Here you’ll find updates on cross border tax issues for 2021. Please check back often for updates as this page will be revised for new cross border tax news items from month to month.
Update January 23, 2021
Updates on 3520 and 3520-A filings for TFSA accounts – Our colleague at Polaris tax, Max Reed has posted an update on an IRS appeals resolution regarding TFSA accounts and 3520 and 3520-A filings. The report outlines that the IRS agreed with the view that TFSAs held by US tax residents should not be considered “foreign trusts” for purposes of these filings, and therefore penalties assessed could be abated.… Read more...
I think I need some help with a tax matter that has developed.
I have an IRA in the US that I’ve just started taking distributions from. I move to Victoria from Colorado 10 years ago and I plan on staying in Canada until my final days.
I filed my Canadian return with a Vancouver CPA and he referred me to a US CPA to help file my US tax return. I was fine paying both accountants to help me file as I understand most do not file both styles of returns but I was surprised to receive a letter from CRA asking me for more money on my 2019 tax return.… Read more...
My Mother recently passed away (she lives in the US and I live in Canada) and I’ll be receiving a sizable inheritance some time next year once the estate is fully resolved and wound up. I’m really worried about how much tax I’ll need to pay on the inheritance. Here are more details on the amounts:
$250,000 in an inherited IRA
$50,000 in a ROTH IRA
Almost $2,000,000 in a Fidelity investment account
Cash proceeds from home (will sell soon)
Condo in the US that I’m not sure I will be selling.
I stumbled across your site after researching some issues on google. I’ll be moving to Vancouver for work at the end of the year from Texas and I need some help with my US investments.
A few years ago I invested in some very speculative stocks within my ROTH IRA and I’ve been fortunate enough to have grown the ROTH to a sizable amount. I’m now worried that some or all of this will be taxed when I move to Canada.… Read more...
I’m a Canadian citizen who recently moved to the states for work. I came across your contribution to a Canadian news article about cross border income tax a few months ago when I was preparing for my move. Although the tax season is a bit far away right now, I would like to get your advice about my Canadian and American residency status for 2021, which will really help me figure out the duration of my stay in Canada for the holidays.… Read more...
Thanks for the email. Given the length of your email I won’t be able to address all the issues below, however I’ll do my best to summarize some thoughts below:
Software for US citizens living in Canada doesn’t really exist. Those that try to file their own US tax returns often use something like Turbo Tax. You can take a look here for some guidance on filing.
The fact that you didn’t file US returns for some time while you were a resident of Canada is quite concerning.
I’m moving to Victoria next month from Vancouver and I saw that you have a CPA practice on the Island. I’m reaching out in case you can help answer some real estate investment questions (also for a school project):
What advice would you give to a new investor who is buying their
first rental property?
Are buy-and-hold exit strategies better for veteran or new investors?
What are the most important things new investors need to look for in a rental
On episode #5 of the Expat Tax and Financial Planning Podcast we discuss some options for Canadians holding US IRA accounts.
Whether you moved up to Canada with a pre-existing IRA or have inherited an IRA from a relative living in the US the following discussion should help you make a decision on what to do with your US IRA accounts.
Collapse the IRA and bring the money to Canada
A good option for small accounts
May work if your income is already low
Keeps things simple
15% minimum tax for non-US citizens
Roll the IRA into a ROTH IRA
An option for Americans moving to Canada only
Works if your current tax rate is less than your future tax rate
Need Canadian ROTH election
Leave the IRA in the US
Some US brokers can’t manage US IRAs for Canadians
Likely the US broker will not be able to take direction from Canadian clients
Foreign currency risk not properly managed
Most US brokers simply do not understand Canadian tax and financial planning
Transfer the IRA to an RRSP
Can help consolidate accounts
Works well for smaller accounts
Often suggested by Canadian investment advisors that cannot manage IRA accounts
Can only transfer approximately the amount of your Canadian source income for the year
May be able to eventually split RRIF payments
You’ll lose the ability to transfer IRA to beneficiaries tax-free
Transfer the IRA to a Canadian border with both a US and Canadian securities license.… Read more...