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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10091
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am a Canadian citizen. My wife is a US citizen, living in

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I am a Canadian citizen. My wife is a US citizen, living in Canada as a permanent resident with me. I would like to transfer approx. $130,000 from my Canadian account to my wife's US account in New Jersey. The funds I am transferring were received from the sale of the house I purchased prior to our marriage and wife's name was not on the property. My question is if I transfer these funds to my wife's US account, will there be any tax implications either in Canada or US for me or my wife.

Lane :

No,

Lane :

She WILL need to DECLARE the money transfer form, however, on for 3520: Form 3520 - Internal Revenue Service

Lane :

This is what's called an INFORMATIONAL return ... NO TAX is generated. It is really done for money tracking purposes (money laundering, etc..) ... the transferring of the money itself, is not a taxable event

Lane :

As you would have paid the capital gains tax to CRA (IF any were due after your deduction) any tax due would have been paid in Canada.

Lane :

Questons?

Lane :

And finally, if you are worried about any gift tax due on your wife's part only the GIVER of the gift pays gift tax in US. And even if it were she that si giving the gift to YOU there would be an annual exclusion of $143,000 in 2013.

Lane :

I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)

Lane :

Let me know if you need anything else at all on this ...


Lane

Customer: replied 3 years ago.

I don't have to pay any taxes to CRA as the property was our primary residence. In Canada, proceeds from primary residence are not taxable. However, I am not sure if IRS tax my wife on the proceeds of the sale of the house in Canada as she is married to me. If I transfer the funds to US, US knows about the funds. Will IRS tax my wife knowing that I did not pay taxes in Canada on the sale of the property?


 


thanks.


Right, that's way I said , "if any." I believe the lifetime exclusion amount is 250,000 of gain on personal residence, similar to US.

But no, again (1)The transfer would not be a taxable event, (2) Because of the tax treaty between US and Canada the money will not be taxed twice (excluded twice) (3) IF this was her primary residence as well, there is the same $250,000 per person ($500,000 for those filing jointly) exclusion of gain in the US as well.

Lane


Customer: replied 3 years ago.

thanks, XXXXX XXXXX clarification!


 


Does my wife have to complete form 3520 now or when she filing her taxes in the beg. 2014 for year 2013?



You turn it in WITH the taxes.

That actually works to her advantages, as they will see that it is a gift and not earned income.

From page 2 of the 3520 instructions:

"In general, Form 3520 is due on the date that your income tax
return is due, including extensions."


Lane
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