US outland applicants' thread :)

[rhcohen2014]

So it would be wise to have my own account and put the vast majority of the money in my wife's account? On that note, would having a joint account with say "Over" 30K steadily in it be wise? I do not want to have to report this account; I'd think that because it was a joint account they wouldn't need to know, correct? She is Canadian I am American why would "Her" income matter? I am confused. FK'n Uncle Sam :-\

if you have a joint account with you canadian wife in canada that regularly has a balance of over $30,000, then yes it, and all of your foreign accounts must be reported by FACTA for FBAR(i'm not sure which one). that is the whole point. ANY account not in the US held by a US citizen or when they are the signatory (ie: business or children accounts) on the account must be reported. if you don't want your accounts reported, then the accumulative amounts in ANY account outside of the US can't exceed $10,000, and you can't be a signatory on other accounts.

no matter if you have a separate account or joint accounts. if the total of both accounts total $10,000 or more, then they have to be reported.

 

[IvanP]

So it would be wise to have my own account and put the vast majority of the money in my wife's account? On that note, would having a joint account with say "Over" 30K steadily in it be wise? I do not want to have to report this account; I'd think that because it was a joint account they wouldn't need to know, correct? She is Canadian I am American why would "Her" income matter? I am confused. FK'n Uncle Sam :-\

FBAR cares about assets, not income. If it's a joint account, even if your wife put all the money in, it's considered yours. If the account is hers, has over $10k, and you have the ability to take money out without her consent, the US considers it yours, and you have to file the FBAR. If it's just your Canadian wife's account and you can't touch it without her taking it out, the US doesn't care about it and you don't have to file.

If you've already got the ability to sign on that account, you'll have a filing obligation.

 

[fizban]

Right, and she can keep her US bank accounts if she wants - there's really no need to move everything. It can be handy to have a US checking account...

Oh yes, most certainly, she'll be keeping most of her US stuff. Might as well take advantage of US financial offerings if you can.

 

[saria1]

Right, and she can keep her US bank accounts if she wants - there's really no need to move everything. It can be handy to have a US checking account...

I hope you don't mind me jumping in on this conversation.

Since we're both Americans, I wonder if we were to keep our American TD account open and opened a cross border account where we can wire transfer into the Canadian TD account as needed. We were thinking of having the American company direct deposit into our American account and wire transfer the money as we need into the Canadian TD account. Would this be the best option for an American living in Canada while working for an American company? Transfer what we need, but always keep it less than 10k in our Canadian checking account? All the meanwhile keep all our American accounts and savings etc here in a America? We have no intentions of giving up all our accounts in this country and continuing to use American Credit cards, since a good Canadian card is 19.99%. We'll be transferring our TD and American express cards into Canadian accounts, but those are cards we don't use much, it's only for credit building purposes. I'd prefer to keep American credits cards with 7-9% interest rates and pay the 3% fee. I read the worst thing an expat could do is to shut all their American accounts down and let their American credit lie stagnant. It's pretty much like coming back to no credit history.

Also how will that work for income taxes? If we only transfer up 75% of what is earned into Canada, do you still claim 100% on the Canadian and American income taxes? And what about the province you live in, I assume it works the same way as federal?

Then here's another tricky one for you Ivan. What about if the PR is a 50% founder in an American company, the other 50% is living in America and dealing with all the finances etc of the company. I'm assuming since it's an American company not earning any Canadian money, because all the clients are American, then there is no concern for filing Canadian taxes on an American business. Oh jeez, something tells me I'm going to need a serious accountant :-\

One last thing, Nova Scotia is being tossed around as a secondary option to stay close to family, if my hubby gets cold feet. They offer something that the distant burbs of Vancouver doesn't offer, they are wired with fiber optic internet. So it might be a good fit as a 2nd option, but I'm a little freaked out by the 15% HST and I can only find info on sales tax breaks on children clothes, children shoes and diapers. Is food taxed in Nova Scotia?

 

[michminn]

if you have a joint account with you canadian wife in canada that regularly has a balance of over $30,000, then yes it, and all of your foreign accounts must be reported by FACTA for FBAR(i'm not sure which one). that is the whole point. ANY account not in the US held by a US citizen or when they are the signatory (ie: business or children accounts) on the account must be reported. if you don't want your accounts reported, then the accumulative amounts in ANY account outside of the US can't exceed $10,000, and you can't be a signatory on other accounts.

no matter if you have a separate account or joint accounts. if the total of both accounts total $10,000 or more, then they have to be reported.

Ok, what does reporting it do? Do I have to pay on my own accounts?

 

[michminn]

FBAR cares about assets, not income. If it's a joint account, even if your wife put all the money in, it's considered yours. If the account is hers, has over $10k, and you have the ability to take money out without her consent, the US considers it yours, and you have to file the FBAR. If it's just your Canadian wife's account and you can't touch it without her taking it out, the US doesn't care about it and you don't have to file.

If you've already got the ability to sign on that account, you'll have a filing obligation.

Goodness, at this point I am only the beneficiary; we chose to wait on joining until we had further information. Am I considered a "Signer"?

 

[saria1]

And to us Americans celebrating Thanksgiving today, Happy Thanksgiving!

