Category Archives: AmeriPREP Financial

All people have a responsibility to themselves and to their families to engage in responsible saving, investing, financial and retirement planning. Generally tax systems are designed to incentivize this. Because of US citizenship-based taxation, Americans abroad have special financial and retirement planning needs. They need specialized knowledge and specialized advisors. These posts identify and describe topics of specific interest to Americans abroad specifically and the expat world generally.

You Have Your Certificate Of Canadian Citizenship – What Next? Six Options For Newly Recognized Canadians

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John Richardson, J.D. – August 13, 2026

Introduction and purpose

This is the third of a series of posts to help you understand Canadian citizenship by descent. Canada’s Bill C-3 which took effect on December 15, 2025 made major changes to Canada’s citizenship laws. By changing it’s “citizenship by descent” rules, Canada has created an opportunity for many U.S. citizens to be formally recognized as Canadian citizens. This series of posts has been designed to understand Canada’s Bill C-3 (effective December 15, 2025) and understand how and why these changes are so valuable for many U.S. citizens.

A series of posts

The first post focused on Understanding The Citizenship By Descent Provisions Of Bill C-3 – The Canada Citizenship Act. Specifically what factual conditions would result in an indiviudal being a Canadian citizen and therefore entitled to a Certificate of Canadian citizenship? (Note that with the exception of naturalization or direct grant, one would, under Canadian law, be a Canadian citizen from birth. Those born in the United States are U.S. citizens from birth. Hence, many people, recognized as Canadian citizens from birth, would be Canada/U.S. dual citizens from birth.)

Understanding The Citizenship By Descent Provisions Of Bill C-3 – The Canada Citizenship Act

The second post is a discussion of “Canadian Citizenship By Descent – A Search For Proof (To Prove The Truth)”

Canadian Citizenship By Descent – A Search For Proof (To Prove The Truth) – 4 Perspectives

If citizenship cannot be proven, it has no functional or practical existence. Therefore, those seeking a Certificate of Canadian citizenship embark on “a search for proof”. Although the law does not establish a formal deadline to submit the application for a “Certificate of Canadian Citizenship”, I suggest applying as quickly as possible. Laws can and do change!

This third post is to explore why eligibility for a “Certificate of Canadian Citizenshp” matters. What good is it to be a Canadian citizen? What role could Canadian citizenship play in your life. So, you are a Canadian citizen? What do you do with it? How can it benefit you and your descendants? I suggest that (particularly as a U.S. citizen) that there are (at least) six ways that having a Canadian passport could enhance your life.

What does it mean to be a Canadian citizen? What does it mean to move to Canada as a Canadian citizen?

This post is organized in the following Parts.

Part A – Taxation is destiny – moving to another country always has tax implications

Part B – If you move to Canada and renounce U.S. citizenship you may be subject to the U.S. “Exit Tax” rules

Part C – A review of who IS a Canadian citizen and entitled to a Certificate of Canadian citizenship”

Part D – I have my certificate of Canadian citizenship – what do I do with it? How do I turn it into a family heirloom? How can I sponsor my spouse?

Part E – Six specific opportunities Canadian citizenship provides to U.S. citizens

Part F – Renouncing U.S. citizenship and having access to the United States as a Canadian citizen

Conclusion

Appendix A – The 877A U.S. Exit Tax Rules

Appendix B – The 877A “dual citizen from birth” exemption to the Exit Tax Rules

Appendix C – The legislative text of the “dual citizen from birth” exemption to “covered expatriate” status

Here we go …

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Part 2: Inheriting From America AKA Anxiety On Steroids – Retain Or Renounce U.S. Citizenship? What About U.S. Tax Compliance?

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Prologue

This is the Part 2 of two posts motivated by the story of a Canada/U.S. dual citizen living in Canada who sought help from the University of Washington “Low Income Tax Clinic” – “LITC”. The first post is here.

Part 1: The University Of Washington “Low Income Tax Clinic” And A Canadian Student

This was also discussed by “Tax Fairness Abroad“.

It’s worth reading the entire blog post from Tax Fairness Abroad titled “A summer job and bad advice land an American in Canada in international tax court“.

The post references a report from the University of Washington “Low Income Tax Clinic”. (Note that the “LITC” also provided assistance to Gabriel Morrow who is another American abroad who received advice from the clinic.)

