QUESTION: I am a Canadian citizen working in US on H1B visa for last three
and half years.
Before coming to US I have some investment in RRSPs and also have a bank
accounts in Canada
For last three years I am paying taxes in US. First year I filed papers in
both countries and paid additional tax in Canada
My question is do I have to file any tax papers in Canada for my earnings in
US or for the RRSP investment in Canada? Or do I have to declare anything
on my US tax filings?
Thanks
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david ingram replies:
If you are living full time in the US with no immediate family (wife and
children) in Canada, you do not need to file a Canadian return.
All of your account holders should Know that you are living in the US. If
any interest or dividends are paid to you by a financial institution, the
institution should deduct withholding tax and remit it to Canada. No
Withholding is required for RRSP profits BUT,
You have to report the internal earnings to the IRS on US form 8891 and the
existence of ALL your Canadian accounts to the Department of the Treasury on
form TDF 90-22.1
find 8891 here - http://www.irs.gov/pub/irs-pdf/f8891.pdf
penalty for not filing is 35% of the amount in the plan plus 5% per year for
every year you fail to report it.
find T D F 90-22.1 here - http://www.irs.gov/pub/irs-pdf/f9022-1.pdf
penalty for failing to file a TDF 90-22.1 for each foreign account is up to
$500,000 plus 5 years in jail.
I actually had a 105 year old client who was sent a $10,000 fine for not
reporting $38,000 in the Royal Bank of Canada in Edgemont Village in North
Vancouver.
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