researching citizenship ?'s for Canadian spouse in US

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mnr3
Posts: 23
Joined: Fri Mar 20, 2015 6:53 am

researching citizenship ?'s for Canadian spouse in US

Post by mnr3 » Sat Apr 13, 2019 9:42 am

Hi all,
My wife and I have earned essentially all of our income working in the US over the last 30 years (with all retirement funds in US custodial accounts). I'm a US citizen and she is a Canadian with resident alien status. As we near retirement--and unsure where we will be spending time and money--I've been trying to get a handle on taxation/residency and citizenship options. We certainly will be spending some time in both the US and Canada, but for how long and whether I or she changes citizenship are still up in the air. I realize that long term I may have to hire an accountant who knows these kinds of issues but in trying to decide on where to retire and under what status, I've been a little stumped for good sources of information. Maybe have not looked hard enough, but given the wealth of knowledge here, thought I would ask for some homework reading or sources to begin honing in on best options. Any good books/blogs/wikis that address these issues or am I condemned to wading through tax treaties and internet charlatans or paying someone? Thanks in advance for any suggestions

codedude
Posts: 42
Joined: Thu Jan 26, 2017 9:15 pm

Re: researching citizenship ?'s for Canadian spouse in US

Post by codedude » Sat Apr 13, 2019 11:13 am

mnr3,

You: As a US citizen, you need to pay tax on your worldwide income regardless of where you actually live. If you take up another country’s citizenship, will you give up your US citizenship or not? If you continue having US citizenship, you will need to pay US tax as a resident on worldwide income. If you give up US citizenship, you need to be (or get) current on all US tax returns for the last 5 years, file a dual status return for the year in which you give up US citizenship. Along with this tax return you will need to file IRS form 8854. After getting an exemption for about $700000 (please check the actual limit this is just a ballpark), your assets are marked to market as of the last day of you weee a US citizen, including any real estate, IRAs etc. it is like you sold them all on that day and you bought them back. You owe taxes on all these. Please review form 8854 instructions.

Your spouse: Your spouse can take up a different citizenship, it does not matter. However, if she gives up or loses the permanent status - this can happen in several ways, by filing form I-407 with a US consulate, or by being out of the US over 6 months without a USCIs parole etc. She will have the same issues you have as. USCitizen above.

This is advice from a random dude on the net. Please review with a tax pro.

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Peculiar_Investor
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Re: researching citizenship ?'s for Canadian spouse in US

Post by Peculiar_Investor » Sun Apr 14, 2019 10:03 am

mnr3 wrote:
Sat Apr 13, 2019 9:42 am
Any good books/blogs/wikis that address these issues or am I condemned to wading through tax treaties and internet charlatans or paying someone?
A couple of resources you might consider Disclosure: I'm a member on both the BH and FWF forums
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams

assyadh
Posts: 53
Joined: Tue Sep 18, 2018 12:44 pm

Re: researching citizenship ?'s for Canadian spouse in US

Post by assyadh » Sun Apr 14, 2019 10:25 am

codedude wrote:
Sat Apr 13, 2019 11:13 am
mnr3,

You: As a US citizen, you need to pay tax on your worldwide income regardless of where you actually live. If you take up another country’s citizenship, will you give up your US citizenship or not? If you continue having US citizenship, you will need to pay US tax as a resident on worldwide income. If you give up US citizenship, you need to be (or get) current on all US tax returns for the last 5 years, file a dual status return for the year in which you give up US citizenship. Along with this tax return you will need to file IRS form 8854. After getting an exemption for about $700000 (please check the actual limit this is just a ballpark), your assets are marked to market as of the last day of you weee a US citizen, including any real estate, IRAs etc. it is like you sold them all on that day and you bought them back. You owe taxes on all these. Please review form 8854 instructions.

Your spouse: Your spouse can take up a different citizenship, it does not matter. However, if she gives up or loses the permanent status - this can happen in several ways, by filing form I-407 with a US consulate, or by being out of the US over 6 months without a USCIs parole etc. She will have the same issues you have as. USCitizen above.

This is advice from a random dude on the net. Please review with a tax pro.

The exit tax does not trigger below 2M net worth.

codedude
Posts: 42
Joined: Thu Jan 26, 2017 9:15 pm

Re: researching citizenship ?'s for Canadian spouse in US

Post by codedude » Sun Apr 14, 2019 12:07 pm

Over $2million net worth is just one of the conditions that will make someone a covered expat. There are others like average 5 year tax liability over $165000, and a requirement to have completed all tax liabilities for the past 5 years. Any of these can make someone a covered expat and subject to the exit tax.

Anyone considering giving up US citizenship or a green card will do well to read form 8854 instructions and fill out a form 8854 for themselves to see where they will fall - no impact, some impact, or a lot of impact, and decide.

retire2022
Posts: 549
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Location: NYC

Re: researching citizenship ?'s for Canadian spouse in US

Post by retire2022 » Sun Apr 14, 2019 12:11 pm

op some of the issues are discussed in previous thread which could be of interest: viewtopic.php?f=2&t=277516&hilit=green+card

Topic Author
mnr3
Posts: 23
Joined: Fri Mar 20, 2015 6:53 am

Re: researching citizenship ?'s for Canadian spouse in US

Post by mnr3 » Mon Apr 15, 2019 6:33 am

retire2022 wrote:
Sun Apr 14, 2019 12:11 pm
op some of the issues are discussed in previous thread which could be of interest: viewtopic.php?f=2&t=277516&hilit=green+card
thanks for that link; my use of the search function missed that one. I'm getting the feeling that there is not much of a repository of knowledge on these questions, and as a previous post here suggests, it might just come down to reading the tax codes. I was somewhat more interested in the implications of moving from green card status to citizen for her, but there would be repercussions for that on the Canadian side of things as well, where we establish residency, etc.

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