The complete text of the “LITC” report AKA the drama of taxing Americans abroad

“Taxpayer is a dual US-Canada citizen; TP is a long-term resident of Canada and is employed there. TP’s father passed away in 2020 and client received an inherited retirement account in 2021 (approximately $110K). TP was misinformed by the retirement account custodian that the “taxes have been paid” (when,in reality, this was just the tax withholding from the transaction). TP believed that taxes had been reported and paid; the retirement account was not included in the 2021 tax return. TP also did not include 1099-income earned while doing a summer job in Canada for a U.S. domiciled company. TP received a notice of deficiency, and a tax court petition was filed. Unfortunately, the TP has a deficiency because the retirement account; nonetheless, IRS appeals refused to apply the LITC’s treaty claim in regard to the 1099 income and is invoking the US-Canada Treaty savings clause. The LITC will be requesting a competent authority determination on this issue (Revenue Procedure 2015-40, Section 6.04(3) and related IRM provisions). However, the TP will still have a liability because of the retirement account taxable income—this liability process will continue through appeals while the competent authority determination is submitted and a determination is received from the IRS.”

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What facts can we glean from the report?

It appears that this dual Canada/U.S. citizen who resides in Canada filed a U.S. tax return for the 2021 year. That return omitted both distributions from the U.S. IRA AND income from the summer emmployment performed in Canada. It is likely that the IRS was able to match his Social Security Number with the information returns that had been filed for both the IRA distributions and the wages from the U.S. based employer. Put another way: the existence of the information returns combined with the Social Security Number on the U.S. tax return, alerted the IRS to the two specific income sources that should have been included on the tax return.

Question: What does this imply for Americans abroad who stand to inherit retirement plans or other income generating assets (for example a stock portfolio) from a U.S. relative? This is a recurring question. What about long term Americans abroad who may not be current on their U.S. tax returns? Should those people renounce U.S. citizenship prior to inheriting these assets? Should they remain American? If so, how do they manage U.S. tax compliance? Inheriting assets of a kind that would generate income and require the reporting of that U.S. source income implicates the question of U.S. tax compliance.

Two background points that are worthy of note:

1. The United States does NOT impose tax on the value of an inheritance. Rather it taxes the income generated from that inheritance. As per 102 of the Internal Revenue Code:

Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.

(Note that your country of residence may impose an inheritance tax.)

2. In most states, depending on the circumstances, it is possible to “disclaim” an inheritance. As always, the Internal Revenue Code – section 2518 – imposes specific procedural requirements. If you want to completely avoid these issues (perhaps because the amount of the inheritance is very small) you should be aware that a disclaimer is possible. That said, to disclaim an inheritance – although there may be good reasons to disclaim an inheritiance – is an erosion of your wealth.

The inheritance from America – The Good, The Bad And The Ugly

Inheritances (and gifts) can be income producing or non-income producing. It seems likely that inheritances that are non-income producing will not produce income tax (and therefore tax filing) consequences. For example, if a U.S. citizen were to receive personal property that would not be used to generate income there would be no presumptive income issues. The problem is more likely to arise where the American abroad receives assets that are (1) income producing and (2) reported as income producing. An obvious example of an income producing inheritance would be an IRA.

This purpose of this post is to discuss the quesion of “income producing inheritances” from various perspectives. The “LITC” case of the Canadian student reinforces why “information returns matter. The effect of the information return (reporting the fact of the inheritance of the IRA and the fact of the employment) is that the IRS would have a reason to expect income to be reported on a U.S. tax return.

If you are a U.S. citizen living outside the United States you should consider the implications of receiving any inheritance, but most particulary an inheritance from the United States. I suggest that the implications should be considered from the following perspectives in Category A, Category B and Category C.

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What To Hold And What NOT To Hold In A Canadian TFSA Or UK ISA

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What follows is a post that I wrote for the Isaac Brock Society. It has broad application. I thought I would provide it on this blog as well.

The Saga Continues – What To Hold And What NOT To Hold In A TFSA Or ISA

PFIC: Revenue Procedure 2026-10 – Making A Retroactive Qualified Electing Fund (QEF) Election

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Introduction

The Purpose of the PFIC rules – Description of the 1986 Tax Reform Act

The PFIC rules were part of the general tax reform act of 1986. In order to understand the intent of the PFIC rules it is useful to read the general explanation of the tax reform act. The explanation starts at page 1021 of the document or page 1037 of the pdf. It is worth the read …

https://web.archive.org/web/20120507115421/https://www.jct.gov/jcs-10-87.pdf

jcs-10-87

The discussion of PFICs begins on page 1021 of the document. What is clear is that the purpose of the PFIC rules was to impose punitive taxation on investments in foreign corporations. The PFIC rules were designed to apply when he Subpart F rules did not apply.

