The IRS, CRA, and US Treasury are extremely harsh with people who don’t file timely paperwork to disclose their foreign accounts:
- There is a $25/day late penalty for Canadian taxpayers failing to report foreign accounts on time. As of 2014, you must file Canada Form T1135 if you have >$100,000 CAD of assets in foreign accounts.
- As reported in Forbes, a Miami man was fined 150% of the value of his foreign accounts for failure to report them. A US citizen (including ones resident in Canada) or US resident who has more than $10,000 USD in foreign accounts at any time during the year must report these accounts to the treasury (not the IRS) by June 30 each year.
- A US citizen (including ones resident in Canada) or US resident with substantial foreign accounts must also report them to the IRS on Form 8938.
The CRA also has some ridiculous late penalties for those leaving their tax winter wonderland:
- There is a $25/day penalty for late reporting of assets held at the time of Canada exit on Form T1161. As of 2014, you must file this form if ALL of your assets upon Canada exit amount to more than $25000 CAD.
The moral of the story is that International people tend to get lumped in with money-launderers by the tax agencies, so watch out.
Disclaimer: I’m not a tax professional, just an academic who wasted too much time dealing with the US-Canada tax system.