Taxation Post: FATCA for Americans Living In Canada. It’s Time to Prepare.


Copied in whole, with permission, from www.intaxicating.wordpress.com.

In case you have just starting to catch wind of FATCA and you are wondering if you are going to get caught up in its web, you might find this post very useful.  I have gone to the Internal Revenue service (IRS) website and pulled out their passages on American’s living in Canada and the expectations on how they will be handled under FATCA – coming globally January 1st, 2013.

The IRS has clearly stated that “All persons born in the United States are US citizens.  This is the case regardless of the tax or immigration status of a persons parents.  Furthermore, a person born outside the United States may also be a US citizen at birth if at least one parent is a US citizen and has lived in the United States for a period of time.”

This is the link to that information from the IRS website; http://www.irs.gov/businesses/small/international/article/0,,id=244868,00.html

If you are of the belief that as an American living in Canada that you do not need to file a US tax return because you do not generate any US source income in any way, that is also incorrect;  “The IRS reminds you to report your worldwide income on your US tax return and lists the possible consequences of hiding income overseas.”

More information on consequences of hiding income overseas (including Canada) in this link.  I have broken out some key facts below; http://www.irs.gov/businesses/article/0,,id=180946,00.html

As a US citizen living in Canada, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the US or not.

Not reporting income from foreign (including Canadian) sources may be a crime.  The IRS and its international partners (including the CRA) are pursuing those who hide income or assets offshore to evade taxes.  Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions.  The goal is to ensure US citizens and residents are accurately reporting their income and paying the correct tax. 

In addition to reporting your worldwide income, you must also report on your US tax return whether you have any foreign (Canadian or international) bank or investment accounts.  The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:

  • You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and
  • The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

More information on foreign financial account reporting requirements is in News Release FS-2007-15, Foreign Financial Accounts Reporting Requirements and Publication 4261, Do You have a Foreign Financial Account?

This link below outlines the filing expectations for US Citizens and resident aliens abroad.  You have until June 15th to file your US tax returns each year:

http://www.irs.gov/businesses/small/international/article/0,,id=97324,00.html

Most common question I have been asked:

“I am a U.S. citizen who moved to Canada to live and work there as a Canadian permanent resident, do I pay both U.S. and Canadian Taxes?

Answer: As a U. S. citizen living in Canada you:

Are required to file annual U.S. income tax returns and may be required to file certain information returns if applicable (e.g. Form 8891, U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans; Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts; TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR)).

You must report your worldwide income on your US income tax return if you meet the minimum income filing requirements for your filing status and age.

You must contact the Canadian Government to determine whether you must file a Canadian tax return and pay Canadian taxes – unless you are already filing tax returns here in Canada, then this step is obvious.

You may be able to elect to exclude some or all of your foreign earned income, if certain requirements are met, or to claim a foreign tax credit if Canadian income taxes are paid.

Behind on your filing to the IRS, are you?

The IRS began an open-ended offshore voluntary disclosure program (OVDP) in January 2012, on the heels of strong interest in the 2011 and 2009 programs, which may end at any time.  The intent of this program is to offer people with undisclosed income from offshore accounts another opportunity to get current with their US tax returns.  The 2012 OVDP has a higher penalty rate than the previous program but offers clear benefits to encourage taxpayers to disclose foreign accounts now rather than risk detection by the IRS and possible criminal prosecution.

Rumour has it that in September, the IRS will be releasing some new documents (besides the final regulations) aimed at helping Canadians file their US tax returns up to date – the IRS wants the most recent 3 years and 6 years of FBAR information from Canadians.

My thoughts here are that the IRS thinks all Americans living in Canada are not paying taxes so that anyone with over $1500 owing will still be penalized.  Once these US persons provide proof of their filing of Canadian tax returns at a higher rate, then the best the IRS can get from these residents if valid certifications and by adding them to the database, another potential income source to track.

FAQ Offshore voluntary disclosure program:

http://www.irs.gov/businesses/small/international/article/0,,id=256774,00.html

So if after all this you are unsure if you need to file you might want to seek out an accountant or lawyer which a strong US presence to advise you.  Remember if you are a US person and you let your bank know, they are required under FATCA to notify the IRS.

At the very least you should prepare your US tax returns for the previous 3 years and include the Canadian taxes paid under “foreign tax paid” to see where you fall under FATCA.  Then take them to an accountant with a strong knowledge of US tax in order for them to ensure the US return is correct and have them advise you on where they feel you fall under FATCA.  From there… It’s up to you.

There is no hiding from FATCA, so prepare now and prepare for the future before the IRS gets to you first.