In 1986, it was contemplated that taxpayers would be subject to either default (most punitive taxation) under 1291 or the QEF election under 1295 (pay tax on your share of the corporations undistributed profits). The 1296 – Mark to Market option – was created in the mid 1990s.

The IRC 1291 Default Option
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The Power Of Attorney: WHERE Is It To Be Used And WHAT Is It To Be Used For?

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The purpose of this post is to draw awareness to the common problem of the validity and effectiveness of a power of attorney (“POA”) to deal with a property in a cross-jurisdictional context. For example, is a power of attorney validly created in Canada sufficient to allow one to make decisions pertaining to the registration of land in Florida? The “POA” could be perfectly valid under Canadian law but NOT be sufficient for its intended use in Florida.

The validity of a “POA” where it is created is different from whether it is sufficient to be used in its effective jurisdiction.

Note also that this is a different issue from “Authenticating A Document Created In Canada”.

Q. What if a property is located in another jurisdiction and a POA is needed to deal with that specific property? Will a POA created in Canada or Europe be valid in the United States?

A. Not necessarily!

As one person commented:

I had POA for a family member, took the document to that family member’s bank in the US and they sent us back to get it notarized at the US consulate in Canada.

It makes good sense to create:

1. Separate powers of attorney for different purposes: and

2. A power of attorney in the jurisdiction where the power of attorney is to be used!

“An ounce of prevention is worth a pound of cure!”

Yesterday I participated in an IRS Medic podcast to discuss “Powers Of Attorney” and Americans Abroad.

Generally, a Power Of Attorney is created when an individual grants to an “attorney” the power to act on behalf of the grantor with respect to a particular property or issue. For example, a grantor could grant to an attorney the power to sell or manage a specific property. But, what if that property is outside the the residence or domicile of the grantor? What are the requirements that make a POA valid? Is a POA that is valid under the laws of Ontario, Canada valid in a U.S. state? The short answer is NOT NECESSARILY. Would it make sense to have multiple POAs, each of which is limited to a specific decision/property, etc? The answer is probably YES.

The reality of an individually living in jurisdiction A having to deal with property in jurisdiction B is becoming more and more common.

After participating in the IRS Medic podcast I saw the a blog post written by the Toronto law firm of O’Sullivan law titled: “Powers of Attorney: Jurisdictional Challenges“. The post does an excellent job of defining why this issue is important:

In order for a POA to be valid, it must comply with the formal POA requirements of the applicable jurisdiction. These requirements are generally concerned with who may make a POA, who may be appointed as an attorney, who may or must witness the execution of the POA and when the POA will be in force. Although the formalities may appear similar across jurisdictions, each jurisdiction generally has its own unique requirements, with the result that extra-provincial/extra-territorial or foreign country POAs may not be recognized locally.

In summarizing the problem, the article includes:

Problems caused by the lack of uniformity in POA law among various jurisdictions are becoming well known to the legal community. The uniform law commissions of Canada and the United States have enacted uniform model POA legislation which, if implemented in these jurisdictions, would solve many of the various problems that exist with divergent laws. Some progress in this field has been made, however, a complete overhaul of the POA laws is far from complete. It is therefore imperative that individuals who have ties to other jurisdictions speak to their lawyers about having valid local POAs as part of their personal, estate and incapacity planning so that inconveniences such as those recently encountered by the Ontario couple can be avoided.

Bottom Line:

To be forewarned is to be forearmed. It makes good sense to have a POA created in accordance with the laws of the jurisdiction where the POA is to be used. For example: If you are a U.S. citizen living in Canada and a POA of needed to manage a property located in the United States, the UK or any other country, consider the creation of a separate POA for that particular jurisdiction!

John Richardson – Follow me X.com/ExpatriationLaw

IRS Service To Expats: Another Reason To End U.S. Citizenship Taxation

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Guest Post By Dr. Suzanne de Treville – Switzerland

Discussions about eliminating double taxation for U.S. citizens abroad often focus on reducing the significant compliance burdens these individuals face. When the U.S. taxes income or assets already taxed in a citizen’s country of residence, the resulting complexity is substantial while the extra tax revenue to the IRS that results from this double taxation by ordinary taxpayers is quite low. This complexity is particularly burdensome for the 80% of expat taxpayers with an Adjusted Gross Income of $100,000 or less.

