Common Questions Asked By US Citizens in Canada – FATCA and Tax Related

By
Phil Hogan, CPA, CA, CPA (Colorado)
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103
11722

I have helped hundreds of people successfully navigate from the US to Canada. If you're thinking of moving or retiring to Canada contact me today to chat about your plans.

I can be reached via email at phil@philhogan.com, by phone at 250-661-9417 or through my contact page here.

I look forward to speaking to you soon.

Phil Hogan, CPA, CA, CPA (CO)
Cross-Border Tax and Investment Specialist

We get a lot of tax and FATCA (Foreign Account Tax Compliance Act) related questions and I wanted to take the opportunity to outline some of the most common questions in an effort to help anyone who may have similar questions about their taxability and/or tax compliance requirements with respect to US Citizenship.

 

I’m a US Citizen living in Canada, why do I have to file taxes?

Under US tax law, as a US citizen, you are required to file tax returns with the IRS and pay any taxes resulting from the filing. The good news is that although they may need to file in the US, many US citizens living in Canada will not pay any US taxes as a result of filing. The Canada-US tax treaty and other related domestic exemptions are in place to ensure double taxation of US citizens living in Canada does not occur whenever possible.

I’m moving up to Canada and I have 401k, IRA and a ROTH IRA. Do I need to liquidate these accounts before entering Canada.

I would definitely not liquidate any of your US retirement accounts because you’ll be moving to Canada. Unfortunately some Canadian brokers suggest this option because they can’t manage US retirement accounts from Canada. We work closely with Canadian investment advisors that have the ability to manage US retirement accounts in Canada. Please contact me for some suggestions.

If I file my US returns will I owe any taxes?

As mentioned above, it’s common for US citizens living in Canada not to pay any tax to the US. However there are certain cases where US citizens living in Canada may need to pay the US tax. Some of these reasons include:

  • you have not paid enough Canadian tax to fully reduce your US tax to nil (via foreign tax credits)
  • you earned US source income (will still receive a foreign tax credit in Canada)
  • your US source income is significantly higher than your Canadian income due to foreign currency fluctuations.
  • you’ve sold a property that was exempt from tax in Canada.

I’m a US citizen living in Canada and I’ve never filed US taxes, what do I do?

If you’re delinquent in filing your US tax returns and you qualify for the program your best alternative is to file your late returns under the streamlined tax filing procedures administered by the IRS. If eligible you will only be required to file 3 years of tax returns and 6 years of FBAR forms. Other less favorable options are available if you don’t qualify under the streamlined program.

Now that FATCA is set to be implemented in July of 2014, what will happen to the Streamlined amnesty program?

No one knows for sure, but it would be hard to believe that the IRS will keep this program around indefinitely. Considering this program has been around since September of 2012, they may consider it fair warning for anyone that has yet to catch up on their returns. We are not certain what they would put in it’s place, if anything at all. We’ll know much more once FATCA gets rolled out this year.

Are US Pensions taxed in Canada?

As a Canadian tax resident, you’re taxed on your worldwide income including US pension income. However, that doesn’t mean that you’ll be paying tax twice on your American pension payments.

As a US citizen living in Canada you’ll be required to report the US pension income on both your Canadian and US income tax return. Under the Canada-US income tax treaty you pay a maximum of 15% US tax on your US pension income. For example, let’s say Sally earns $10,000 of US pension income and her US tax rate is over 20%. She reports the pension income on both her Canadian and US income tax return. She will received an 1116 re-sourced foreign tax credit on her 1040 to bring the tax on the pension income down to 15% on her US return (5% 1116 credit). She will then report the income on Canadian income tax return and take an offsetting Canadian foreign tax credit for any US tax that she paid.

The result looks like this…(let’s assume a 25% tax rate in Canada)

  • Canadian tax on the pension income = $2,500
  • US tax on the pension income = $1,500
  • Canadian tax of $2,500 less a foreign tax credit from her US taxes paid of $1,500 = net Canadian tax of $1,000
  • She already paid $1,500 in US tax, therefore net overall tax on the pension income = $2,500

You can see from the example above that in most cases US citizens living in Canada simply pay Canadian rates on their US source income, although getting to that figure requires a fair amount of understanding of the treaty and foreign tax credit calculations.

If I haven’t filed my US tax returns can they stop me at the border?

At the moment it doesn’t seem like US border agents have access to (or care about) tax return history information for US citizens traveling back into the US. That doesn’t mean however that this is not going to be implemented some time soon. We have heard stories from clients where US border agents gave travelers a “hard time” for not traveling on their US passports. Agents often review Canadian passports for country of birth and question US citizens on their intentions.

Will CRA collect late taxes and penalties on behalf of the IRS?

Currently CRA doesn’t seem keen on collecting taxes and penalties on behalf of the IRS, however given the changes that are slated for 2014 it’s possible this will change. Even if this does change Canada would only be required to collect taxes owing on income pursuant to the Canada-US tax treaty and not on penalties resulting from late file tax returns and/or disclosures.

What does it cost to file a US tax returns each year as a US citizen living in Canada?

