My sister and I are seeking a tax professional with cross-border expertise to prepare our income taxes for 2015 and possibly 2016. I am wondering if you would have the experience we may need. These are my specific issues and questions. It is possible that our questions are quick and simple for you, however, if they need time for consideration and you would require to be paid a consultation fee, could you please advise me what the fee might be? Thank you so much. In consulting your firm’s website, which I found very informative and user-friendly, I thought your expertise might be the closest match to our needs, but if I got that wrong, could you please forward my email to a colleague if that is more appropriate. Thank you.
My sister and I the sole beneficiaries to our Step-Mom’s estate. We are both Canadians living in Canada, (me – XXXX, sister – XXXXX). Our Step-Mom was our only remaining parent. She recently passed, our Dad having passed 4 years ago. Step-Mom was a US citizen, living in California. She and Dad had lived much of their working lives in Canada, therefore she has a RRIF with TD Waterhouse in Canada. She had created a Revocable Living Trust in California as many there do, in order to avoid probate. She had put all of her estate into the Living Trust. There is a Fiduciary in California responsible for handling her estate, and the Fiduciary has a local CPA and lawyer to assist as needed. The Fiduciary has no Canadian/US cross-border experience, I do not know if the CPA or lawyer does, I think perhaps not.
Our inheritance will include:
• the Canadian RRIF
• some bank accounts in Canada,
• some US bank accounts and a modest home in California (to be sold),
• a small death benefit from a US professional organization from Mom’s US career prior to marrying Dad.
Total value under the $5 million cutoff for estate tax in California
1. I am wondering if our situation sounds like a scenario within your expertise, and whether you might be able to prepare our Canadian Income tax forms for us in the year(s) we receive our inheritance?
2. Will my sister and I need to fill out US tax forms in the year(s) we receive our inheritance?
3. How will the Canadian RRIF be handled, and do we have any choices/decisions to make about that? For example, is it a necessity that it be collapsed from Canada into her estate in the US? and will it be subjected to Canadian non-resident withholding tax? (at 15% or 25% ?) Does the fact that California does not follow US/Canada tax treaty rules make any difference to how the RRIF will be treated?
4. Would the RRIF capital inside her estate be dealt with any differently from the US bank accounts when distributed to us? ie will we have to pay US or Canadian taxes on it as it is a “pension-type fund” coming to us (from Canada via the US), or has the taxation obligation been fulfilled already by the estate?
5. Would it be wise at this stage to ask the Fiduciary if we could use the services of a cross-border tax specialist? Or might that be considered rude? Have you ever been asked to advise a US CPA on cross-border issues, while he or she prepares a deceased’s final US tax return? We are nervous that something may be incorrectly submitted and we want to avoid costly mistakes, but we also don’t want to upset the Fiduciary.
6. I worked in the US for a few years on a TN status. I left there 7 years ago. For my TN work I had to have a US SSN, but it is only valid along with proper employment authorization, such as TN. Would this SSN be appropriate to use on the W-8BEN form? Or do I need an ITIN?
Thank you very much for your consideration. Could you also let us know an estimate of your fees to prepare our tax returns?
Thank you for your email. We would be glad to help advise on your Canadian and U.S. tax requirements.
It would be best to discuss these issues over the phone or in the office to ensure I develop proper context of your situation, however, let me do my best to answer your questions outlined above before we meet.
- Yes, we will be able to help with any Canadian or U.S. tax returns you require.
- You most likely will not need to file individual U.S. tax returns, however, this will depend on how the estate is handled for U.S. purposes. We can discuss in more detail when we meet.
- The RRIF may be tricky to deal with. A 25% withholding will be levied on the de-registration of the account, however, we may have options for reducing this amount further.
- We can review the RRIF to assess if any contributed capital can be withdrawn tax-free.
- Yes, this is very common. We advise U.S. CPAs on a regular basis on cross border tax matters. Most U.S. CPAs do not have cross border experience, and it is very easy to make costly mistakes while filing these type of returns, if you do not have the appropriate amount of experience.
- Yes, that tax ID number will be the number you use going forward. We should ensure that any distributions you receive going forward have the appropriate amount of withholdings for U.S. purposes.
Please give me a call at the office at 250-3812-2400 and we can discuss the above in more detail.