The IRS requires expatriates to file intricate returns and is responsible for providing necessary assistance. However, while resources are available to domestic taxpayers, similar support is lacking for those abroad, despite their greater need.
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Renunciation/Relinquishment, The US Exit Tax And The Confiscatory Case Of NON-U.S. Pensions (U.S. Pensions Avoid This!)

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Part I – Prologue – A Tweet Worth A Thousand Posts

For a “Readers Digest” version of the post that is to follow, simply click on the link in the above tweet!

To see examples of the deemed income inclusions and the U.S. tax owing click on the links to Appendices, B, C and D below.

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Outline And Structure

This post is for the purpose of alerting Americans abroad and their advisors to a particularly difficult and unjust aspect of renouncing U.S. citizenship. The punitive treatment of the non-U.S. pension is a reason for many Americans abroad to consider renunciation earlier (when they are not “covered expatriates”) rather than later (when they may be subject to the confiscatory rules applied to “covered expatriates”).

Part I – Introduction – The General Message
Part II: Renunciation/Relinquishment and the confiscatory case of the “ineligible” (non-U.S.) pension … A Deeper Dive
Part III: Renunciation/Relinquishment and the retention of the “eligible” (U.S.) pension … A Deeper Dive
Part IV – Conclusion
Appendix A – How Internal Revenue Code Sections 877A and 877 Lead To The Confiscation Of The Non-U.S. Pension
Appendix B – Dual Status tax return with a 1 million USD income inclusion on the day before expatriation
Appendix C – Dual Status tax return with a 1 million USD income inclusion on the day before expatriation with a $100,000 tax credit carry forward
Appendix D – Dual Status tax return with (1) a full actual distribution of the pension in Canada on the day before expatriation (generating a foreign tax credit in the current year)

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Part I – Introduction – The General Message

The warning! Some Americans abroad who renounce U.S. citizenship can expect to have punitive taxation imposed on the value of their non-US pensions. This is a tax imposed by a “deemed distribution” (not actual) of the the pension. Because there was no “actual distribution” those affected will need to find another source of funds to pay the tax. Significantly, the tax does NOT apply to U.S. pensions. Those renouncing who have U.S. based pensions may NEVER be taxed on the value of those pensions.

Once an individual’s net worth reaches 2 million USD, that individual is generally subject to this tax. This means that renunciation may become very costly. Americans abroad with non-US pensions and their advisors should be aware of (and plan around) this problem.

In this post I am joined by CPA Olivier Wagner who has generously provided excerpts from mock U.S. tax returns which demonstrate how confiscatory the U.S. Exit Tax rules are when applied to non-U.S. pensions (and therefore to Americans abroad). You will find his returns in Appendixes B, C and D at the end of this post.

The mock tax returns show that a U.S. citizen living outside the United States who:

– is a “covered expatriate”

– has a non-U.S. pension with a present value that includes a taxable amount of $1,000,000 USD

will be subject to an immediate tax of $344,963 triggered by renunciation of U.S. citizenship.

Because this tax is NOT imposed on those with U.S. based pensions, this tax applies disproportionately to Americans abroad, who earned their pensions while living outside the United Sates.

Of course, if he had renounced before reaching the 2 million USD net worth mark, he could possibly renounce and pay no exit tax on the value of his pension. Financial planners and other advisors take note!!

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To TFSA Or To Not TFSA, Whether Tis Better For A US Citizen Living In Canada To Open A TFSA Or Not

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Update March 29, 2023 …

On March 28, 2023 the Government of Canada officially announced that the Canadian “First Home Saving Account” will be available to Canadian residents as of April 1, 2023. As explained in this description of the “FHSA”, this will be of value to U.S. citizens who are resident in Canada. The circumstances surrounding the TFSA are similar to the FHSA. Here is a more complete discussion of US citizens residing in Canada and the use of the FHSA.