The cost to file a US tax return (or multiple years) and related disclosures will depend on the complexity of the returns and the amount of time required to prepare and gather the required documentation. The cost to prepare US tax returns for Canadians can vary from $500 to $5,000 depending on the work required.

What is an FBAR?

FBAR stands for Foreign Bank Account Report. Prior to 2014 all FBAR reporting was completed manually and submitted using form TDF 90-22.1 to the US treasury department. Starting in June of 2013 FBAR forms are required to be submitted electronically via form 114 through the BSA treasury site unless the forms are submitted via the streamlined tax filing program. FBAR forms are only required if the taxpayer controls foreign accounts with aggregate highest balances in the year that exceed $10,000.

I heard that if I make less than $90,000 I don’t need to file in the US, even as a US citizen?

You often hear this quoted online on tax forums and it can be very misleading. What people are referring to is the foreign earned income exemption available to individuals that work outside of the US. You can apply for the exemption by filing a US tax return and completing form 2555. For 2014 the 2555 exemption is $99,200. You’ll only be able to get this exemption by filing a US tax return and therefore you still need to file in the US even if your income is below the exemption amount. Also, 2555 exemptions do not cover other sources of income such as pension and investment income.

Does the US have inheritance or death taxes?

The US doesn’t necessarily have an inheritance tax, although any income you earn from an inheritance you receive will be taxable. Unlike Canada, the US taxes individuals at death based on US Estate tax rules. Generally speaking however if your net worth at death is less than the annual exemption amounts (less any required adjustments) you are not taxable on your estate at death. The estate tax exemption for 2014 is $5,340,000.

Do I have to pay gift tax on cash gifts to my family?

As a US citizen you are subject to US gift tax rules. However exemptions apply to certain gift throughout the year. For 2014 each taxpayer is allowed to gift up to $14,000 per recipient and $145,000 to their non-resident spouse. Gifts to US spouses (from a US taxpayer) are unlimited.

Of course, there are many other questions that are asked on a regular basis by US Citizens living in Canada. If you have a question that was not addressed above please leave it in the comment below and we’ll add it to the list above.

Can I open a TFSA or hold Canadian Mutual Funds?

If the IRS views the TFSA as a foreign trust, which is very likely, opening a TFSA would result in additional US tax forms that would need to be filed, namely form 3520/3520-A. In addition, Canadian mutual funds are considered Passive Foreign Investment Companies (PFIC) for US tax purpose. As such, you would be required to file for 8621 for each PFIC that you owe. The potential additional tax and cost to file these forms may outweigh the benefits of owning such investments.

103 COMMENTS

  1. I’m so stressed out about this. I was born in the US and have spent no time there since I was 5 years old. I’ve only worked and lived in Canada since then. I have some investments in Canada (not a lot) and my wages from my job. Do I still need to file US returns. I don’t want to pay more tax!

  2. considering the streamline route to get caught up on filings. hesitant cause my spouse doesn’t want their information on FBAR forms. why does the IRS want this information and do i have to provide it? i’m not trying to hide anything but it just feels like an invasion of privacy.

  4. I really appreciate this article. I’m a US citizen and have lived in Canada for 30+ years. I truly never knew that I should have been filing US tax returns as well as Canadian tax returns. I am planning on becoming complaint and trying to read/came my fears about the potential penalties. Is the streamline a safe route? I’m trying to do the right thing, I’ve never been hiding anything and I just don’t want to be penalized for this. Have you seen any penalties for people like myself?

  5. Phil –

    If my bank balances have not exceeded $10K in total for any of the last 6 years and I want to file using the streamlined process (which based on my research I would likely qualify for) do I still have to file the FBARs?

    • Hi Dan

      No, if the total of all the highest balances in your non-US financial accounts was less than $10,000 in any particular year you won’t need to file FBAR forms for those years. Note that this includes registered accounts like TFSA, RESP and RRSP accounts as well.

      Cheers

      Phil

  6. As most, longvterm canadian citizen here who had no idea I had to file US tax. Do I send in the 6 years fbar wit my streamlined tax returns, or file them electronically?

      • Thanks Phil.. So I’m a little confused. I’ve lived in canada 15 years and have not filed IRS during that time. Will doing the streamlined program basically catch me up or will I be required to go back all those 15 years and file?

  7. When electronically filing late fbars, is it best to click the “filing late as I didn’t know I has to file ” or clicking ” other” and putting in a detailed reasoning.. IE: resident of canada for 15 years, didn’t know…. I’m wondering if clicking on the ” other” doesn’t send the form to a different pile for further examination?

    • Hi Suzie

      I would be careful about filing late FBARs. The only real way of filing late FBARs without being subject to penalties would be to file the forms under the streamlined tax filing program (or OVDP) or file them late assuming that you’ve already reported all the income from the unreported accounts on your 1040 US income tax returns.

      Hope that helps.

      Phil

  8. If I’m a dual US & Canadian citizen, who worked in US for 10 yrs, now back in Canada working and plan to do so indefinitely. Is there any point of having a US Citizenship given the increasing costs of filing to be compliant with US tax requirements? The only benefit I can see is maybe getting social security after having worked that long in US and paid social security taxes. I don’t want my adult children to be burdened with filing taxes each year when they plan to reside in Canada. What would be the benefit of retaining US citizenship?

