The Wooding Group
January 31, 2020
2020 Insights for US Citizens
As an advocate for US Persons in Canada and an expert on their investment matters, I am no longer surprised when I come across US Citizens among us. Now, for the record I am not a dual citizen, but all of us have close ties to the US and my family has cousins and in-laws that fall into this category.
For example, the 2019 Canadian Federal election saw 2 candidates that are US Persons! In the middle of the campaign Andrew Sheer of the Conservatives was ‘revealed’ as a US citizen and apparently is taking steps to renounce. Meanwhile Elizabeth May of the Green Party (and Martimer as my Dad always reminds me) has long been known to be a US Citizen. Regardless, it reflects the fact that so many of our friends, colleagues and family around us have such close ties to our American neighbours.
Here is what I am sharing with our US Citizens in Canada clients this year:
This year the US will face a Federal election. Expect it to be very partisan, fatiguing and very ugly. Don’t expect much change in the tax law for US Ex-pats. The focus for both parties will remain protectionist with the Democrats proposing to tax the wealthy…at home and abroad.
The longstanding rumour that the US will adopt a residence-based approach to taxation will wait another year (and likely more).
IRS & file Sharing
CRA reported that 900,000 financial records belonging to Canadian residents were shared with the IRS in 2018.
As a result of the Foreign Account Tax Compliance Act (FACTA) adopted by the US and Canada and as a measure to limit off-shore accounts to avoid tax this figure continues to rise.
We don’t have any material objection to the sharing, we strive to ensure accounts held at the Wooding Group meet the most stringent of scrutiny for US tax compliance. We work closely with our clients and their accountants to avoid raising any unnecessary red flags.
We have had several clients go through the IRS’ Streamlined Filing Compliance Program over the past 3 years. This process is voluntary and is a mechanism to get ‘caught-up’ on US personal tax and all the related requirements of the IRS. While the IRS put this in place as a temporary program, it’s continued popularity and use has extended its lifespan into the foreseeable future. However, they will, shut this door at some point and we don’t advise being the last one to knock…it may be best to get compliant today.
As always, let me know if you have any questions about all things American!