Hiring a Nanny in the US: Not an Easy Task.


English: Seal of the United States Department ...
English: Seal of the United States Department of Homeland Security. (Photo credit: Wikipedia)

The kind folks at www.nannypro.com brought this article to my attention, as a Canadian, in order to help shed some light on the requirements and obstacles around hiring nannies in the US.  The article link is below;

http://www.nannypro.com/blog/why-it%e2%80%99s-not-so-easy-to-hire-a-nanny-from-overseas/

Once you get through this informative post you will come to the same conclusion that they did, and that it is a long, complicated process to hire a nanny from overseas to work in the US.

Some of the delays include;

Potential nanny employers in the US are legally required to verify a nanny candidate’s employment eligibility using form I-9 from the Department of Homeland Security, U.S. Citizens and Immigration Services.

The purpose of the form is for all U.S. employers to complete and retain a Form I-9 for each individual they hire for employment in the United States. This includes citizens and noncitizens. On the form, the employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and relate to the individual and record the document information on the Form I-9. The list of acceptable documents can be found on the last page of the form.

The form can be found here;

http://www.uscis.gov/files/form/i-9.pdf

The handbook for the form is here;

http://www.uscis.gov/files/form/m-274.pdf

The other key concern here is that in order for a nanny to legally accept work in the United States, she must be a citizen of the United States, a noncitizen national of the United States, a lawful permanent resident, or an alien authorized to work in the United States.  As a result of this language and strict criteria, most nannies outside of the United States aren’t able to legally accept work in the United States.

Hmmm.  Great law, eh?

As a result, many parents turn their attention to Au Pairs since the U.S. Department of State, Bureau of Educational & Cultural Affairs has a visa progran to bring over foreign nationals between the ages of 18 and 26 years of age who are a secondary school graduate or equivalent and who are proficient in English to continue their education and experience American life with a host family.  Here is where it gets interesting… They can do this in exchange for room, board, and a stipend, Au Pairs provide limited child care.

This is unfortunately a short-term solution.

On the horizon, the U.S. Department of Immigration recently reclassified live-in nannies from unskilled to skilled workers, meaning some nannies in some countries may be eligible to secure a visa to work in the United States as a live-in nanny.   Emphasis on the word “some”.

But if this appeals to you, this article recommends that these parents seek the services of an immigration attorney who specializes in securing visas for nannies, which makes sense.

So after all this if you are still interested in looking for a live-in caregiver, I wish you the best of luck and I encourage you to get moving on this process early.

Some parents register their kids for school while pregnant with that child and unless the rules and regulations lessen, hiring a caregiver in the US will be the next task.

What is on your radar?


Here are some items on my radar right now which may or may not make their way into a real blog post down the road;

1. I understand there was a shooting at the Caribbean Carnival (formerly Caribana). Some idiot shot one of the dancers then fired into the crowd while ignoring the police telling him to drop his gun so they shot him.

WOW.

I think he set back the carnival 10 years.

I’m not sure if the police killed him or not, but if they didn’t he should pay the organizers a lot of money for ruining what looked like a great event.

2. Rob Ford went to this event. He didn’t go to the Gay Pride parade but he came here. Oh boy… This is going to be a wonderful Ford-bashing week by the lefties.

3. Roberto Alomar was elected into the Major League Baseball Hall of Fame last weekend and today in Toronto at the Blue Jays game the team held an on-field celebration to honour him.  I remember Alomar for the game-tying home run in the playoffs off of Oakland A’s ace relief pitcher and a player I detested growing up, Dennis Eckersly. I also remember Alomar for spitting in the face of an umpire. What I didn’t remember was that he was only a Blue Jay for 5 years. I thought it was much longer and when I searched his stats on the net I was surprised to know that he played for the Orioles for 4 years with Cal Ripken Jr, and then with the Indians, Mets, White Sox and finally retiring after signing with the D’Bax. I knew he came from the Padres to the Jays but the rest I could not recall. Odd.

4. Is it just me or do watermelons suck this year? I recall reading and blogging about a field of exploding watermelons from China – the result of too much water and genetically modified melons with thinner rinds – and I think about every melon we’ve had this year which has been over ripe and lacking of any real flavour. Maybe the melon farmers should go back to the real melon seeds and sell a tasty product and not mass produce garbage.

If I took back every crappy melon to the store I bought it, I would not have paid for any this year.

5.  Hey, look at that!  It’s August 1st today, and that means we’re in the stretch run for back to school… Already. Man do Toronto summers go fast, especially when the first month is all rain, and the previous month no rain and a ton of heat. 