  9. I am a US citizen who has lived in Canada since childhood. I have been filing US taxes for years but it seems that every few years I find I have missed some requirement. I have been filing the FBARs as well for the last few years.

    I am married to a Canadian citizen. As a homemaker/mother with limited income I have filed my US taxes as married filing separately and have never included my children (who do not qualify as US citizens due to residency requirements not met) on my returns.

    We are a low income family, and I have an RESP account set up for my 2 youngest children as they qualify for the low income education grant. We have not contributed any money ourselves into this account. I just found out that as the account is set up, I should have been declaring this account on my taxes and on form 3520 and 3520-A which was due March 15. how should I handle this?

    Also this got me to thinking, should i have been including my husbands RRSP accounts on my FBAR as I am listed as beneficiary? If how should I go about correcting this oversight?

  10. I have streamlined my taxes now. I do not anticipate having to pay taxes based upon my income going forward in years to come.
    The streamlined process has cost our family already about 13K.
    As my taxes should be rather simple to do, please let me know if there is any self help material that will allow me to do it myself.

  11. Hi Phil,

    I was a professional Hockey Player and had three children in the US. We moved back to Canada when they were all under the age of 5. Since then, They have not made a cent in the US. This seems criminal making innocent people pay taxes on money they never made. You mentioned above that not paying is very risky. Can you be more specific?

    • Hi Wayne,

      I’m not sure if you are a US citizen (or just your children), however, you are correct, that as US citizens (even living abroad) you are still required to file US tax returns. Generally speaking, if you don’t have any “US source” income you usually won’t end up owing any tax to the US. This is because you will get credit for tax you pay in Canada on your Canadian income and generally the tax in Canada is greater than the tax you’d pay in the US on that income. This is not always the case, but in a lot of cases this is true. Although you may not owe any tax, you are still required to file US tax returns and any other compliance forms as required.

      One of the common compliance forms is a FBAR- foreign bank reporting forms (Form 114). The penalties for willfully not filing these can be 50% of the highest value in each account for each year in which the violation occurs. This is a very aggressive penalty, but there have been cases where its held up in court. (This form is required if you have, in aggregate, over $10,000 in accounts located outside of the US).

      It’s also important to note that depending on your individual circumstance (ie if you have Tax free savings accounts, Registered Education Savings Plans, if your the beneficiary of a trust or an owner or a corporation, etc) there may be additional compliance and filings that are required to be fully compliant with your US tax and information filings.

      Currently, the Streamline program, allows “low risk” individuals to get caught up on there US tax returns, with much less risk of penalties. One important factor is that the filings needs to be voluntary before the IRS contacts you.

      Please feel free to email me directly at tony@hutcheson.ca or call 250-381-2400 to discuss you and your families situation further.

  12. As a US citizen (living in the US), what are the tax implications (both US & Canadian) for money gifted to a Canadian citizen. Likewise, if I name a Canadian citizen as a beneficiary of US bank/insurance/estate proceeds. Thank you!

  13. I am a Canadian, but my Aunt is/was American. She has died recently and left me money in her will. How much will I have to pay to the IRS in estate tax because I am a Canadian? Her estate is valued at around 3 million.
    Thank you.

  14. I adopted a baby in the US while I was living and working there; she’s 3 now. We now reside in Canada and have just been granted Canadian Citizenship for my daughter; she still has her US Citizenship and a SSN number. At what age do I need to begin filling taxes for her?

    Thanks,
    M.

    • Hi Melissa

      Generally speaking not until she earns enough income to have to file in the US (around $10,000). There may however be some instances where she would have to file, for instance if she was a beneficiary of a trust. If her financial situation gets more complicated in the future best to get some good advice then.

      Hope that helps.

      Phil

  15. I am a US citizen living in Canada and do not work I have zero income no t/4’s issued do I still have to file a us return ??

  16. As a US citizen living in Canada I got caught up via the streamlined plan through tax year 2012. For 2013 I just filed a fairly complex return which included income from my self employed in home business , some inheritance monies and annuities. For 2014, I will have only a small business income, CPP and Old Age supplement. The total should be only about $35000, well below the $90.000 exemption. Can I get by by merely filing 1040, 2555 and the FBARs? Thanks.

    • Hi Paul

      Unfortunately it won’t be that simple. You’ll only be able to exempt “earned income” with form 2555. CPP and OAS are exempt will proper treaty disclosure inclusions.

      You may also have additional filing requirements in addition to the forms you mention above such as:

      – 8621 for PFICs, (Canadian mutual funds)
      – 3520/3520-A Foreign Trust disclosures
      – Form 8938 for foreign bank and investment holdings

      Many other forms may apply depending on your situation. Please give us a call at 250-381-2400 and we’ll be able to help you with your 2014 filings.

      Cheers

      Phil

  17. In my previous question, I forgot to add that my taxable income in Canada might only be less than $10,000; possibly even less than $5000. Should I file a 2555, 1040, and a 1116? Thanks again.

  18. Hi Phil, I have both US and Canadian citizenship and currently am a resident of Canada. I am wondering if a gift of money from a Canadian family member to me will be taxable by the US.

