s/o investments - Americans and taxable income

[loira]

If you are (married to) an American, do you and your spouse have separate accounts? We tried to get H on my Canadian account as joint, but now they want some stupid US tax paperwork. It's not worth it because we don't want the US thinking my income is taxable. We never had this problem in the UK (we have a joint Barclays account). How do you deal with taxes? We already have a 'fake' SSN that the government gave H to use for me when he files, which creeps me out but is required. Is H going to be subjected to double taxation when he starts making money?

[Cicero]

We're both Americans so the first part of your question doesn't really apply to us. I will say that as Americans it is a giant PITA to get foreign financial institutions to deal with you and good luck finding someone willing to help you with actual investing.

Re: taxation. The 2016 foreign earned income exclusion is $101,300. So it's not anything he needs to worry about if he's not making more than that. i am guessing (although I don't absolutely know) that the US and Canada have a tax treaty and that the Canadian effective tax rate is higher. If both of these are the case he won't owe anything. If there is a tax treaty you get a credit for the amount of taxes you pay to the other government so It's when the rate is lower tha you owe to difference to the US government.

[frlcb]

Mar 27, 2016 10:48:45 GMT -5 loira said:

If you are (married to) an American, do you and your spouse have separate accounts? We tried to get H on my Canadian account as joint, but now they want some stupid US tax paperwork. It's not worth it because we don't want the US thinking my income is taxable. We never had this problem in the UK (we have a joint Barclays account). How do you deal with taxes? We already have a 'fake' SSN that the government gave H to use for me when he files, which creeps me out but is required. Is H going to be subjected to double taxation when he starts making money?

Do you have a green card for the US? Why do you use a SS# for taxes if you aren't? When dh and I were in the UK, pre green card for him, I just filed married but separate or whatever it is. It was never a problem.

[loira]

Mar 27, 2016 20:07:37 GMT -5 frlcb said:

Mar 27, 2016 10:48:45 GMT -5 loira said:

If you are (married to) an American, do you and your spouse have separate accounts? We tried to get H on my Canadian account as joint, but now they want some stupid US tax paperwork. It's not worth it because we don't want the US thinking my income is taxable. We never had this problem in the UK (we have a joint Barclays account). How do you deal with taxes? We already have a 'fake' SSN that the government gave H to use for me when he files, which creeps me out but is required. Is H going to be subjected to double taxation when he starts making money?

Do you have a green card for the US? Why do you use a SS# for taxes if you aren't? When dh and I were in the UK, pre green card for him, I just filed married but separate or whatever it is. It was never a problem.

I don't have a green card. The IRS (or some government official) gave H a special SSN for me. One that was only for the purposes of his taxes. It doesn't allow me to work or anything. To be clear, the US doesn't require me to pay taxes, but any money in a joint account we hold may be subject to taxation. I don't really know anything about this because when we were in the UK the bank never had us fill out weird paperwork on this. I guess there are a lot of Americans living in Canada that the IRS wants to make sure are filing correctly?

[rupertpenny]

I would try and keep his name off of foreign accounts if at all possible. It is just such a huge headache and Cicero is correct, it will be hard to find anyone willing to deal with a US citizen. It also may restrict the kinds of investments you can make. I think there are some funds we can't but as US citizens living abroad (this is with a US acct and buying US funds so may not apply for you).

I recently acquired a second citizenship and if I ever decide to expatriate I anticipate that H and I would fully separate our finances first.

[gigem]

Mar 27, 2016 10:48:45 GMT -5 loira said:

If you are (married to) an American, do you and your spouse have separate accounts? We tried to get H on my Canadian account as joint, but now they want some stupid US tax paperwork. It's not worth it because we don't want the US thinking my income is taxable. We never had this problem in the UK (we have a joint Barclays account). How do you deal with taxes? We already have a 'fake' SSN that the government gave H to use for me when he files, which creeps me out but is required. Is H going to be subjected to double taxation when he starts making money?

I am by no means a us tax code expert but im american married to none american, and we have both joint and foreign bank and investment accounts. that tax form will always come up when an american opens a foreign account and additionally all forgein accounts with your husbands name have to be reported on the fbar form for his tax returns if the aggregated balance on all forgein accounts if over $10k at any point during the tax year. If you are not a us citizen your income isnt taxable regardless of your name also being reported on joint forgein accounts except if you earned interest income on those accouts. Yes he will be subject to "double taxation" as you called it if he starts working, but many countries have a tax treaty so you are taxed at a reduced rate (basically us takes into consideration what he is paying as tax to the country where he lives and earns income). Also there is the foreign earned income exclusion which is a huge deducion of salary around $95k and also housing costs reduction. I have someone who does my us taxes because i dont want to mess up, it only costs me $300 a year and then $100 more for the fbar which is worth it imo. If you are filing with a fake ssn then it seems like you are still fling jointly even if you arent a us citizen, you should ask if this is necessary. My husband is listed but we wont file anything for him than the joint accounts (we dont file anything with regards to his salary). Does this help answer any of your questions?

