Discussion with @IRSMedic and @Keith__REDMOND about defensible compliance: Foreign Trusts, Form #3520 + Form #3520A – To be a "Foreign Trust", it must be a "trust". When in doubt about whether it's a "trust", is it safer to file a 3520 or NOT file a 3520? https://t.co/LNV0ady090
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) August 10, 2019
There is evidence from both tax practitioners and from individuals that Americans abroad are suffering from a “Form 3520A” penalty epidemic. Some of the best discussion of both the scope and technicalities of this problem may be found at Tax Connections. See particularly the posts here, here and here. (Mr. Carter’s original post was also reproduced at American Expat Finance.) The posts have attracted commentary from a number of tax professionals. The IRS Taxpayer Advocate has been invited to intervene. “Tax Compliant” Americans Abroad are just a penalty waiting to happen!
Americans abroad are potentially required a very large number of IRS forms. Continue reading →
Article XVIII of the Canada U.S. Tax Treaty Continued – The question of the TFSA
In a previous post I discussed how a U.S. citizen moving to Canada with an existing ROTH will be treated under the Canada U.S. Tax treaty. The purpose of this post is two-fold: First,to argue that the the TFSA should be treated as a “pension” within the meaning of Article XVIII of the Canada U.S. Tax Treaty; and Second, to argue that the 5th protocol (which clarifies that the ROTH IRA) is a pension within the meaning of the Canada U.S. Tax Treaty means that the Canadian TFSA has the same status. This will be developed in three parts: Part A – How the Canada U.S. Tax Treaty affects U.S. Taxation of the Canadian TFSA Part B- Wait just a minute! I heard that the “Savings Clause” means that the treaty would not apply to U.S. citizens? Part C – The TFSA and Information Returns: To file Form 3520 and 3520A or to not, that is the question Continue reading →