With the fall coming that tells me it’s time for;

  • vacation
  • taking the kids apple picking
  • taking the family to see beautiful fall colours
  • back to school shopping
  • the CNE!

6.  In what I feel is a mistake that could happen in Toronto if the “Downtown Elite” got their way, the President of the US agreed to raise the debt ceiling for the states.  What that means???  It means they are prepared to take on more debt without going bankrupt.  This ostrich like behaviour is going to come back and bite them in the ass big time and will for sure prolong the recession. 

Until both the republicans and the democrats agree that lavish spending and ridiculous compensation for CEO’s and professional athletes are brought back down to earth, the recession will not end.  Since a recession is essentially a view of public confidence in the economy the government has to appear to be doing something to equal the playing field before we can see the light at the end of the tunnel.

Case in point… HSBC.  Last week they cut 10,000 jobs, and this week 25,000 more.  I can’t see a company as well run as that shedding 35,000 jobs and then suffering, so that tells me they have 35,000 more positions than they needed.  WOW.  That’s a huge hit to the workforce no matter where the jobs are located.  And this is just one example.

7.   Ford recalled 1 million trucks due to faulty gas tanks and socialists everywhere are prepared to descend on Toronto City Hall looking to blame either Rob or Doug…

Stuff on my mind today


I just read that the Marilyn Denis Show, www.marilyn.ca  is guest hosted by Cabbie (Cabrel Richards) from The Score.  If you have even seen The Score, you will want to watch Cabbie in this new venue.  With Denis, a Toronto radio and TV legend in Toronto pairing up with Cabbie, this show is now a must see.  Set your PVR’s.

Now for the, is it just me or is the world getting stupider, portion of our show…

When Sarah Palin accused journalists and pundits of “blood libel” in the wake of the deadly Arizona shootings, it caused quite an uproar.  At first I figured it was because it’s Palin and she says a lot of dumb stuff, but apparently, bad on me for not knowing more about my history.

The term “blood libel” is a direct reference to a time when many European Christians blamed Jews for kidnapping and murdering Christian children to obtain their blood.  Jews were tortured and executed for crimes they did not commit.

In a video posted to her Facebook page early Wednesday Palin accused the US media of inciting hatred and violence after the shooting that gravely wounded US Rep. Gabrielle Giffords by saying, “But, especially within hours of a tragedy unfolding, journalists and pundits should not manufacture a blood libel that serves only to incite the very hatred and violence they purport to condemn. That is reprehensible.”  I doubt she said this with the intent of being anti-Semitic…  She doesn’t seem that smart.  Sorry.

A police officer in Toronto was killed when he was run over by a stolen snow plow which went on a rampage in downtown Toronto… I feel sorry for the cop and his family. But how and why do crazy people get all the press now? One shoots a congresswoman in Arizona, another steals a snowplow.  What ever happened to getting your fifteen minutes of fame without hurting someone like on YouTube by posting a video of yourself.

Why in the world is everyone so excited about Ted Williams, the homeless guy with the great voice.

His story is a slap in the face to all the homeless. Let me first state that I detest that there are homeless in the streets (had to step over one yesterday while working downtown – it was -15 celsius and this guy was ona sewer grate. They are gross, smelly and bugging people for money for wine. The City should be rounding them up, cleaning them up and doing whatever it takes to get them back on their feet. I think as human we owe that to them. They are there for a reason, usually related to some mental illness. Ignoring them or feeding them is not the solution…

So back to Williams… He gets noticed for having a nice voice, picked up, cleaned off and people expect him to change. He’s in rehab today after getting in a fight with his daughter who didn’t care about him and let him live in the street for so many years.

Before we thrust him in the spotlight, we need to take a step back at all these lost souls living in the streets without the golden voices, and figure out a plan to help them succeed, not to for our benefit. Williams’ handlers might be worried now about their meal ticket…

Under the category of WTF…
An Iranian deputy foreign minister has said the United States and Israel are to blame for the collapse of Lebanon’s government.

Lebanon was without a government on Thursday after Hezbollah and its allies resigned from cabinet over a UN probe into the assassination of former premier Rafiq Hariri.

Tell me how this is Israel’s fault? And why exactly is Iran so interested in Lebanon, now? I’ll tell you why.

For months, terrorist group, Hezbollah, which is backed by Iran and Syria, had been pushing current PM Saad Hariri to reject a UN tribunal which was going to indict senior Hezbollah members in connection with Rafiq Hariri’s 2005 assassination.

So to clear this up… Hezbollah – a terrorist organization according to the UN – is involved in the killing of Lebanon’s PM, then blames Israel and the US for the releasing of a UN report blaming Hezbollah.

