with explosives”
Seconded, and it’s not just the USA that could cause this to go bang.
Ron…..Foreign checks/cheques and unexplained income from abroad raises flags with local tax authorities, it’s not just the US that on the war path with undeclared income from abroad. It also has the added bonus, simply because it’s from the US, of raising flags regarding ones US person status.
I have no idea what the particular situation is in Canada.
I have SEEN US checks in the UK cause problems for reasons we should all know about, a financial industry scared to death of the USA. I can’t find it now, but one guys story (UK) made headlines when the bank simply returned his US check to him and blacklisted him leaving him unable to bank at all.
The ignorant UK media blamed the blacklisting on suspected fraud, but you don’t return a fraudulent check to the fraudster and there is only one blacklist, not one for clients that may be a danger to the bank because of FATCA and dubious US person status.
I don’t wish to be alarmist and I am as quick as any to question the doom mongers that reckon the US is all powerful and will come and get them regardless of residence (just did on Facebook where a Condor touting for business suggested Boris Johnson paid up because the IRS could make him pay up, no doubt my post will be removed again) but it is not just the US tax authorities with a suspicious eye on foreign money coming into the country.
As always, caution, and consider that the USA has already done the unthinkable with FATCA and local nations not only did not help their residents and citizens, they rounded them up and handed them over.
That measly $1200 could open up a whole can of worms and not just with the US.
I’m reminded of a saying about Greeks and gifts.
Agree with Barbara and Mike.
A US cheque is radioactive here in Switzerland as is any US connection and it’s getting that way everywhere now. Its one thing having a CLN to thrust in their face but US stimulus cheque recipients are by definition US toxic people. Certainly if I was ‘in hiding’ I wouldn’t touch it with a barge pole.
To be honest, I think the most likely outcome is that you’d never receive the cheque. It will be chaos at the IRS.
In Canada it’s not unusual to deposit US cheques, or receive direct wire transfers from the US. Lots of people doing business back and forth, US dollar accounts are quite common. As for local tax authorities, not every payment counts as income, you know. Perhaps I sold a used car to the IRS for $1200.
That being said, there’s always the risk of an unusually alert bank employee noticing a cheque with Donald’s signature and asking awkward questions.
I am sure that particular cheque would be a problem
Not so sure. You could literally deposit it to your US dollar account via ATM or with the app, no need to go into the branch and deal with a human.
Its a very specific US indica, banks could set up an electronic search for that amount. I have seen them pick up on a US skype telephone number I had once used. As much as I would like them to fund other countries treasuries I don’t think it is a risk worth taking for many.
American Expatriate’s FB group encourages expats exercise caution in response to the Jerusalem Post article linked below.
“How many will unwittingly enter the US tax system for a one-time comparatively minor windfall? Americans abroad who do not file need to look this gift horse in the mouth. Comments to the article vary, some are downright scary.“
https://www.jpost.com/Diaspora/Israeli-Americans-are-eligible-for-stimulus-checks-tax-attorney-tells-Post-622749
Well, I won’t be the guinea pig because any IRS interaction on my part risks jeopardizing my self-relinquished status. One might be able to get away with this in Canada but in other countries all bets are off. Besides, they are already sending me SS every month totally risk free so there’s no reason for me to push my luck on a scam like this. The thought is amusing, however.
The Spider and the Fly
A Fable
by Mary Howitt (1799-1888)
“Will you walk into my parlor?” said the spider to the fly;
“’Tis the prettiest little parlor that ever you did spy.
The way into my parlor is up a winding stair,
And I have many pretty things to show when you are there.”
“O no, no,” said the little fly, “to ask me is in vain,
For who goes up your winding stair can ne’er come down again.”
“I’m sure you must be weary, dear, with soaring up so high;
Will you rest upon my little bed?” said the spider to the fly.
“There are pretty curtains drawn around, the sheets are fine and thin,
And if you like to rest awhile, I’ll snugly tuck you in.”
“O no, no,” said the little fly, “for I’ve often heard it said,
They never, never wake again, who sleep upon your bed.”
Said the cunning spider to the fly, “Dear friend, what shall I do,
To prove the warm affection I’ve always felt for you?
I have within my pantry good store of all that’s nice;
I’m sure you’re very welcome; will you please to take a slice?”
“O no, no,” said the little fly, “kind sir, that cannot be;
I’ve heard what’s in your pantry, and I do not wish to see.”
“Sweet creature!” said the spider, “You’re witty and you’re wise!
How handsome are your gauzy wings, how brilliant are your eyes!
I have a little looking-glass upon my parlor shelf,
If you’ll step in one moment, dear, you shall behold yourself.”
“I thank you, gentle sir,” she said, “for what you’re pleased to say,
And bidding you good-morning now, I’ll call another day.”
The spider turned him round about, and went into his den,
For well he knew the silly fly would soon be back again:
So he wove a subtle web, in a little corner sly,
And set his table ready to dine upon the fly.
