IRS Tax Traps For US Citizens Living in CANADA

Passive Foreign Investment Company (PFIC)  filing requirements are one of the most complex tax matters on your personal tax return. Read the article below which lays out  the US tax treatment of various items in Canada which do not exist under US tax law and often end up being PFICs and are taxable in the US. Click the link below for details.

https://www.theglobeandmail.com/globe-investor/personal-finance/taxes/us-citizens-living-in-canada-beware-these-five-tax-traps/article37658751/

IMPORTANT US INTERNATIONAL TAX FORM DUE DATES

• Form TDF 90-22.1 (FBAR FORM) where you report details of your foreign financial accounts, including bank accounts, stock brokerage accounts, pension plans, etc. is must be received by the IRS by 6/30/12. No extension can be granted. Penalty for filing late can be $10,000 or more.
• Expat tax returns (if you lived abroad on 4/17/12) are due on 6/15/12 for 2011. You can obtain a further extension by filing form 4868 prior to that date. This does not extend the due date of any taxes you owe which must have been paid by 4/17/12 to avoid late payment penalties and interest.
• Forms 5471 (foreign corporations), 8865 (foreign partnerships),  8858 (Disregarded Entity), and 8621 (Passive Foreign Investment Company- usually foreign mutual funds) are all due on the due date including extensions thereof of your personal tax return. Most of these forms provide for a possible $10,000 penalty for filing late.
• If you have not filed these forms for many years (and were required to file) now may be a good time to file all those past years forms because the 2012 Voluntary Offshore Disclosure Program is still in effect and sometimes under that program you may be able to file these forms late and secure reduced or no penalties at all!

If you have prepared these forms yourself and are not sure if you have done so correctly, we do offer a service where we review your self prepared forms and provide you with written comments and suggested corrections.  These forms can all be downloaded at www.irs.gov.