  19. Hello Phil,

    I am a U.S. citizen who has lived and worked in the UK
    since I was seven years old or 48 years. I had no idea I had to file US tax returns until this week. Both my deceased parents were American, separated. My mom raised me in the UK. I have been married to a UK citizen for over 30 years.
    At present I have been earning under the $ 7,600 yearly exemption limit for more than ten years. My husband similarly if not less. However, I inherited monies from my mom back in 2010 of about
    $ 300,000 a good half went immediately to pay off debt.
    My dad died last year and I expect about $ 60,000 once his estate is taxed and settled.

    Will I be double taxed on both my inheritances ?

    Thanks for being there.
    Sara

    • Hi Sara

      You shouldn’t be “double taxed” on your inheritance, matter of fact you probably won’t pay tax on the inheritance at all. I do think however that you have FBAR requirements even if you fall below the annual filing requirements.

      Are you familiar with the new Streamlined Tax Filing Program?

      Phil

  20. Hi any help is appreciated. I am a US citizen that married a Canadian and currently living in Canada since 2013. I have not work and he’s not working either. Our income is absolutely zero! I have a child and I have been paying back student loans…do I have to file for 2014 tax?

  21. I’m a US citizen living in Canada married to a Canadian woman. We are considering buying a condo here. If the condo is just under my wife’s name and not mine (using just her money), would I or my wife still have to report the condo to the IRS?

  22. I have a segregated funds policy with a Canadian insurance carrier (individual variable annuity contract). My beneficiary is an American citizen. Upon my death, would my beneficiary or the insurance carrier be responsible for reporting the proceeds at my death to the US based on new FATCA regulations?

    • If I am a dual Canadian – U.S. citizen living in Canada and owning no U.S. assets, do I need a will drawn up in the U.S? in the United States or is my Canadian will sufficient?

  23. I am an American and Canadian citizen I have filed my US tax reports every year since leaving in 1979.
    My question is I have a condo that I am going to rent to my daughter for the same amount of my mortgage and I plan to buy another condo which I will live in with my other daughter is there a limit how much I can hone in Canada without having to pay taxes in the US.
    Thanks Jeff

  24. I am American, my husband is Canadian. We have been splitting his pension income on our Canadian filings to lessen our tax liability. A US tax accountant indicated I had to put the portion of his pension which I put on my Canadian tax return on my US tax filing as income. She called it passive income. The IRS says that I do not have to declare it because it is not earned income by me, which it is not. Which is it?

    • Hi Lorraine

      First, I would argue that pension income should be considered general source income for purposes of the 1116 calculations.

      Second, the IRS has yet to give us solid guidance on how to properly report the pension split.

      In most cases, even if you add the split on your US tax return you’ll have enough foreign tax credit carryfowards to eliminate all of the extra tax.

      Do you end up with additional US taxes owing?

      Phil

  25. I have a question. If a US citizen living in Canada has a lot of mutual funds and thus has to fill out a lot of costly 8621 forms, do you recommend selling all these mutual funds,
    and if so what if there is a large capital gain
    upon selling. Will this result in a big tax bill from the IRS

  26. Hi, My husband and I are Canadian, and also have US citizenship. We have lived in Canada for the past 6 years, and also received American Financial Aid (student loans) from the US dept of Education. Our student loan deposits into our Canadian accounts have been over $10,000 each over the last 6 years. We have not files US taxes as our incomes are zero. Do we still have to file FBARs if our only income is in the form of American government student loans? If so, do we both have to file FBARs—we receive the same student loan amounts. Thank you…

  27. I am a US citizen and my husband is Canadian. I am currently residing in Canada and I do not work but my husband does. He files for his Canadian taxes would I need to file for my US joint taxes even though I do not work and he does?

  28. I have a question.

    I am a US citizen living in Toronto on a student visa, attending university. My wife and I both have SIN numbers. I am married with one child. I filed Canadian taxes. Our combined income was about $1,000 from part time Canadian jobs. I received $11,000 in scholarships from a Canadian University. I received zero income from the United States…because I did not live or work there. I have found no help on what to do with a USA 1040 form for reporting income and scholarships. What do I need to do?

    Thank you.

  29. hi hi, my wife is a US Citizen now living in Canada for more than 2 years. She is working here now and she does her US tax return and Canada. My question is, can she co-sign a mortgage with me to buy a house? what problems can that arise? or penalty in US tax return?

    thanks for any help.

  30. I am an American living in Canada. I am a permanent resident. I was gifted an amount over $10,000 from a canadian resident. So I have to pay taxes on it in the US although I haven’t lived there for over 10 years? Why?

  31. Hi. I am a US citizen living in Canda but not working, although I do have Permanent Residence status. Could you tell me which US tax form to fill out? Is it a 1040 NR or just a 1040? Thank you,

  32. I’m a dual citizen for Canada and US for a few years now residing in Canada. I’ve been good with doing both returns including the fbar etc. My father passed away leaving a large sum to myself which will soon be dispersed on the US side. I am unsure what I will need to do on the Canadian side for taxes. I assume I shouldn’t be double taxed, but I’m a bit lost if anything else will need to be done or filled out for declaring receiving this inheritance. However I decide to use it, I know to declare to my canadian taxes any interest income I will start to receive once the inheritance has been dispersed and set up in savings in the US. Will there be anything else to it?

