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Can Clients Ditch U.S. Citizenship Retroactively?
Whether for ideological reasons or tax complications, many people want to shed their U.S. citizenship. There are two ways to do so: renunciation and relinquishment. Renunciation requires swearing an oath at a U.S. consulate. A person who renounces is no longer a U.S....
The Tax Consequences of Inheriting Money from the U.S.
Many Canadians inherit money from relatives in the United States. There are generally no issues on either side of the border if a Canadian inherits property or money through a will. That being said, many U.S. residents plan their estates by using a trust rather than a...
Protecting Canadians from the U.S. Estate Tax
Canadian residents who aren’t U.S. citizens may be surprised to know that U.S. estate tax can apply to them. That’s because U.S. estate tax applies to any assets that are considered to be located in the United States. This includes U.S. real estate, stocks in U.S....
The Tax and Immigration Consequences of Renouncing US Citizenship
Thanks to FATCA and onerous tax reporting requirements, the renuciation rate is on the rise. Renouncing is a personal decision – but there are a number of general pros and cons. Consider those first. The Pros and Cons of Renouncing US citizenship Put simply, the pros...
The QEF Election is a Suboptimal Remedy to PFIC Pain
The standard solution to the PFIC problem offered by certain banks and investment funds is that a US investor in a PFIC should rely on the QEF election. This is an election on behalf of the taxpayer that the products in which they have invested and to which the...
Creating PFIC-free Canadian mutual fund trusts
The Canadian mutual fund trust is a very common Canadian investment structure. It is used by retail mutual and exchange traded funds, REITs, income trusts, and other investment fund. A common view is that US taxpayers (whether they reside in the US or are US...
Certain Canadian mutual funds aren’t PFICs
Of all the tax problems faced by a US citizen in Canada none are as potentially fraught as the ownership of Canadian mutual funds. A commonly held view is that these funds are Passive Foreign Investment Companies (PFICs) under US law. This view is based on an...
Holding Canadian mutual funds inside an RRSP doesn’t cause US tax problems
Canadian mutual funds held inside of an RRSP should not cause US tax problems. Assuming that Canadian mutual funds are PFICs (a position that’s far from certain), holding them in an RRSP negates the bad tax consequences that would otherwise come with stock in a PFIC...
How far-reaching is the IRS’ power to collect taxes from Canada?
If you’re a U.S. citizen living in Canada, you might be frantic about the IRS tax crackdown and hefty fines if you haven’t been tax compliant. How fast can the IRS come after you? What are its enforcement powers in Canada, anyway? Turns out, Canadian law has a trick...
The Basics of U.S. Tax for Canadians
The US Foreign Account Tax Compliance Act (FATCA) has generated a lot of attention in Canada. It recently became Canadian law, as a part of the 2014 federal budget. FATCA requires Canadian financial institutions to send information about their US account holders to...