Dual citizen unsure of where to invest

[bpp]

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Originally Posted by pauld82 The reason I am thinking of going to an expert before the IRS is because I would like someone to explain to me what is required of me and what is the best course of action to take (not simply in regards to what I've failed to file, but for what I should do in the future to keep both countries happy). And I'll need it to be explained in dumbed down language...

That's fine. I might gently suggest that after you get the expert's advice, you run it past the IRS before acting on it. You could talk to the IRS anonymously, or "on behalf of a friend," for example.

I've seen some bad advice put out by tax experts, really basic stuff that a careful reading of the IRS documentation and/or speaking to the IRS would have cleared up. For example, one person who has written a book on US expat tax issues and who was running a Q&A on an expat website said that one could intentionally exclude part of one's income from the FEIE in order to be able to make IRA contributions. This is patently untrue. Another expert, who gave a good description of PFIC issues on his website, then stated that one only has to report foreign accounts where the total in each account exceeds $10,000, so that 10 accounts with $9,000 each in them would not need to be reported. This is also not true; if the aggregate total over all foreign accounts exceeds $10,000, then ALL accounts must be reported.

Anyway, ask but verify. Unless you want to end up like Wesley Snipes...

[Martha]

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Originally Posted by bpp Why is that?

Quote:

Originally Posted by bpp I've seen some bad advice put out by tax experts, really basic stuff that a careful reading of the IRS documentation and/or speaking to the IRS would have cleared up. Anyway, ask but verify. Unless you want to end up like Wesley Snipes...

I agree that this is a problem. But, the IRS is also often wrong too and unless you get a private letter ruling you cannot hold them to what they say if incorrect.

So, my feeling is start with a professional familiar with the area and ask for copies of what regulation/publication/whatever they are relying on.

[nun]

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Originally Posted by pauld82 Will do. Thanks for you help, and thanks to Ed and Nords as well.

I too am a dual citizen, but US/UK and you ahve to make sure you comply with both tax regimes, in your case US/Canada.

US is "easy", no matter where you are or how much you earn as a US citizen you must file a return. I'm not sure about Canada, but I bet its similar to the UK, and most other countries, in that they tax on residency and whether you have funds arising within the country. So even though I'm a UK citizen (or is it still subject) as I don't live in the UK and have no earnings or investmenst there I have no UK tax liability and do not file UK taxes. However, if I move back to the UK I will have to file both UK and US tax forms.

Also if you own Canadian mutual funds or PFICs (Passive Foreign Investment Company)

http://www.altassets.net/casefor/cou...002/nz3254.php

I'd talk to a tax accountant as there are some really nasty tax laws for them.

Also as a US citizen you must now report any foreign accounts over $10k to the Treasury Dept. on Form TD F 90-22.1 and if you don't the fines are frightening.

Bottomline is as a US citizen the IRS and Treasury can hammer you with nasty taxes and fines for money you invest or have abroad if you are not careful. I'd talk to a dual qualified accountant to make sure things are ok

[InTheFlow]

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Originally Posted by bpp The IRS should be pretty helpful.

I've found that IRS personel are much like the Dementors in the Harry Potter novels. At least that has been my personal experience...along with other family members/friends. Not that all the IRS personel are like that or anything...but some of them lord the power over you and suck up your energy. If you don't HAVE to deal with the IRS, you're better off.