US citizen living in Canada

Forum|Forum|5 years ago
March 15, 2021
1 reply
6 views

Have a new client, wife is US citizen, been in Canada for 4 years, filed all Canadian tax returns. Does she need to file a US return, her income has never been above $8,000 in any year.

Also there is some type of reporting called "FBAR", seems to be about bank accounts.

Do any of these two items need to be filed with US.

Any help would be greatly appreciated

Thanks

L. Demers

ProFile (Canada)

This topic has been closed for replies.

J

janisbossenberry

Level 7

As a US citizen, she must file US tax returns reporting her world-wide income. She must also file a FBAR (Foreign Bank Account Report) if amounts in Canadian bank/financial accounts (including joint accounts, RRSPs etc) exceed $10,000 equivalent US highest balance during the year. There is a further requirement to file Form 8938 with the tax return if the financial balances exceed $200,000 highest balance during the year. If she files her US returns, she will get those nice Covid special payments the US is paying out so she should have been filing even if her income is low. Note that penalties for not filing the FBAR (which is separate from the tax return) and the Form 8938 (which is part of the tax return) are large.

L

ldres1985Author

Level 4

Thank you for taking the time to respond to my question.

In your opinion what are the chances she would be penalized if she started to comply in 2020?

How strict is US on this issue?

Thanks in advance Janisbossenberry

J

janisbossenberry

Level 7

It is really hard to say. Some people used to just start filing and try to slide under the radar. However, there is now a procedure for late filers called the Streamlined Filing Procedure. If that procedure is followed (including for filing the FBAR), then penalties are waived. I never recommend that people just start filing, especially if they have large enough financial accounts to require the Form 8938 to be included with their tax return.

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