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Tuesday, June 05, 2012

Another step in integration- a bank account

If you read the checklists of what to do as soon as you arrive in Canada as an immigrant, one of the top things is to establish a bank account. Now I've been here nearly nine months and I'm just getting that particular item crossed off of my list.

Why the long wait? Well, I still have had a lot of business with the U.S., so I hadn't closed those accounts yet. My Love and I use those accounts when we go to the Niagara/Buffalo region to shop sales too. I just haven't had the need to set up an account until now.

But a tax refund check and the reality of U.S. tax laws meant that I had to do something. Until all the ramifications of  Report of Foreign Bank and Financial Accounts (FBAR) are understood, it was better for us that I establish my own bank account rather than simply join my Love's.

That issue aside (it will be 2014 before anyone understands how the IRS intends to use the mandatory reporting), it's nice to take one more step to integrate into Canadian life.

So who am I banking with? TD? CIBC? RBC? Nope. I chose President's Choice (the same folks that bring you tasty food at Loblaws). They offer a completely free checking account through CIBC, with access to all the Interac machines in the country. One good thing about waiting a few months to get this done is I was aware of the best options for my needs.

Not sure what's left on the "after you arrive" list, but I'll keep you posted as usual!

3 comments:

  1. You might want to study very closely the implications of banking and saving in Canada. Many people who are deemed US taxable 'persons' who have moved outside the US are now trying to comply with the complex and draconian FATCA and FBAR requirements of the US. All sorts of everyday banking and savings, and pensions that we take for granted are toxic to US citizen/persons 'abroad', because they are considered 'foreign'. The reporting is labyrinthine, hard to understand, and the pitfalls are many. It takes a cross-border specialist to advise - so you can make decisions about your accounts, and savings, way BEFORE any reporting is due, because so many have found after the fact that they have missed some obscure form or deadline - completely different than what applies to US citizens inside the US. Plus, Canada has it's own rules in this respect too.
    Here's a whole website where many of us are trying to figure things out - after the fact.
    http://isaacbrocksociety.ca/2012/05/10/american-citizenship-a-cost-benefit-analysis-5-2/
    You might not agree with some of the sentiments expressed there, but at least you will be forewarned about the pitfalls, and hopefully not fall into them as so many have inadvertently and innocently.
    http://isaacbrocksociety.ca/2012/01/23/fatca-the-need-to-know-basis-is-not-satisfied/

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  2. It's always good to have as full a picture of possible of the impacts of leaving your home country for another.

    While I agree that it's hard to stomach some of the policies of the IRS (citizen-based taxation for one), it is the price you pay for retaining American citizenship. Many expats want the flexibility in travel, economic and other opportunities that come with U.S. citizenship, but don't want to pay for it. In many ways, just like U.S. citizens at home who want the benefits of government support, but complain about paying taxes.

    As voting U.S. citizens, we do have the ability to make our viewpoints known directly to our representatives, or to challenge the government legally if we feel our rights are being violated.

    Once an expat makes the commitment to another country in the form of citizenship, they also have the choice to renounce their U.S. citizenship. It costs $400 and takes a couple months.

    Life is full of complicated choices when it comes to being an expat. I just feel blessed that I HAVE a choice.

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  3. Actually, many affected in Canada were born here, and are duals that inherited the US status via their parent/s. They did not have a 'choice'. Others were 'accidentals' born in US border hospitals in areas where the Canadian hospital couldn't take them, or if they were born when their Canadian parents were visiting the US or studying there.

    Many US states do not allow those who never lived in the US to register to vote. Hence, there is NO representation, only taxation. To complete a renunciation/relinquishment requires certifying 5 years IRS tax compliance - and renouncing costs 450. US fee. With assets over a certain threshold, there is an exit tax.

    Many naturalized Canadians lost their US status automatically when they swore the citizenship oath to Canada - because that was US law for decades, but a US Supreme court decision retroactively changed that in the 80's - which unbeknownst to us, led the IRS to decide now that those people still have an IRS obligation - irregardless that they do not have US citizenship. The US used to strip citizens of their US citizenship automatically if they swore a citizenship oath to a 'foreign power', (among other renunciatory acts). For the IRS and US to retroactively consider that those who they stripped of the status decades ago are still citizens for US tax purposes - is just wrong. Those ex-US citizens didn't have a choice either.

    A Constitutional challenge, or a challenge to the Supreme court is beyond the skills, resources and abilities for the ordinary person. Several US tax lawyers have already advised those deemed 'US persons' in this situation that it would not be a feasible path to attempt - even though they agree that there are significant potential grounds for such a court challenge. Thus, justice deferred is justice denied.

    For a more definitive discussion of the rights denied to US citizens abroad - by birth, or via parentage, I would point you to:
    http://www.aaro.org/position-papers-2011
    http://www.aaro.org/taxation
    http://www.aaro.org/us-taxes-us-exports-2010
    http://www.aaro.org/citizenship
    http://www.aaro.org/representation
    http://americansabroad.org/issues/taxation/
    http://americansabroad.org/issues/

    Of particular note is the chart on this page http://www.aaro.org/position-papers-2011/taxation , delineating the differences in the taxation burden that US persons living 'abroad' face, versus those living inside the US. Many of those abroad are dual citizens by birth in another country and have never sought US status, or set foot in the US, or worked there, and receive no US benefits. They should not have to pay 450., and satisfy the IRS with 5 years of returns, plus 6 years of FBARs, and now FATCA for a status they did not seek, was conferred without their consent, that imposes unwanted and now serious potential penalties, forces them to disclose all their local assets and bank accounts by Acct.no, location, highest aggregate balance, and opens them up to draconian penalties (that cans exceed the balances in question) for even inadvertent errors (the US considers all local assets and accounts we hold where we live 'foreign' by the US standards just because they are not inside the US). All our Canadian government blessed registered tax deferred and tax privileged savings like Registered Education Savings Plans are considered 'foreign trusts' by the IRS and are taxed by the US. Yet, we cannot qualify for or use the US equivalent. The forms to report 'foreign trusts' are time-consuming to complete, and very complex, and US tax preparers outside the US charge a great deal of money per form. Canadian mutual funds are considered PFICs and the US tax on them can exceed any interest earned, and eat into the balance. RRSPs are recognized to be taxdeferred for US tax purposes, but require an annual form for maintaining that status - any error in filing annually requires an IRS private letter ruling application - at a cost of $2000. per letter.

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