  33. Hi,

    I am a dual Canada/US citizen who was financially swamped by the 2008 financial downfall. I haven’t filed US tax returns since moving back to Canada in June, 2012. My “income” is almost nothing these past three years in Canada. Things were so bad in 2012 and 2011 that I liquidated about 40k in 401K funds. I am sure Uncle Sam is salivating over unpaid taxes on the now empty 401Ks. Am I in a heap of doo and do I need help or multi-denominational prayer?

    • Hi Gene

      If you’re income is still relatively low filing your late tax returns under the streamlined tax filing program may be a very attractive option. And depending on how much tax was withheld on the 401k collapse it’s possible that you could be receiving a refund upon filing.

      Give me a call at 250-381-2400 and we can chat.

      Thanks

      Phil

  34. I am a dual citizen married to a Canadian citizen living in Canada and have been for 8 years. I haven’t filed a US return since I left. I am planning on catching up on my tax forms, I shouldn’t owe anything. My question is since my wife is Canadian do I have to include her income? Or can I get away with married file separately and not file her tax return.

    I personally feel that the US has no right to know anything about my wife let alone her income.

    • Ryan

      Yes that is correct, as long as your wife is not a US citizen or green card holder she will most likely not be required to file in the US. You would be able to file yourself as married filing separately.

      If you need help in filing your catch up returns under the streamlined tax filing program please give me a call at 250-381-2400.

      Cheers

      Phil

  35. Hi,
    I’m an American married to a Canadian citizen with no ties to the states but me. I’ve never made above the filing threshold or needed to file an FBAR. But I’m named as a beneficiary for my husbands RRSPs and I’ve never put that in a calculation for the FBAR. Should I? Also would that be over 10,000 USD or CAD? I’ve look at it as cad but just wanted to be sure. Thank you.

    • Hi Jennifer

      If you’re only the beneficiary of the RRSP it won’t need to be included on the FBAR form 114.

      Remember however that the $10,000 FBAR threshold is calculated as the total of the highest balance of all financial accounts in that particular year, opposed to the each individual account.

      Regards

      Phil

  36. Hi Phil

    I’m a US doctor living and working in Vancouver. Most of the other doctors at the hospital are incorporated and able to split income with their spouses.

    Should I incorporate even thought I’m still an American?

    thanks

  37. Hi. I was/am a U.S. Citizen based on having a Certificate of Citizenship. I also have a SSN. My family lived in Montana and I grew up there however because they were dual at the time they came back to Canada to give birth to me and my siblings. So I have a Canadian birth certificate. I left the U.S. for good and came back to Canada in 1993. I have not filed any U.S. taxes since then.

    Now this last year, I started doing some training for a U.S. company. I still live in Canada but am owed for my training by this U.S. company. I have been working with them to figure out the best way to get paid based on the information shared above. They are wanting me to complete a form W-9 to get compensated.

    I am not sure what I should do. Will I receive tax deductions from the U.S.? What will this result in? Any thoughts and advice would be helpful. Thanks.

    • Hi Wally

      This could get tricky. If you are in fact a US citizen you would be required to file US tax returns even though you are not living in the U.S.

      I would be careful about sending in a W9 without getting fully caught up on your US tax returns. Any reporting may trigger red flags at the IRS.

      Please give me a call at the office at 250-381-2400 and I can fill you in on the details.

      Phil

  38. Hi Phil

    Even though I am based in the UK and so some of what you cover above will not be appropriate to my situation I wanted to thank you for your excellent article and replies to the comments above.

    There is very little information, help or advice available to people about FATCA unless they fall into the super rich category and your words above have been a great help.

    Is there anybody you are aware of who can provide an equivalent to your advice in the UK?

    Thank you,

    Simon

  39. Greetings. I hold both US and Canadian citizenship.I’ve lived in Canada for 43 years. In 2014 I back filed US income tax for 5 years via the streamline process (didn’t know I was suppose to be filing!). So I am now up to date with my filing. Next year I will retire from work and collect my municipal pension (private plan through employment around $23,000/yr canadian). I’ve already looked into this and can’t figure out how I claim this on US income tax – which forms do I fill out?
    Also, it is my understanding that I don’t have to claim my OAP and CPP on US tax returns – is this right?

    I did try to file FBAR on line, but it wouldn’t work, maybe my computer doesn’t work for this….
    Thanks for any advise,
    Sherry

  40. I am a U.S. citizen that worked for 4 months in Canada last summer. Do I need to file in both countries and if so how would I go about it?