[gigem]

Mar 27, 2016 21:48:33 GMT -5 loira said:

Mar 27, 2016 20:07:37 GMT -5 frlcb said:

Do you have a green card for the US? Why do you use a SS# for taxes if you aren't? When dh and I were in the UK, pre green card for him, I just filed married but separate or whatever it is. It was never a problem.

I don't have a green card. The IRS (or some government official) gave H a special SSN for me. One that was only for the purposes of his taxes. It doesn't allow me to work or anything. To be clear, the US doesn't require me to pay taxes, but any money in a joint account we hold may be subject to taxation. I don't really know anything about this because when we were in the UK the bank never had us fill out weird paperwork on this. I guess there are a lot of Americans living in Canada that the IRS wants to make sure are filing correctly?

It could be that when you were in the uk it was before fbar, which i think hasnt been around that long. I have never had any restrictions on investments or banks who dont want me on their accounts because of being a us citizen. It has nothing to do with canada, everyone has to file fbar now if you meet that $10k limit. The us isnt going to tax the money in your joint forgein accounts except any interest earned or capital gains taken.

[gigem]

Sorry i some how jumped straight down to bottom Of thread and now i reread everything, looks like your questions had already been answered!

[loira]

Thanks all! We are going to remove him from my account today. When he gets a job (if we stay in Canada), he can open up his own account here. I am familiar with the tax treaty between Canada and the UK, since I had to file a return every year but didn't have to pay Canadian taxes. Good to know the US also has tax treaties. H has been a student for the past 6 years so this has never been an issue until now. I'll keep the advice on investments in mind.

[gigem]

Mar 28, 2016 9:01:31 GMT -5 loira said:

Thanks all! We are going to remove him from my account today. When he gets a job (if we stay in Canada), he can open up his own account here. I am familiar with the tax treaty between Canada and the UK, since I had to file a return every year but didn't have to pay Canadian taxes. Good to know the US also has tax treaties. H has been a student for the past 6 years so this has never been an issue until now. I'll keep the advice on investments in mind.

Hope it helped a bit! Also just to note, for his 2016 return, he will still have to file fbar for this joint account that you are going remove his name from today, and say that it was closed in march 2016 (if the balance was over the $10k). 

[Cicero]

Mar 28, 2016 9:01:31 GMT -5 loira said:

Thanks all! We are going to remove him from my account today. When he gets a job (if we stay in Canada), he can open up his own account here. I am familiar with the tax treaty between Canada and the UK, since I had to file a return every year but didn't have to pay Canadian taxes. Good to know the US also has tax treaties. H has been a student for the past 6 years so this has never been an issue until now. I'll keep the advice on investments in mind.

US tax treaties are a bit different though since The US bases taxes on citizenship/Green Card status and not residency. You can definitely end up owing to the US government even with a treaty. We've had to cut the IRS a check from every country we have lived so far for taxes despite all three having a tax treaty with the US.

[gigem]

Mar 29, 2016 4:43:07 GMT -5 Cicero said:

Mar 28, 2016 9:01:31 GMT -5 loira said:

Thanks all! We are going to remove him from my account today. When he gets a job (if we stay in Canada), he can open up his own account here. I am familiar with the tax treaty between Canada and the UK, since I had to file a return every year but didn't have to pay Canadian taxes. Good to know the US also has tax treaties. H has been a student for the past 6 years so this has never been an issue until now. I'll keep the advice on investments in mind.

US tax treaties are a bit different though since The US bases taxes on citizenship/Green Card status and not residency. You can definitely end up owing to the US government even with a treaty. We've had to cut the IRS a check from every country we have lived so far for taxes despite all three having a tax treaty with the US.

if you earn less than the limit for the foreign earned income exclusion and you meet the bona fide residence or physical presence tests you won't owe. when I am working and in a country with a yearly salary under that limit I didn't have to pay anything to irs... of course on higher paying expatriations I did have to pay, although that one did not have a treaty.