Thank you for bringing up these important points! I have about $35K combined in my Canadian accounts, so I'll definitely need to file the FBAR. You're right about the TFSA - that's exactly why I'm planning to close it before October. Regarding RRSPs, I do have about $80K in an RRSP. I wasn't aware of Form 8891 - does that need to be filed annually or just once?

The good news is that Form 8891 was actually eliminated in 2014! The IRS now automatically recognizes the tax deferral for RRSPs under the US-Canada tax treaty without requiring a specific form. You'll still need to report the existence of the RRSP on your FBAR and potentially on Form 8938 (Statement of Foreign Financial Assets) if you meet the filing threshold, but the income can continue to grow tax-deferred. One other consideration for your plan: make sure you've researched any state-specific requirements. California, for example, doesn't always follow federal treatment of foreign income and may have different rules regarding your Canadian accounts and investments compared to federal regulations.

This is incorrect information. Canada doesn't have an "exit tax" in the same way as the US. What Canada has is a deemed disposition rule where certain properties are treated as if they were sold at fair market value when you cease Canadian residency. However, this typically doesn't apply to cash, personal-use property, most registered plans like RRSPs, and certain real property located in Canada.

Thanks for bringing this up. I've been concerned about this potential issue. My total assets are around CAD $1.3 million, so I should be under that threshold. Most of my assets are either in my RRSP, cash, or the condo which I'm planning to sell before becoming a non-resident. Would there be any other assets I should be concerned about for the deemed disposition rules?

Thanks for mentioning this! Do you know if setting up a payment plan affects your credit score? And is there a minimum amount I have to pay monthly or can I set it to whatever I can afford?

Setting up an IRS payment plan generally doesn't directly affect your credit score - the IRS doesn't report to credit bureaus like a normal lender would. However, if you fail to pay and the IRS files a tax lien, that WILL hurt your credit. So the payment plan actually helps protect your credit by preventing more serious collection actions. For monthly payment amounts, it depends on how much you owe. For debts under $10,000, you can pretty much set your own monthly payment as long as you can pay off the full amount within 3 years. For larger amounts, the IRS may want financial information to determine what you can afford. They're surprisingly reasonable about this - they'd rather get paid slowly than not at all.

This is actually brilliant advice. I had a similar situation (though not as old) and the Social Security earnings record was spot on. Combined with the IRS transcript it gave me everything I needed!

Thank you for sharing! Did you and your spouse both use the same CPA so they could coordinate both of your returns? And did you have any issues with previous years where you might have filed inconsistently?

Yes, we definitely used the same CPA for both returns to ensure consistency. That was key to making sure our community property allocations matched up perfectly. Regarding previous years, we had indeed filed inconsistently for two years (similar to your situation). Our CPA advised that we could either amend those previous returns or simply start filing correctly going forward. Since the difference in our case wasn't enormous and we hadn't been audited, we chose to just file correctly going forward rather than opening up old returns. The CPA mentioned that the statute of limitations for most returns is 3 years, so after that time passes, your risk decreases significantly.

How much were the penalties? Was it worth the savings you got on the student loans during that time or did it completely wipe that out?

3 Is there any minimum amount for self-employment? Like if someone paid me $50 to mow their lawn once, do I still need to report that? It seems excessive to file all these extra forms for tiny amounts.

22 The technical answer is that if your net earnings from self-employment are $400 or more, you're required to report the income and pay self-employment tax. Below that threshold, you still technically need to report the income on your tax return, but you wouldn't have to pay self-employment tax or file Schedule SE. For very small amounts like $50 from a one-time lawn mowing job, the practical reality is that it's unlikely to create issues if not reported. However, the letter of the law says all income should be reported regardless of amount. As amounts get larger (like the $3,800 mentioned in the original post), the importance of proper reporting increases significantly both for compliance reasons and because the IRS is more likely to notice larger unreported amounts.

2 Which tax software do you think handles this situation best? I'm in a similar boat with just one small freelance project this year.

Do you find any difference in quality between your rural vs city accountant? I'm wondering if paying more actually gets you better service or tax savings?

Honestly, my rural accountant is more attentive and responsive - probably because she has fewer clients overall. The Chicago firm has more specialized expertise in certain areas (particularly for e-commerce tax issues), but for day-to-day service and general tax matters, the rural accountant provides better value. The big difference is that the Chicago firm has more specialists under one roof, so if I have a very specific tax situation, they can usually handle it in-house. With my rural accountant, she occasionally needs to bring in outside expertise for complex situations. But for standard business tax planning and preparation, I haven't found that paying more necessarily results in better service or outcomes.

How do you find a good EA? Is there a directory or certification board? I've only ever used CPAs and H&R Block type places.

You can find qualified EAs through the National Association of Enrolled Agents website (NAEA.org) - they have a directory searchable by location and specialization. I found mine through a business owner networking group, which was great because I got to hear about direct experiences from other small business owners. When interviewing potential EAs, ask about their experience with your specific industry and business structure. A good EA should be able to discuss relevant deductions and planning strategies in your initial consultation. Also check if they offer audit representation (most do, it's a core part of their expertise). The right EA can provide the same level of tax expertise as a CPA, often with more specialized tax knowledge and lower fees since they focus specifically on taxation rather than broader accounting services.