  41. My spouse is a US Citizen and we have lived in Canada for 10 years and I am just now finding out he should have been filing a US tax return but hasn’t. He is going through the appeal process with the CRA for 2011, 2012 and 2013 regarding adjustments, he is also self employed.
    If we use the Streamline route his last 3 years are still under review so I don’t know the final assessment, do we just go on what he submitted or should we wait?
    Also though he’s self employed we hold no accounts over $10,000 in value so I don’t think we need to file an FBAR but as a business owner does he need to fill out anything special.
    Is there a checklist for Streamline so we know we have everything correct?
    It’s very overwhelming but we can’t afford to hire a tax lawyer.
    Thanks

  42. Hi,

    This is urgent,

    -I have dual citizenship, but was born and have lived my entire life in Canada.
    -Both my parents WERE american before gaining Canadian citizen ship a few years ago.
    -I have an expired American passport, (in the picture I am six years old) but a Canadian birth certificate.
    -I don’t think I have a SSN.
    -As shameful as it is, I think the most money I have ever made in a year is under $10,000.00
    -I am now in my mid twenties, and would like to stay for the summer with a friend in the U.S. and work while Im there, before returning to Canada for another year of University.
    A.)Once renewing my american passport, and somehow obtaining a SNN, (which I’m not sure even exactly how to go about doing), will I have a bunch of taxes to file? Despite never having a SNN before? Nor making over 10000 in a year, ever?
    B.)Would I be better off applying a Canadian passport and a work visa to enter the US for the summer as a Canadian citizen?

    Thanks!

  44. I have dual citizenship,Can/US…. have filed in USA/Can taxes yearly. Live in Canada. Recently we applied and received OAS/GI, is this taxable in USA? Also, we are receiving two years benefits retro active, can they be recalculated for the years already filed out?

  45. I”m a dual citizen. I’ve kept up to date with my US tax filings. I’m low income and have never paid US taxes on my Canadian income. I wasn’t aware of FBAR requirements until I read it in the Canadian news today.

    I checked my bank accounts and they’re just barely over the 10,000 (I’m assuming this is USD) limits at the moment. I’m not sure about other years.

    I’m terrified by these new requirements because i just barely get by. I can’t afford to pay penalties or even hire an accountant. Such penalties could literally leave me destitute.

    Do you have any advice for me?

  46. Hello,
    I’m would like more information to file FBAR. I know I would need to include RRSP and TFSA. Do I need to include CPP or Pension MPP. Thank you!

  47. Hi there,
    I’ve read all of the questions posted on this site, but not one of them asked specifically about my situation, and so I’m hopeful that you can help me.

    My father was a U.S. citizen and my mother is a Canadian citizen. I was born in Canada and I have never resided in the U.S. My mother worked hard to get her sons dual citizenship, which she was successful in doing in the late 90’s. I have never had a U.S. passport, but I do have a SIN card and a citizenship paper.

    As far as I know, there is no Canadian financial institution that is aware that I”m a dual citizen, as I’ve never noted it on any form.

    Do I need to do ANY of this tax return craziness?? Does it apply to people who have never worked or lived in the U.S.?

    I appreciate your feedback.
    Thanks,
    BH

  48. Hi,

    I was born in the U.S and have a ssn. I came to Canada when I was 5 with my legal guardians and was able to stay in Canada with a student visa. I have only been back to the U.S for summer vacations and to visit family. After I turned 18, I was adopted by my legal guardians and was given a Canadian citizenship.

    In January, I went back to the U.S to visit my brother and sister and decided I wanted to move back to the U.S for a while. My parents think that I don’t need to file anything, but I would rather know the correct actions to take. While doing research, I came across this and would like some advice on best course of action. Being a dual citizenship, and having only filed taxes for Canada, what are things I need to do so that I can handle this correctly?

    Any help would be great,
    Thank you

  49. Just another way the US government is trying to get money.

    I was born in NYC to my mother (Canadian) and my Dad (American)

    My mother divorced and moved us to N.B. in 1959

    I took out my Canadian citizenship when I was 18 and served in the Royal Canadian Army and still serve in the CIC as a reserve officer due to age out in a few years.

    I have no ties to the USA except birth, Am i considered an american even tho I hold legal Canadian citizenship and do i have to file USA income tax??????????????????????????????????????

  50. My wife is an american and a landed immigrant of Canada….she has filed her income tax to the USA for years
    she has lived in Canada for over 30 years…she has never received any income from the USA….
    We presently own a house jointly…does she or will she be charged a usa estate tax upon her death ..what if the house was put in my name..has a Canadian citizen could the USA still tax it…Canada will levies taxes on estates so wouldn’t this be double taxation

    Thank you for any info you may provide

    bwesner@gmail.com

  51. Hello,

    I am a dual citizen but I have never lived in the US. I don,t have a US bank account and I have less than 5000$ in my Canadian bank account. A few months ago I received a cheque for 5000$US from my aunt after my grand-mother passed away. That’s the only “transaction” I have with US dollars. Do I have to fill any form for my income?

    Thank you very much!

    • Hi Malaika

      The FBAR threshold for filing is $10,000. This threshold is calculated by combining the highest balance in all your Canadian accounts (non-US accounts) and assessing whether it exceeds $10,000. The 1040 tax return filing threshold is different and is assessed on income.

      What is your annual income for the last few years?

      Phil

  52. Hi,

    I am a Canadian citizen but I visit the US frequently (my boyfriend lives there). Do I have to file taxes in the US? I was unaware that I had to, I do not work in the us or have any assets exceot money in by bank account all from Canada, I also have TFSA and RRSPs. I’m confused about why I would need to file taxes. Would I owe anything?