Errr, yeah. Nice swerve… NOT.

And last thought.

Who, or what the fuck is Nicki Minaj? I heard a song of hers earlier in the day in my car where she uses the expression, “nappy headed hoes” throughout a song which was the exact same expression used by Don Imus, the long-time radio host which got him fired from radio in 2007.

Below is a recap of that incident, I encourage you to read through it, and please take note of the last paragraph.

 For Imus, it all started on April 4, 2007, during a discussion about the NCAA (US college) Women’s Basketball Championship, Imus characterized the Rutgers University women’s basketball team players as “rough girls” commenting on their tattoos.  His executive producer responded by referring to them as “hardcore hos”.  The discussion continued with Imus describing the girls as “nappy-headed hos”.

Imus immediately issued a statement of apology:

I want to take a moment to apologize for an insensitive and ill-conceived remark we made the other morning regarding the Rutgers women’s basketball team, which lost to Tennessee in the NCAA championship game on Tuesday. It was completely inappropriate and we can understand why people were offended. Our characterization was thoughtless and stupid, and we are sorry.

Still, on April 9, Imus appeared on the Reverend Al Sharpton’s radio talk show to address the controversy.  Sharpton called the comments “abominable”, “racist”, and “sexist”, and repeated his earlier demand that Imus be fired.

Even CBS board member and former NAACP president Bruce Gordon said that Imus should not be allowed to come back even after the suspension, claiming that his remarks “crossed the line, a very bright line that divides our country.”

Eventually, CBS Radio cancelled Imus in the Morning by making a statement that contained some of the following language; “From the outset, I believe all of us have been deeply upset and revulsed by the statements that were made on our air about the young women who represented Rutgers University in the NCAA Women’s Basketball Championship with such class, energy and talent. There has been much discussion of the effect language like this has on our young people, particularly young women of color trying to make their way in this society. That consideration has weighed most heavily on our minds as we made our decision.”

What’s important here is that the rationale for Imus being cancelled / suspended was the impact of his words on young woman of colour and condemnation came from all over the place, yet these same people – Al Sharpton, Jesse Jackson who jumped all over Imus have been really silent as Nicki Minaj sings about it… I believe this is called a double standard!

Ironically, just hours after his firing, Imus attended a 3-hour meeting with the basketball team where Imus again apologized and the team accepted it. It was also revealed that the basketball team had NOT asked for Imus to be fired.

Jesse Jackson and Al Sharpton’s role in the controversy has drawn complaints. Conservative African-American columnist Armstrong Williams criticized Jackson and Sharpton for “ratcheting up the rhetoric” and holding Imus to a “higher standard” than they would have themselves judged by. Sharpton has been criticized for his hypocrisy in not attacking rappers who use similar terms.

In an even more bizarre twist, Nicki Minaj has been nominated for an NAACP Image Award for “Outstanding New Artist”… The same organization that pushed for Imus ousting for the negative impact his song had on woman of colour.

I’m confused.

Could someone please explain…

September 29th – National Coffee Day


Apparently today, September 29th, is National Coffee Day.  I know it is in the US, but in all the coffee I drank today in meetings I did not hear anything about it being National Coffee Day in Canada.  I mean, if it was, Tim Horton’s would advertise it, right?!?  It would also probably be a National holiday…

So to my US friends, I wish you a good cuppa java.

Happy National Coffee Day!

And from a new blog that I found, Coffee House Observer, I bring some coffee facts.
 

  • Coffee was first rumoured to have been found by farmers in Ethiopia who noticed that their goats would get all jumpy after eating cocoa beans, so they decided to try it for themselves.
  • Coffee was a food before it was a drink. 
  • Coffee grows on trees.
  • The expression “cup of Joe” was first coined in World War II. Soldiers, known as “Joe’s,” were apparently big coffee drinkers.
  • Only two types of coffee tree are widely cultivated. 70% of the world drinks coffee from Arabica coffee trees. The rest drink coffee from Robusta trees.
  • Oil is the only product that gets traded more than coffee. Cool, eh?
  • A coffee tree takes about 5 years to mature. The average annual yield from a coffee tree is only enough for one roasted pound of coffee.  Hmmm, I’m going to have to plant something else in Farmville…
  • My favourite kind of coffee when I do go Starbucks, the Americano is another coffee term coined during World War II.  American soldiers would order espresso with water to cut down on the bitter flavor.
  • Brewed coffee has been drunken for 700 years.  Instant coffee, was invented in 1906 in Belgium.
  • On average, 1400 million cups of coffee are consumed every day around the world.  I accounted for 3 today.