Canada/US Tax obligations - TD request for information

[Dreamerforever]

Hi everyone,

I think I posted this originally in the wrong place - hopefully this is the right place. A little bit of background first. My husband lived in the US with a green card for a couple of months a few years ago (I was with him, but we weren't married then). Because I'm Canadian, when we decided to get married and start a family, we decided to do it Canada vs. the US, so we moved to Canada directly, where we underwent the family sponsorship process. He's now a Canadian PR, and we haven't been to the US since then (it was about 3 years ago).

This year, he received a request from TD to complete some forms to whether he is a US person or not. He completed form W-9, as requested, stating he is a US person (because of hic Green Card which expires in a few years), but that he now lives in Canada and will not be going back to the US. It was also our understanding that even if he wanted to, because he hasn't been back in the US for a while, his Green Card would be forfeit anyway. Long story short, TD is now asking for "exit documentation" - an expired Green Card, or student visa, etc., but we don't have any of that. They say that they may report us to the CRA, which is fine, we're not hiding anything and he's been filing taxes regularly in Canada since he moved here.

I did some digging and I see that this is all part of the FACTA agreement that Canada has with the US, but I still don't understand how it applies to us and what our obligations are. More importantly, I don't know how we should respond to TD. Should we reply and say we don't have exit docs, or just let them report it to the CRA? I don't want to create more trouble, if there is no need. Does anyone else have any experience with this?

Thanks in advance!

 

[MidoRafa]

Hi everyone,

I think I posted this originally in the wrong place - hopefully this is the right place. A little bit of background first. My husband lived in the US with a green card for a couple of months a few years ago (I was with him, but we weren't married then). Because I'm Canadian, when we decided to get married and start a family, we decided to do it Canada vs. the US, so we moved to Canada directly, where we underwent the family sponsorship process. He's now a Canadian PR, and we haven't been to the US since then (it was about 3 years ago).

This year, he received a request from TD to complete some forms to whether he is a US person or not. He completed form W-9, as requested, stating he is a US person (because of hic Green Card which expires in a few years), but that he now lives in Canada and will not be going back to the US. It was also our understanding that even if he wanted to, because he hasn't been back in the US for a while, his Green Card would be forfeit anyway. Long story short, TD is now asking for "exit documentation" - an expired Green Card, or student visa, etc., but we don't have any of that. They say that they may report us to the CRA, which is fine, we're not hiding anything and he's been filing taxes regularly in Canada since he moved here.

I did some digging and I see that this is all part of the FACTA agreement that Canada has with the US, but I still don't understand how it applies to us and what our obligations are. More importantly, I don't know how we should respond to TD. Should we reply and say we don't have exit docs, or just let them report it to the CRA? I don't want to create more trouble, if there is no need. Does anyone else have any experience with this?

Thanks in advance!

Hello.
You are right, it is a FATCA requirement which applies to your husband since he is still considered a "US person" because of his LPR (green card) status.
While from a US immigration (USCIS) standpoint he may be "deemed" to have abandoned his status by being absent for those 3 years or more, it is not really a certainty unless he has a document to prove it (for example by filing Form I-407 Record of Abandonment of Lawful Permanent Resident Status).

Until this happens, he is somewhat in limbo where tax authorities (both IRS and CRA) will always assume that he is a US person until proven otherwise and therefore that he owes taxes on his world income to the US (too), while USCIS may or may not think of him as having abandoned his status. (In some cases, a person could still be re-admitted as a LPR despite long absences, so the fact that he's been away for a long period is not "proof" of loss of status).

For now, I think you/he will need to provide the information TD is asking for (the W-9), which they will pass along to CRA and IRS so that they know where his accounts are. My opinion is that this is not an issue in itself unless he starts earning/moving a lot of money inside those accounts, which would then make the IRS curious. Meanwhile, he could take steps to prove (most importantly to the IRS) that he is no longer a US resident, in whichever way that works for them so that they would -hopefully- take him off their radar.

 

[MidoRafa]

I just found the following on the IRS's website. So unfortunately he is forever on hook until and unless he has an official document that says he has formally abandoned or lost his status.

You are a resident, for U.S. federal tax purposes, if you are a lawful permanent resident of the United States at any time during the calendar year. This is known as the "green card" test.

You are a lawful permanent resident of the United States, at any time, if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services (USCIS) issued you an alien registration card, Form I-551, also known as a "green card."

You continue to have U.S. resident status, under this ["green card"] test, unless:

• You voluntarily renounce and abandon this status in writing to the USCIS,
• Your immigrant status is administratively terminated by the USCIS, or
• Your immigrant status is judicially terminated by a U.S. federal court.

I hope this helps. Sorry for being the bearer of unpleasant news, but hopefully now that he knows he can do something about it if he so chooses.

 

[canuck78]

Hi everyone,

I think I posted this originally in the wrong place - hopefully this is the right place. A little bit of background first. My husband lived in the US with a green card for a couple of months a few years ago (I was with him, but we weren't married then). Because I'm Canadian, when we decided to get married and start a family, we decided to do it Canada vs. the US, so we moved to Canada directly, where we underwent the family sponsorship process. He's now a Canadian PR, and we haven't been to the US since then (it was about 3 years ago).

This year, he received a request from TD to complete some forms to whether he is a US person or not. He completed form W-9, as requested, stating he is a US person (because of hic Green Card which expires in a few years), but that he now lives in Canada and will not be going back to the US. It was also our understanding that even if he wanted to, because he hasn't been back in the US for a while, his Green Card would be forfeit anyway. Long story short, TD is now asking for "exit documentation" - an expired Green Card, or student visa, etc., but we don't have any of that. They say that they may report us to the CRA, which is fine, we're not hiding anything and he's been filing taxes regularly in Canada since he moved here.

I did some digging and I see that this is all part of the FACTA agreement that Canada has with the US, but I still don't understand how it applies to us and what our obligations are. More importantly, I don't know how we should respond to TD. Should we reply and say we don't have exit docs, or just let them report it to the CRA? I don't want to create more trouble, if there is no need. Does anyone else have any experience with this?

Thanks in advance!

One of the major drawbacks of having status in the US is the ongoing tax liability.