Americans living in Canada risk facing massive tax penalties

Uncle Sam | 1184 hits | Aug 18 8:32 pm | Posted by: Strutz

An Aug. 31 deadline looms for an untold number of Americans living in Canada — certainly many thousands, and possibly hundreds of thousands — who are at risk of massive penalties from the IRS, even if they have no U.S. income, owe no back taxes and haven’

Comments

by saturn_656
Fri Aug 19, 2011 4:22 am
Can US citizenship be renounced?
by GreenTiger
Fri Aug 19, 2011 4:37 am
Yes, but it has to done at at a US Embassy or possibly a consulate.
by DrCaleb
Fri Aug 19, 2011 2:33 pm
But it won't save them from back taxes. Only future ones.
by Prof_Chomsky
Fri Aug 19, 2011 3:17 pm
What a load of crap. Nothing like going after the average working class citizen with a technicality, while they willfully ignore the offshore tax havens of billionaires.
by saturn_656
Fri Aug 19, 2011 4:09 pm
"DrCaleb" said
But it won't save them from back taxes. Only future ones.

The U.S. Foreign Account Tax Compliance Act, which comes into effect in 2013, will require non-U.S. financial institutions to tell the IRS about any clients who are American citizens.

Renounce it before 2013 and Canadian banks can't send your personal information to the IRS.

How can the US pass laws on Canadian banks domestic operations anyway?

Get back on your side of the line.
by bootlegga
Fri Aug 19, 2011 4:22 pm
"saturn_656" said
But it won't save them from back taxes. Only future ones.

The U.S. Foreign Account Tax Compliance Act, which comes into effect in 2013, will require non-U.S. financial institutions to tell the IRS about any clients who are American citizens.

Renounce it before 2013 and Canadian banks can't send your personal information to the IRS.

How can the US pass laws on Canadian banks domestic operations anyway?

Get back on your side of the line.

By squeezing their US subsidiaries...for some of the big 5 banks, their business south of the border exceeds their Canadian business. That's one of the reasons they have changed names from Toronto Dominion to TD, Royal Bank of Canada to RBC, etc.

Dueck said the IRS has the clout to pressure Canadian institutions that do business on both sides of the border into doing this. So the only way for Americans living in Canada to avoid being identified would be to have no dealings with any financial institution, or to commit perjury — an option he emphatically advises against — when their bank asks about their citizenship.

Still the work around is to deal with a smaller local financial institution like a credit union or local bank (Edmonton has Servus for example).
by bootlegga
Fri Aug 19, 2011 4:23 pm
I find this even worse...

Even more chilling, he said, Canadian-born children of American citizens may not realize they may automatically get U.S. citizenship without ever making any effort to apply for or acknowledge it. So some may be at risk of penalties without even realizing they’re dual citizens.
by saturn_656
Fri Aug 19, 2011 4:37 pm
http://www.theglobeandmail.com/globe-in ... le2067393/

That means that people like Kerry Knoll’s two teenage daughters, who have never had a U.S. address or earned a penny there but have dual Canadian and American citizenship, will have to file U.S. tax returns on accounts they hold in Canada and may face penalties.

“Suddenly we are being told that my daughter’s savings account from her summer job is considered an illegal offshore account by the Americans, something that I find preposterous,” Mr. Knoll said in an interview.

“My daughters might owe thousands out of their registered education savings plans (RESP). These are not even taxes, these are penalties because it was not reported. And the reason we did not report it is because we had no idea we were required to,” Mr. Knoll said.

Yep, not only are they going after American emigrants... they're going after native born Canadians as well because one or both parents are American.

Government has to step in, this is bullshit. The IRS is stepping outside of its jurisdiction.
by BartSimpson
Fri Aug 19, 2011 4:40 pm
This is the Obama administration putting the squeeze on the middle class because this mostly affects working people who live outside the USA.

As for myself, I do not disclose my foreign assets and holdings unless I access the dividend or interest income from them and then I only disclose the income not the source of it.

The IRS doesn't like that and they can suck the sweat off my left nut for all I care.