Midcityjohn said:
From what I understand, the government of Canada is telling/ordering banks not to release financial information to the IRS. But that would not excuse the US from arresting her when traveling abroad for tax evasion. All in all, I think it will solely depend on your income level. If your income is not so high, you wont really owe any taxes or might get a tax credit refund in the US on Canadian income. If you earned a lot, then you could file to see what happens and to play it safe. If they take too much then you could make the hard choice to renounce US citizenship. Sounds drastic but it would be rock solid protection. And you could always get it back in the event of necessity.
Renouncing your citizenship is not a "rock solid protection" from US taxes. First you must verify with the IRS that you were current in your taxes for the previous 5 year period. Then, anyone renouncing U.S. citizenship will immediately be taxed on
all their
global unrealized gains, meaning all stock portfolios, real estate, art, and most other kinds of property and assets will be taxed as though they were immediately being sold at current market rates. In addition, anything given or left to any heirs by ex-U.S. citizens will immediately be taxed at U.S. gift rates. I think it's 45%.
I'm not sure repatriation is a cake walk either. You don't just get a
do over. Both natural born and naturalized US citizens who have renounced would, as I understand it, have to go through the naturalization process by applying to become US permanent residents and then satisfy the citizenship requirements.