American spouses FATCA

[BubbOZ]

Even more reason to have it repealed! If doesn't affect the vast majority of Americans and only makes life more difficult for the few.

What's that famous saying? No taxation without representation?

I wouldn't hold my breath that it will get recalled. Neither US party has any desire to repeal FATCA. The only faction that has really spoken out against it is the Tea Party (Rand Paul, etc).

 

[scylla]

There's absolutely no chance FATCA is going to be recalled. One of it's primary reasons for existing is to prevent terrorist financing. So it's going nowhere.

 

[thegorchess]

That is so unfortunate. I don't want my husband to renounce, but the second he gets his Canadian citizenship (in numerous years) he is renouncing because of this.

Also, it would be nice to have joint bank accounts, but as long as this exists it will never happen.

 

[scylla]

I still don't understand why you think you can't have a joint bank account. FATCA certainly doesn't stop you from doing that. You won't be taxed on your income twice - that's now how it works.

 

[thegorchess]

Because my finances are none of the USAs business. It is as simple as that.

 

[fugaziosbourne]

I still don't understand why you think you can't have a joint bank account. FATCA certainly doesn't stop you from doing that. You won't be taxed on your income twice - that's now how it works.

Do you understand it has nothing to with being double taxed and it's entirely about the invasion of privacy? Why should the US government have any access to a Canadian citizens bank records?

 

[scylla]

Do you understand it has nothing to with being double taxed and it's entirely about the invasion of privacy? Why should the US government have any access to a Canadian citizens bank records?

No - I didn't understand that before. I actually thought thegorchess was worried about being double-taxed (which is why I posted what I posted).

But now I understand the real issue based on her last reply.

 

[scylla]

Just to add to my above post - because of FATCA, there are actually certain types of accounts an American with PR really can't open. One example is a TFSA. The US views TFSAs as tax shelters and you end up getting screwed on your taxes as an American (i.e. lose the benefits of having a TFSA) if you have one. So a TFSA is a type of account you really can't open. Same goes for RRSPs (including joint RRSPs) to the best of my knowledge.

There are no such issues with regular joint bank accounts. Although I do appreciate that people may not want to open them for privacy reasons.

 

[fugaziosbourne]

No - I didn't understand that before. I actually thought thegorchess was worried about being double-taxed (which is why I posted what I posted).

But now I understand the real issue based on her last reply.

I'm glad we're all on the same page now.

More people should be upset with the conservative government. It's shameful they would just roll over for the US like this and sell out their citizens. Too bad it hasn't received much coverage in the mainstream press. I've only seen once article in the Toronto Star and it was very brief and buried in the back of the paper.

 

[fugaziosbourne]

Although I do appreciate that people may not want to open them for privacy reasons.

Thats the entire issue. I'm not rich or hiding assets from the IRS or funnelling money to ISIS so they shouldn't be snooping around her chequeing accounts. This is just one more thing on the long list of reasons I can't wait to renounce my citizenship.

 

[scylla]

There was actually a great deal of Canadian press a couple of years ago (I think it would have been in 2012 when several additional regulations came into play - but perhaps it was in 2011 or 2010 instead when the first group of regulations came into play). There was also quite a bit of press when the US decided to do that forgiveness thing (forget what it was officially called) and allow people to catch up on their taxes without penalty. I don't remember if that was last year or the year before that.

Having said that, I agree there have been FAR fewer articles this year. A handful around tax time - but not much beyond that from what I've seen.

Even with all the press from past years, I still come across people all of the time who don't know or don't understand the impact to them - and not just in Canada, but elsewhere as well. Had to explain it to an American friend of mine living in Australia just a couple of months ago. And that was for the second time...

 

[keesio]

Just to add to my above post - because of FATCA, there are actually certain types of accounts an American with PR really can't open. One example is a TFSA. The US views TFSAs as tax shelters and you end up getting screwed on your taxes as an American (i.e. lose the benefits of having a TFSA) if you have one. So a TFSA is a type of account you really can't open. Same goes for RRSPs (including joint RRSPs) to the best of my knowledge.

There are no such issues with regular joint bank accounts. Although I do appreciate that people may not want to open them for privacy reasons.

RRSPs are ok. It is covered under the tax treaty. Income earned in an RRSP is tax free even to the IRS. However, the key thing to remember is that if you contribute to an RRSP, you will get a refund from CRA for the taxes you paid on that money (if they were already deducted from your paycheck). Since that contribution amount itself is still taxable to the IRS, this may result in you potentially owing (more) taxes to the IRS depending on how much credit you have from the FTC. So you need to do some extra calculation on what is the optimal amount you can contribute to your RRSP while minimizing what you owe to the IRS.

Yup, TFSA is useless for an American. So are RESP. If you wish to open an RESP for your child, make sure it is all under the name of the non-American spouse (if applicable).

Mutual funds are also a major pain in the ass and not recommended.

Note that it is not FATCA that makes TFSA and RESP non-beneficial to own. These rules always applied way before FATCA ever existed. FATCA is just a reporting and privacy headache. In fact, the Canadian government was able to get TFSA and RESP excluded from the mandatory reporting rules (which is not really that big a deal since you have to report it on your FBAR forms anyway.

 

[keesio]

That is so unfortunate. I don't want my husband to renounce, but the second he gets his Canadian citizenship (in numerous years) he is renouncing because of this.

Also, it would be nice to have joint bank accounts, but as long as this exists it will never happen.

Note that the US quadrupled the fee for renouncing (due to the large increase in renunciation requests) and your can apply to renounce but the state department may deny your request anyway.

Also anyone who has successfully renounced still may be requested to pay a tax "exit fee" or still be obligated to file taxes for a few more years or the USA will treat you has a tax dodger and give you all sorts of problems if you try to re-enter the USA.

It's funny because there are many people here who are worried about losing their US citizenship when they take Canadian citizenship, when in actuality they make it really hard to lose it (much harder than renouncing a Canadian citizenship).

 

[keesio]

There's absolutely no chance FATCA is going to be recalled. One of it's primary reasons for existing is to prevent terrorist financing. So it's going nowhere.

It's all about trying to catch tax evaders. Basically a very heavy handed (and sometimes redundant) new reporting system to catch people who try to avoid taxes when it really ends up mostly punishing your regular citizen because the real wealthy criminals have an army of accountants who know the system and can always find loop-holes.

 

[scylla]

It's all about trying to catch tax evaders. Basically a very heavy handed (and sometimes redundant) new reporting system to catch people who try to avoid taxes when it really ends up mostly punishing your regular citizen because the real wealthy criminals have an army of accountants who know the system and can always find loop-holes.

I completely understand that.

What I'm saying is that from a PR (public relations) perspective, this is touted as an anti-money laundering, anti-terrorism financing measure. Hence why it's here to stay.