Recently it came to my attention that I should have been filing US taxes as I’m a US citizen.
Here’s a brief outline of my situation:
- Born in the US- moved to Canada when I was 2 years old.
- Have never worked in the US and haven’t really spent much time down there besides the odd holiday.
- My spouse is a Canadian citizen only and we have two children who are also Canadian citizens.
- I have one company XXXXXX that I am the sole shareholder and another company XXXXXXX that my spouse and I both own 50% of the shares. Both of these companies relate to the XXXXXX industry.
- Apart from income I get from the businesses, I have some investment income (roughly $10,000 per year).
- I also have an RRSP account
I’ve read a bit about the Streamline program and think I’d qualify. I understand that I have to file 1040’s for three years and foreign bank forms for six years. I’m not certain if there is anything else I’ll need to file relating to the Companies or anything else? Also what does it cost for a typical streamline.
Thanks for your email.
You’re on the right track needing to file three years of 1040’s and six years of FBAR’s (TDF 90-22.1). With regards to the companies, I’m under the impression that they are Canadian Companies- if that’s a correct assumption, than you would also be required to file form 5471 which is an information return for foreign companies with US shareholders. You would need to also complete three years of 5471’s for each company.
With regards to the investment income, there may be additional filing issues if you have any TFSA’s or RESP’s. If you have either of these types of accounts, you may also have a filing requirement of form 3520. We can discuss this further if either of these are applicable.
The streamline filing would also contain a **UPDATED SEPTEMBER 2014- The Questionnaire is no longer part of the Streamline Procedures. It has been replaced with Forms 14653 and 14654. Click here for more details.
Questionnaire that essentially allows the IRS to assess whether you are a low compliance risk or not. Having items that increase the compliance risk will increase the scrutiny that the IRS places on your returns. Low risk filings usually go through the system quickly and seamlessly. Items that would increase your compliance risk include whether you hold accounts outside of your country of residence, whether or not you are fully compliant with your Canadian tax filings or whether the IRS has already been in contact with you regarding delinquent tax returns.
In order to defer income on your Canadian RRSP, you are also required to file form 8891. Since form 8891 would be late, Streamline procedures also require that you include a prescribed RRSP disclosure form as well.
Please be aware that you may also have additional filing requirements that I am unaware as I have limited information about your situation.
As for cost, I wouldn’t say there is a “typical” streamline file as it really does vary from person to person depending on their situation, types of returns that they require and complexity of their tax filing. Please feel free to give me a call and we can discuss your situation further at which point I could provide a more accurate estimate.
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