  53. We are Canadian parents who adopted our US born son when he was 4 months old. We have never lived in the US, nor has he.
    I understand our son has dual citizenship, and may be required to file US tax return. He is currently a student at US college.
    I called the IRS help line and they advised that since his income is less than $10,000 US he doesn’t need to file anything.
    Does this mean he continues to not have any filing requirements as long as his income is less than $10,000 USD?

    thanks!

  54. hello Philip,

    my wife and me got Canadian PR last year, but never lived in Canada. only came for short landing.
    now we are planning to give a birth in Canada. for that we are planning to stay 3-5 month there only and then leave canada again.

    we have a foreign income during that time. the question is if we have to pay taxes from foreign income only received during this 3-5 month in Canada? or for the whole year?

    • Hi Hof

      Residence issues can be tricky. You may be considered a resident of Canada as you entered and will likely be taxable on your Canadian source income at the very least (depending on the type of income). May be wise to call our front desk at 250-381-2400 to book a consultation.

      Cheers

      Phil

  55. My son (US citizen) has been receiving Ontario Disability (ODSP) payments for years. Is this required to be reported on US 1040 taxes, and/or excluded on Form 2555? If required to be reported, can the disability payments be deducted as not taxable, and on which 1040 line? Because of FATCA, does he have to report this disability income, which has been deposited in his Canadian bank account and has exceeded over $10,000 in 2 accounts? Some of the money has been earned from 2 part-time jobs in the last 3 years. He is compliant with his Canadian tax filings and can accurately determine the exact amount received from the ODSP payments each year. Is he required to file FBAR for all 7 years back, when possibly half of those years had a total in both accounts under $10,000? He filed US taxes in 2007, 2008, and 2009, but stopped after he moved away from home. He needs to file back taxes from 2010-15, all of which have no taxes owed. Please help, as no one seems to know whether Ontario Disability is taxable by the US, especially if it exceeds the $10,000 limit, if it is placed in Canadian bank accounts, one of which is a TFSA. Thank you.

  56. I am a US citizen and a permanent resident in Canada. I filed my first Canadian return last year. Although I received credit for my US tax payments, I had to pay additional taxes to Ontario and Canada.

    Can I deduct those 2015 payments to CRA on my 2015 US return?

    thanks

  57. Hello Phil,

    I moved to Canada in my 20’s. I won’t qualify for Social Security (didn’t work long enough) and I don’t have any monetary interests or value in the US (investments, monies, real estate, etc). I’ve called the IRS a few times and each time get a different answer about filing and what investments are required to be declared and how on FBAR forms. Seems that FACTA is more confusion in implementation than policy.

    • Hi Andrew

      The short answer is as follows:

      – As a US citizen living in Canada you’re required to file both US and Canadian tax returns. You won’t pay tax twice if the returns are properly prepared
      – If you have yet to file in the US the streamlined tax filing program is your best bet
      – You’ll need to report your Canadian (or non-US financial accounts) on FBAR forms to the treasury department.

      If you’re interested in catching up on your late US tax returns please give me a call at 250-381-2400 and we can chat.

      Cheers

      Phil

  58. Thank you so much for providing so much useful information. It is extremely hard to find anything reputable online.

    I am an early retiree and age 60. I have cash assets in the US as that is where I spent my entire career. I receive a pension from my US employer of about $50,000US per year. I am too young to receive social security, but I am aware of the tax treaties regarding those payments when they start.

    I am a dual citizen (Canadian father, American mother) but do not have my Canadian citizenship papers yet. I have never resided in Canada, nor worked there. I am considering moving to Canada and purchasing a home in Canada. I would live on my pension and retirement savings. I have no intent of working.

    So, questions:
    1. Would this all be easier if I completed my citizenship documentation before I move?
    2. Is my pension from a US company subject to any tax in Canada?
    3. Is there any Canadian tax impact from using my US based retirement savings to buy a home and support myself? Some of these savings are subject to US tax as they are both regular IRA and 401(k) accounts.

    Thank you!

    • Hi Kay

      I can’t speak to you legal immigration requirements as you should contact an immigration lawyer, however it’s always wise to start the process sooner than later.

      With respect to the tax questions…

      You’ll be taxed in Canada and the US on your US pension, however you’ll get credit in Canada for any taxes you pay in the US on the pension. If you’re considering withdrawing from your 401k to buy the house it will likely be more tax efficient to withdraw the funds before you become a Canadian tax resident to ensure you don’t pay additional Canadian tax on the pension income after you end.

      As you’ll be filing taxes in both countries when you become a tax resident of Canada you’ll have additional filing requirements such as FBAR forms as well (form 114). Hope that helps and don’t hesitate to call me at 250-381-2400 if you have any further questions.

      Phil

  60. Hi,

    My son is a US citizen and also a permanent resident of Canada. In August 2016, he left Canada to study in US college. This means he was in the US for only 4 1/2 months this tax year. At the moment his address is the college residence. He has been filing Canadian tax return since 2012, but this year he needs to file US income return. He was given grant by FAFSA and also received scholarship money from Canada. We are sending his monthly allowance to the US through his Canadian bank account. Which US tax form should he use? Are there other forms he should submit to IRS? When filling out the forms what address should be used, his Canadian or college residence address in the US?

