US/Canada Expats: How to fix FACTA FBAR tax issues 🇨🇦

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Along with FATCA, and FBAR filings, these are Canadian-specific tax issues our team of tax attorneys, CPAs, and tax preparers assist our clients with.

RRSPs (Registered Retirement Savings Plans) are now exempt from trust reporting, and the contributions can be deferred income.
TFSAs (Tax Free Savings Accounts) – There is little guidance to say if these should be treated as foreign trusts, foreign corporations, disregarded entities, or income that flows directly to the taxpayer. We do case by case analysis on these accounts.
RESPs (Registered Education Savings Plans) and RDSPs (Registered Disability Savings Plans) are treated as foreign trusts that need to be reported on IRS Form 3520/A, and the income must be reported on a US return annually.
PFICs (Passive Foreign Investment Companies) are treated as mutual funds.
There are specific tax credits for Canadian tax and sourcing rules.
Canadian bonds and Canadian guaranteed investment certificates (CDs) get OID treatment when they are held for more than one year.

US-Canada Tax Treaty Information

The US has a tax treaty with Canada. Under tax treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from U.S. taxes on certain items of income they receive from sources within the United States. These reduced rates and exemptions vary among countries and specific items of income. Under these same treaties, residents or citizens of the United States are taxed at a reduced rate, or are exempt from foreign taxes, on certain items of income they receive from sources within foreign countries. Most income tax treaties contain what is known as a “savings clause” which prevents a citizen or resident of the United States from using the provisions of a tax treaty in order to avoid taxation of U.S. source income.

Additionally, as part of the Treaty, the two countries have mutual agreements in place to collect taxes on behalf of the other country. For instance, Canada can collect taxes on a US person who is living in Canada.

Parent & Parent LLP
144 S Main Street
Wallingford, CT 06492
(203) 269-6699


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