QUESTION:
I have both Canadian and US citizenships. I have lived in
Canada for many years. What is the tax consequence of
abandoning my US citizenship? I have investments in
Canada, but also expect an inheritance from the States in the
future.
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david ingram replies:
If you abandon your US citizenship to avoid income tax, the law passed on
Sept 30, 1996 states quite clearly that you are then banned from entering or
visiting the US for life.
In addition, the US reserves the right to tax you for ten more years and can
collect under the terms of the US / Canada Income Tax Convention.
That would be a big step to take.
In the meantime, make sure that you are filling in the 8891 form for your
RRSP accounts and the T DF 90-22.1 forms for your accounts.
The following previous Q & A will explain them.
Hi!
I am XXXXX XXXXXX, a Canadian citizen born in Vermont USA in 1959 from
Canadian parents but lived only 8 years there. I called you few months ago
to have information's about my American citizenship an you told me that I
was as American as Georges W. Bush!!! I took others information's from other
sources and I decided to go on and declare my citizenship to the U.S.
government. So, can you tell me what to do next. Someone told me that I have
to make an income declaration for the last 6 years. Am I right and would you
help me to do it? Please contact me and tell me how to do that. Thank you!
This is my email address:
xxxxxxxxxxxx at xxxxx.com
===================================================
david ingram replies:
Congratulations!
1. You are correct, You need to do US back tax returns for 6 years which
means 1999, 2000, 2001, 2002, 2003 and 2004.
2. I need the year end statements for Dec 31 2002 , Dec 31 2003 and Dec
31 2004 for each and every RRSP account.
This information is required is to file the form 8891 for 2003 and 2004.
You can see form 8891 at http://www.irs.gov/pub/irs-pdf/f8891.pdf. the
penalty for not filing form 8891 is 35% of the money in the RRSP plus 5% for
every year it is not filed starting in 2004.
3. I also need a list of all and any financial accounts and the maximum
balance in the accounts at any one time during the year 2004 that you have
signing authority over. I am assuming here that the total of all balances
(including your RRSP accounts) is over $10,000. If all your accounts
combined do not add up to over $10,000 US dollars, you do not need to give
me the information in 3 but I need the information requested in 2 even if
the RRSP is only $500.00.
This information is required to file form T DF 90-22.1 which can be found at
http://www.irs.gov/pub/irs-pdf/f9022-1.pdf note that there are fines of up
to $500,000 plus five years in jail for failure to file this form.
Make a copy of the your Canadian returns and the Assessments if available
and send them to me at:
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 10 PM 7 days a week (please do not fax or phone
outside of those hours as this is a home office)
email to taxman at centa.com
www.centa.com www.david-ingram.com
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