    Thanks for your advice!

  61. Hello. I had a few questions concerning the FATCA. I was hoping to consult with someone before taking action, if any is needed. My mother, an American citizen, had some cash in her account outside America. However, in wake of the FATCA, she chose to give it to me (also a US citizen, currently living abroad) and my wife (a non-US citizen). My wife is keeping it in her account currently. We are holding it, though I think my mother will ask for the funds back at some point. My questions are:

    1. is it illegal for my wife to be holding onto the funds?
    2. if it is, how can we rectify the situation?
    3. My wife will soon become a green card holder. Do we have to report these funds since they are previously received to her being a US resident? If so, is it subject to taxation.

    TT

  62. Hi Phil,

    My husband is an American living and working in Canada as a permanent resident. He makes less than $30 000 per year. We just want to know if he should be filing as single since I am Canadian and which forms he should fill out.

    Thanks!

    Gina

  63. I am an American citizen with Canadian residency. We are currently living in Canada. My daughter has dual citizenship. Should I be claiming her in my us and Canadian taxes?

  64. Hello! My husband is a US citizen and is a canadian permanent residence since feb. 2016. He receives his US pension from social security benefits, roughly 8000$. Will that amount be cut if the US social security is informed that he lives in Canada now? I am still working, will his social security be lowered BECAUSE of my work income? We are very worried, filing for the IRS now AND Canada, but don’t want to loose any US pension income on his part…

  65. If I receive the disability tax credit from Canada, how does this affect my US taxes? I was approved for the credit after I renounced my US citizenship and I was also awarded retroactive tax years to claim (years when I was a US Citizen). Do I have to go back and adjust my US taxes if I want to claim the Canadian credit for these years that I was a US citizen? I would like to claim the retroactive credit, but without understanding the US tax consequences, I am reluctant to claim it as I don’t want to end up paying or even opening up a giant can of worms.

    • Hi Jim

      That’s great news that you were able to recover previously unclaimed refunds from CRA. The answer to your questions depend on a few factors.

      If in previous years you claimed a foreign tax credit on your US return for Canadian taxes paid (via form 1116) you may have unused foreign tax credit carryforwards on your 1040 currently. Because you adjusted your previous Canadian returns to reduce the ultimate amount of tax owing your 1040 carryfowards are likely overstated.

      You could go back and adjust your previous 1040 returns, however it may make sense to simply not use any of the carryforwards that are over and above what you actually incurred in Canada.

      If that doesn’t make sense please give me a call and we can chat.

      Cheers

  66. If a US citizen, living in CA and owning corporate shares moves to the US, I understand CA will do a deemed disposition and CA tax will be paid to CA upon change of residency.

    Will this tax paid in CA be held as a tax credit in the US and still be available to cover the tax owing when the shares are later sold (while no longer a CA resident; with the realized income being incurred in a later year, and being part of worldwide income being reckoned by the US?

    In other words, will double taxation take place?

    • Hi Ellen

      Yes, in cases where more than 50% of the value of your shares is not attributed to what we call “taxable Canadian property” (assets like Canadian real estate) Canada will deem these assets sold and the resulting capital gain will be taxes for Canadian purposes.

      You also have the ability to elect on the US side to ensure that you’re not double taxed on the asset going forward.

      Hope that helps.

  67. I know this article is a few years old but I figured I would share my situation as well since the comments have been very helpful. I lived in the US until I was 12 and then moved to Canada. I only started working a couple years ago and filed my Canadian taxes online. My familiarity with tax law up until the last few days was for all respects zero. I received a W9 from my bank in the mail in June and had no idea what it was until I started researching and the full implication of it hit me. I am a student who works a minimum wage job and the costs of this situation (both in terms of getting an accountant and potential penalties) scares me. From my understanding because I’ve made less than US10K in each of the last 2 years, I don’t have to file US income taxes. It’s only in the last year my accounts have gone over 10k and that’s because of student loans. It’s my understanding from this I owe 1 year of FBARS. In July-August I am in Cyprus, totally out of the US or Canada visiting family, so there is no way of my dealing with this until I get back. The thing that concerns me is that my bank has required me to send back in my W9 within the month and I have read I should not do so before filing my US taxes. Could I send the FBAR in through the streamlined process online myself (is it understandable to lay people because I fear it is not and is it inadvisable for a layperson to do so given the potential penalties)? I am unsure what to do.

    • Hi Natalie

      Yes, sending back the W9 would put you at an increased risk of FBAR penalties. In cases like this it’s important to get some professional advice on your situation.

      Using streamline to file your late FBARs (likely would have to file late 1040 returns as well) could be a good option.

      Unfortunately the cost to file under streamline could be as high as $1,500 even in relatively simple cases.

      Phil

  68. Very good article. Do you know if I have to mention my husband on my US tax return. He is a non us citizen and we both live in Canada. I file as an individual obviously but I’m wondering if I need to mention him as a spouse.

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