Introduction And Purpose

As the article referenced in the above tweet makes clear, a very small percentage of Canadians can expect their retirements to be funded by pensions. The message is that individuals have an obligation to themselves and to their families to engage in responsible financial and retirement planning. Governments have a clear, important and sustainable interest in assisting their residents to achieve and maintain financial stability. The tax laws in every country have provisions in their tax codes to both incentivize and facilitate this planning. They facilitate planning planning vehicles through provisions in their tax codes. Almost all of these planning vehicles are based on “before tax” advantaged vehicles (RRSP or Conventional IRA) or “after tax” vehicles (TFSA or ROTH IRA) which allow for tax free growth. Canada is home to many people who are dual Canada/US citizens. Canadian residents who are also U.S. citizens are subject to the U.S. tax code. This means that they are required to comply with the tax codes of both Canada and the United States (two of the most complex tax regimes in the world). But, what happens when the financial planning provisions in Canada’s tax law are not recognized in the tax code of the United States? What Canada giveth, the U.S. (possibly) taxeth.

The purpose of this post is to take a “deeper dive” into the mechanics financial planning and investing for U.S. citizens who reside in Canada. Most U.S. citizens feel completely disabled by U.S. tax laws. I don’t believe that this is necessarily true in all cases. This is intended to be one of a series of posts to address the specific issue of:

“Retirement And Financial Planning For U.S. Citizens Living Outside The United States”

If you have an idea for a topic send me an email. I encourage you to subscribe to this blog.

U.S. Citizens In Canada And The TFSA

I am frequently asked by Canadian residents who are US citizens whether they should open a TFSA (“Tax Free Savings Account”) in Canada. The purpose of this post is to discuss this very issue. As usual there is no “one size fits all answer” that is correct for everybody. In order to analyze this question I am joined by Oliver Wagner of “1040 Abroad” who has provided his thoughts, experience, commentary and some sample tax US tax returns which illustrate the various principles.

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Financial Planning For Americans Abroad and By Americans Abroad

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Prologue

In the 21st century it has never been more true that:

On the one hand responsible money management, investing and financial planning is a necessity.

On the other hand Americans abroad have been severely disabled from those essential activities by the US tax system.

US citizens presumptively do NOT benefit from tax advantaged financial planning options outside the United States. The circumstance of US citizenship makes participation in non-US pension plans difficult. The PFIC regime operates to make even investing in non-US mutual funds a difficult proposition. Those Americans abroad who attempt to create private pension plans by using small business corporations will likely find that the CFC, Subpart F and GILTI rules make this difficult.

It’s entirely understandable that many Americans abroad have lost their incentive to care financially for themselves and their families.

The message is clear:

When it comes to investing, financial planning and retirement planning US citizenship is presumptively a disability!

That said, it’s essential that US citizens do NOT allow the US extra-territorial tax regime to cause them to NOT engage in retirement and financial planning! They must adopt a “can do” attitude and understand that even with the disability of US citizenship, they can – with the proper advisors – invest for retirement like the citizens of all other countries. In fact, those who are successful, can take pride in the fact that they succeeded NOT because they were American but in spite of being American! Those who are successful can proudly and defiantly say:

“I’m American, but I’m gonna invest for retirement anyway!”

For Americans abroad investing and retirement planning requires a positive mindset and often a competent advisor.

At a minimum, Americans abroad need financial advisors who understand what it means to be an American abroad.

Creveling and Creveling – Financial Planners For Americans Abroad By Americans Abroad

Investment advisors for Americans abroad is a growing industry. I recently had the opportunity to meet and talk with Peggy Creveling, who is one of the two Crevelings who is part of Creveling and Creveling a Thailand based financial planning firm. Investing and financial planning is a “long term” commitment in the same way that health and fitness is a long term commitment. Most people need a mentor and motivator. This requires that they meet the right kind of mentor who will guide them toward their specific goals.

As part of my podcast series for the American Expat Financial News Journal I had the opportunity to meet and chat with Peggy Creveling. This resulted in the following two podcasts:

Part 1 – From growing up in Ohio to West Point to Thailand – The Making Of A Financial Planner
https://americanexpatfinance.com/podcasts/35-basic-financial-fundamentals-that-makes-all-the-difference-for-americans-who-live-abroad-3

Part 2 – Thinking about financial planning and investing – the difference between investing and speculating
https://americanexpatfinance.com/podcasts/36-thoughts-on-financial-planning-for-u-s-expats-part-2

Bottom line: Americans abroad really need to commit to investing and financial planning. You are likely to find the insights and thoughts of Peggy Creveling to be helpful!

John Richardson – Follow me on Twitter @Expatriationlaw