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By David Ingram
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I really enjoy reading your material and have learned a lot. I believe I have a pretty good understanding of the US/Canada cross border issues and understand the penalties for non-compliance.
My question to you is can you provide some recent examples of penalties for:
* non-compliance for FBAR reporting,
* non-filing of US citizens living in Canada,
* non-filing of US non-residents not reporting US rental,
* and Snowbirds who have met substantial presence test.
I read that enforcement has been stepped up but yet have not heard of anyone getting nailed.
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A great Question and the answer is that I can not provide anything recent because most people who have been caught go to a lawyer, not me.
I know of many but have not been involved.
Jerome Schneider paid $100,000 and served 6 months. As part of his plea bargain, he turned over the names of 1072 clients he had helped hide assets so FBAR was not complied with.
http://www.quatloos.com/schneider_witmeyer_guilty.htm
I did have a 105 year old lady who was fined $10,000 for failure to file the TDF 90-22.1 -
And I did meet a 68 year old lady who paid a $60,000 fine and was sentenced to 6 months but only served one day.
Some of the big ones that have made the press are those who had Swiss bank accounts, mostly with UBS.
Read more at
http://www.centa.com/article.php/20100207020559207
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I am a dual US/Canada citizen living and working in Vancouver, BC. I work on a casual basis at the xxxxxxxxx xxxxxxxxxxxx and I freelance as an xxxxxxxx. The freelance work I do is entirely to publications in the US. I have a home office and receive income from time to time from publications in the US to whom I sell my material.
I'm looking for an accountant who knows both countries tax laws and self-employment issues for both countries. The amount of money I make from the US is minimal at this point - maybe two or three thousand dollars per year.
Is this something you are available for and can you give me some idea of the cost. I don't cross the border, I don't have investments, no assets. The only complexity is the self-employment part, and how to deal with both countries simultaneously.
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Your situation is certainly what we do and have done for 47 years.
I am attaching a copy of our suggested prices.
As a US citizen in Canada all of your income is reportable on an annual basis to the US.
You should read the Oct 1993 newsletter on dual citizenship and my Oct 95 newsletter on the responsibilities of a green card holder or US citizen living outside the US.
You can see these in the top left hand corner at www.centa.com
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| Q: |
1. Good morning, I saw a tape of "Money and Wealth" yesterday on the tax implications for snowbirds with property in the US and found it very informative, learning things I probably should have known already.
2. Hopefully, you are able to steer me in the right direction regarding my Florida property. I purchased a home in May of 2009 with the plan to spend approx 150 to 160 days each winter there. One of my sisters, also Canadian, has a small share and we have no plans to rent it at all. I was there from Nov 15, 2009 to April 20, 2010, a total of 156 days I believe. You talked about a total of 183 days over a thee year period. so if I work this out on a calendar year, I would have to skip every third year in order to avoid paying US Income Tax.
3. Not counting 2009, the year of purchase,I would average about 230 days in the US, using their 1/3 and /1/6th rule for previous years, even though the majority of time is spent in Canada. There are many other Canadians that spend every winter in the US, US property owners, that have not had to pay US tax. Am I reading your comments wrong or are there a large number of people not following the tax laws?
4. I do know there will be tax implications when the property is sold, but I was also told that if I had a permanent address in Canada and spent more time here than in Florida, I would not be subject to Florida or US tax.
5. Another Canadian resident, wintering in Florida also, told me that I had to have Social Security number as a Florida property owner, so I called the IRS and asked them if this was the case. Once I explained the situation, I was told that if I was not going to have any income in the States, that no it was not necessary. If I had plans to rent out my home, then I would have to file a return and would require a number.
6. I guess all I really need to know is YES|, I will have to skip every third year to stay under the 183 day rule, of no I don't. I would appreciate a reply as everything I have read, just leaves me more confused than ever.
7. I have a Tax Planning book and it also has the 1/3. 1/6 rule and if this is really the case, it defeats the purpose of trying to winter away from the cold and now.
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Most US advice you will receive in Florida, particularly from fellow residents, will be incorrect.
I have numbered your paragraphs and will try and give you a hint.
2. If you and your sister are down there for more than 183 days using the substantial presence test, you simply have to file a 1040NR tax return and a form 8840 to prove your closer connection to Canada. This is really no more trouble in the long run than if you lived in Montreal and were filing a Canadian Federal AND a Quebec provincial return.
3. Filing a tax return does NOT mean that you are paying tax. It merely means that you are filing a tax return which in this case would prove that you do NOT owe tax as a rule. However, it will also mean that you are "in line" and will not be subject to arbitrary failure to file penalties.
4. You were misinformed. If and when you sell this property, the first responsibility is to the US when it comes to income tax. You will report it in Canada second and claim a foreign tax credit for 50% of the tax you have paid to the USA.
5. Again the IRS itself gave you incorrect advice. If, you told him or her about the number of days, they should have told you that although you do NOT qualify for a Social Security Number, You MUST get an ITIN (Individual Taxpayer Identification Number) in order to file those 1040NR and from 8840 returns. You get an ITIN by filling in form W7.
6. Why would you give up 5 months in Florida. Filling out the forms is a pain in the neck but it is just paper. Read my April, 1994 newsletter at
www.centa.com/staticpages/index.php/April1994CEN-TAPEDE
This newsletter was copied by the CRA into their Snowbird pamphlet two years later. Just live with the rules and file the pieces of paper. Enjoy yourself.
7. I do not know what book you have bu8t it was and is correct. At the risk of being commercial, just remember that we are set up to look after the paperwork when you need it done. You can courier, snail mail, email or fax it to us.
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