Canadian resident US citizen owns many Canadian mutual funds, what arethe filing requirements? I heard some people have recorded on their1040 returns the same allocation as per T3; others have put the totaldistribution as income on Schedule B so have reported the capital gaindistribution as straight income along with the return of capital. Somehave suggested that Form 3520 needs to be prepared. Others have said noinstead prepare Form 8621 and a QEF election should be considered. Sowhat are you thoughts and how have you been handling this mutual fundissue???
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david ingram replies:
Treat a T3 or a T5 as a 1099-Div or 1099. convert the figures to USdollars if in Canadian and put in the proper place on Schedules B and D.
Calculate the tax you paid to Canada and claim it as a foreign taxcredit on form 1116
There is no reason to fill out a form 8621 or QEF (Qualified ElectingFund) because the Canadian taxes will just about always wipe out anyUS tax by filing form 1116.
You can see
Form 8621 here -
http://www.irs.gov/pub/irs-pdf/f8621.pdf Assuming all of your accounts total more than $10,000 US, you will thenfill out forms TDF 90-22.1 for every financial account including RRSP,RRIF and RESP accounts, AND any mother or father or sister or brother'sor company accounts yo may have signing authority over. See Question7 at bottom of Schedule B.
Form TDF 90-22.1 - http://www.irs.gov/pub/irs-pdf/f90221.pdf-For your RRSP, RRIF and RESP accounts you should file form 3520. Thegood news is that for the RRIF and RRSP accounts you can substitute themuch easier form 8891.
Form 8891 -
http://www.irs.gov/pub/irs-pdf/f8891.pdf
The penalties for failure to file these forms are immense.
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This older question explains penalties:
QUESTION:I would like to put some money away for retirement. I'm a U.S. citizen living in Canada for the near future, but I know I'll be living in the U.S. again before I retire. Should I put my money in an RRSP or an IRA?
Saturday, April 19 2008 @ 11:28 PM GMT-7
Contributed by:
taxman
QUESTION:We hired a "tax professional" recommended by a financial adviser to handle our tax situation for the year and things seem totally wrong. My husband is a Canadian citizen that got his US green card and entered the US in April 2007. We live in Ohio and he is the only income earner since I am on maternity leave. So he has Ohio income, income earned in Toronto while still a resident of Canada and I have income from Connecticut where I was working before moving to Ohio. He also has RRSPs that we don't know what to do with. The tax guy filed our US tax as a 1040 married filing jointly listing both of our US jobs (mine in Connecticut before having the baby and his in Ohio now) for our income. He did not list any of the Canadian income at all or mention the RRSPs or anything. We were under the impression that since he was a Canadian resident until April and then a permanent US resident thereafter that we had to file to include the Canadian income and then file a form 2555 to exclude that income to keep from being taxed on it twice. On the Canadian return the tax guy didn't add in any of the US income, including my income from my previous job in CT. He only shows my husband's Canadian income =66rom the job he was working in Toronto up until his immigration to the US in April. Does this all seem right or totally wrong to you all?
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