Then he came out to his door again, and merrily did sing
“Come hither, hither, pretty fly, with the pearl and silver wing:
Your robes are green and purple; there’s a crest upon your head;
Your eyes are like the diamond bright, but mine are dull as lead.”
Alas, alas! how very soon this silly little fly,
Hearing his wily flattering words, came slowly flitting by.
With buzzing wings she hung aloft, then near and nearer drew
Thinking only of her brilliant eyes, and green and purple hue;
Thinking only of her crested head — poor foolish thing! At last,
Up jumped the cunning spider, and fiercely held her fast.
He dragged her up his winding stair, into his dismal den,
Within his little parlor; but she ne’er came out again!
And now, dear little children, who may this story read,
To idle, silly, flattering words, I pray you ne’er give heed;
Unto an evil counselor close heart, and ear, and eye,
And take a lesson from this tale of the Spider and the Fly.
I don’t really see filing once and cashing the cheque as entering the US tax system – one is not obliged to continue filing. That being said, I myself would only do this to help fund renunciation within a year or two.
“I don’t really see filing once and cashing the cheque as entering the US tax system.”
LOL!
I’m serious. What are they going to do if you file once?
I was in the US tax system once – spent five years o’er yonder – and stopped as soon as I returned to Canada. Pas de problem.
@RH
Have you filed lately? Let’s say 2019,2018 ,or 2017 . They’ll check that out and if you haven’t , will you receive anything except making them well aware of you and your intentions? Tread lightly.
Maybe if they check far back enough , they’ll dig my 1965 return and cut me a check anyway.
That is indeed the question. If they receive a 2019 return after having seen nothing for 25 years, will they still cut a check? On other hand, if one had been an expat stay-at-home parent all that time, recently returning to the workforce, such a pattern would all be quite legit. It all comes down to do they have the resources to follow up, or will they be too furiously busy sending out money to bother?
Similarly, I can’t see Canadian banks caring enough about FATCA to start looking for suspicious US$1200 deposits.
Hi,
I don’t know if this it the correct topic to post to. If not, can someone either move it or let me know the correct topic? Thanks.
My question is regarding Canadian banking institutions. I am a Canadian who spent several years working in the U.S. (filing U.S. tax returns, and Canadian when I had reportable Canadian income), then returned to Canada about 5 years ago. The Canadian bank I had before I left for the U.S. (and kept while I was there) obviously knew of my location (had to update contact info) and would have reported same to the credit bureaus.
On my return, I had lots of letters from the bank making me prove I was a Canadian resident again. I provided the info though I am sure they continue to throw my account and credit transactions over the border to the U.S. 🙁 I tried opening an new account at Vancity who I believed was under the threshold for mandatory reporting and not reporting. However, when I searched recently to find a non-FACTAreporting institution, I could not find a single one. (Vancity now reports.)
https://apps.irs.gov/app/fatcaFfiList/flu.jsf
Can anyone tell me of a banking institution that is not reporting to the U.S. (through CRA)?
Thanks!
I’m not sure why there is a problem. Open an account wherever you like including VanCity. They will ask something like “are you a tax resident of the US?” Truthful answer “no” . No problem.
Ditto. A past resident of the US is not a US person for FATCA purposes. For that to happen you need to be either a US citizen or someone with a green card that was not properly rescinded (plus a few other categories) *and* be self-destructively honest as well. As Portland said, open an account wherever you want and truthfully answer the tax residence question with “no” – you don’t even need to lie. You have no reason to disclose past residence in the US, which in any case isn’t relevant to your current status.
I’m pretty sure they aren’t going to stop at $1200, so I am definitely giving this serious consideration. File a 1040, collect a bunch of money, renounce when they turn off the tap and still turn a small profit. So glad I waited.
RH
You will tell us about it if this all goes south,no ?
All the gamblers I’ve ever met talk about the days they reaped
It in but never talk about the days when they walked out empty.
Absolutely. As mentioned, I would only do this to fund renunciation. I think that is an acceptable risk.
I currently have no reason to renounce, living in Canada, but there are two factors that might make me change my mind in the near future: the elderly parents are convinced that the IRS will somehow sink its claws into their estate, and a possible move to Europe in the next few years, pandemics willing. (I can’t see living there semi-permanently without a CLN, though I do have a German ING account that’s remained “clean” of US indicia.)
@RH
You mentionned receiving a SS pension . Which form do you receive for income tax purposes ? SSA-1099 or SSA-1042s ? Can it be used to determine one’s citzenship status ae viewed by the US ? I have been receiving the 1042s .
Not me. Maz57 possibly?
@ Maz57
Sorry ,error on my part. Is it safe to say that only US citzens ,abroad or homelanders ,receive the SSA 1099 ?
1042s are for non resident aliens who receive US sourced income including SSA payments.
1099 is for US citizens , green card holders and US visa residents.