 

[IvanP]

Ok, what does reporting it do? Do I have to pay on my own accounts?

It's not a tax, it's just reporting (because the US thinks this will end money laundering...). Reporting avoids the penalties. Filing the FBAR is free.

 

[IvanP]

Goodness, at this point I am only the beneficiary; we chose to wait on joining until we had further information. Am I considered a "Signer"?

You'll need to read through the FBAR instructions to figure it out, or hire someone to look into it...

 

[michminn]

And to us Americans celebrating Thanksgiving today, Happy Thanksgiving!

GOBBLE GOBBLE


HAPPY TURKEY DAY!!!!!!!!!!


All our Canadian friends are joining us this evening for turkey dinner.

 

[michminn]

It's not a tax, it's just reporting (because the US thinks this will end money laundering...). Reporting avoids the penalties. Filing the FBAR is free.

Sounds good, still makes no sense If they are not taxing the account why do they need to know? Just seems funny

 

[rhcohen2014]

Sounds good, still makes no sense If they are not taxing the account why do they need to know? Just seems funny

because they want to know where people are making money outside the us, and if it's from legal means. from what i understand, the "theory" is to prevent, control and catch money laundering.

 

[michminn]

because they want to know where people are making money outside the us, and if it's from legal means. from what i understand, the "theory" is to prevent, control and catch money laundering.

I see, makes me want to relinquish my citizenship. The IRS is nosey.

 

[rhcohen2014]

I see, makes me want to relinquish my citizenship. The IRS is nosey.

this is apparently a reason why a lot of people are revoking citizenship, though the US is making it harder to do now. it costs substantially more and they have the ability to deny the request!

 

[IvanP]

I hope you don't mind me jumping in on this conversation.

Since we're both Americans, I wonder if we were to keep our American TD account open and opened a cross border account where we can wire transfer into the Canadian TD account as needed. We were thinking of having the American company direct deposit into our American account and wire transfer the money as we need into the Canadian TD account. Would this be the best option for an American living in Canada while working for an American company? Transfer what we need, but always keep it less than 10k in our Canadian checking account? All the meanwhile keep all our American accounts and savings etc here in a America? We have no intentions of giving up all our accounts in this country and continuing to use American Credit cards, since a good Canadian card is 19.99%. We'll be transferring our TD and American express cards into Canadian accounts, but those are cards we don't use much, it's only for credit building purposes. I'd prefer to keep American credits cards with 7-9% interest rates and pay the 3% fee. I read the worst thing an expat could do is to shut all their American accounts down and let their American credit lie stagnant. It's pretty much like coming back to no credit history.

Also how will that work for income taxes? If we only transfer up 75% of what is earned into Canada, do you still claim 100% on the Canadian and American income taxes? And what about the province you live in, I assume it works the same way as federal?

Then here's another tricky one for you Ivan. What about if the PR is a 50% founder in an American company, the other 50% is living in America and dealing with all the finances etc of the company. I'm assuming since it's an American company not earning any Canadian money, because all the clients are American, then there is no concern for filing Canadian taxes on an American business. Oh jeez, something tells me I'm going to need a serious accountant :-\

One last thing, Nova Scotia is being tossed around as a secondary option to stay close to family, if my hubby gets cold feet. They offer something that the distant burbs of Vancouver doesn't offer, they are wired with fiber optic internet. So it might be a good fit as a 2nd option, but I'm a little freaked out by the 15% HST and I can only find info on sales tax breaks on children clothes, children shoes and diapers. Is food taxed in Nova Scotia?

Who knew there'd be such fun questions here!

Keeping your funds in the US in the way you describe would help you avoid FBAR, but you'll need to look into retirement accounts and whether you can contribute in the US while you are a resident here. The tax advantages of deferred income in retirement accounts will outweight the PITA that FBAR is.

At first glance, without doing any digging (you definitely have questions that will need professional guidance on):

Both the US and Canada tax you on your worldwide income.
The difference is that Canada will tax you on your worldwide income only when you are a resident (for tax purposes - not the same as a PR) of Canada. So when you are a resident of Canada, you declare 100% in both places. Tax credits under the US-Canada tax treaty should ensure you'll avoid double-taxation.

Depending on how the US business is set up, it will be treated in the US as either a partnership (including a pass-through entity such as an LLC) or a corporation. If it's a partnership, there's no entity level tax. If it's a corporation, then there's tax at the entity level and then tax on dividends. Canada wouldn't tax a US corporation operating in the US, but as a resident in Canada you'd pay Canadian taxes on his salary, any dividends, and capital gains if you sold part or all of the company. With a pass-through entity 50% owned, the net income is shared between the two partners and that income (the 'draw') would be taxable in Canada (I'm not 100% clear on how taxation of US LLC/partnership income works in Canada, but it should be similar (not identical) in outcome but calculated - of course - in a completely different way). LLCs are hybrid entities because they are pass-through for tax purposes while providing limited liability as separate corporate entities with a corporate veil to shield the owners.

And yes, you'll need a good accountant/US tax advisor for all of this - find someone local so they get your provincial issues right, too. There are lots more US tax experts in Canada than there are Canada experts in the US, so it shouldn't be that hard.

I've got no idea about the sales tax exemptions... that was the easy question you asked, right?