US citizens take note of tax law changes

Are you a US citizen who has been living and working in Canada for a number of years? Have you dutifully filed your US income tax return every year when you file your Canadian income tax return? These are some of the questions US citizens will be addressing as early as 2014.

However, it is not only US citizens who will come under the scrutiny of the IRS (Internal Revenue Service). Individuals who own American property and investments will also fall under the FATCA regulations.

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is a law that was passed in the United States in March 2010.

One major Canadian financial institution reports that FATCA is intended to prevent US persons from evading US tax by using financial accounts held outside of the United States. In 2014, non-US financial institutions will be required to identify and report accounts owned by US citizens.

Other sources report the act requires individuals to report their financial accounts held overseas as well as requiring reporting by foreign financial institutions (FFIs), such as Canadian banks and insurance companies, to the IRS about their US clients.

Who is a US person?

Under American tax law, you are considered a US person if you are:

• A citizen of the U.S., including an individual born in the U.S. but resident in another country, (who has not renounced U.S. citizenship)

• A lawful resident of the US, including a ‘green card’ holder

• A person who resides in the US

• You also may be considered a US person if you spend a certain number of days each year in the US.

• US corporations, estates and trusts are also considered US persons

Who is affected?

• FFIs are required to identify their US account holders and disclose the account holders’ names, addresses as well as account balances.

• US persons owning foreign accounts or other specified financial assets

• Foreign investors who own US investments and US properties

All the information in this article is available on the websites of major Canadian banks, Canadian accounting firms, the IRS and Wikipedia. The most informative websites are those of the major Canadian banks.

It should be noted that if you fall into the category of one of US persons listed above and have not been compliant with US tax filing, it is advisable to seek professional advice.

Many Canadian accounting firms employ Chartered Accountants who are also Certified Public Accountants, a statutory title of qualified accountants in the US.

 

J McPherson 416-738-1555


Did you enjoy this article? If so, you may consider becoming a Voluntary Subscriber to the Beach Metro Community News and help us continue providing the community with more local content such as this. For over 40 years, our staff have worked hard to be the eyes and ears in your community, inform you of upcoming events, and let you know what and who’s making a difference. We cover the big stories as well as the little things that often matter the most. CLICK HERE to support Beach Metro News.

Click here for our commenting guidelines.

Leave a Reply

*