David A. Altro and Matt C. Altro were recently interviewed by Michelle Schriver from Advisor’s Edge to analyze a case study about a mixed-marriage between a Canadian and American. The analysis was published in the June edition of the Advisor’s Edge magazine and also appeared online on Advisor.ca.

In the article, David and Matt review several investment traps for mixed-marriages including TFSAs and RESPs, passive income sources, a capital gain on the family home, and life insurance. Click here to view the article online or scroll down to read an excerpt from the piece.

How an American spouse can minimize U.S. tax


Michelle Schriver
ADVISOR.CA
June 3 2015

Regardless of where they live, U.S. citizens must file U.S. tax returns on worldwide income and comply with onerous U.S. foreign reporting requirements. U.S. citizens in Canada can reduce or eliminate U.S. taxes by applying two provisions:

  1. The foreign earned income exclusion (FEIE) on earned income up to US$100,800 (2015)
  2. Foreign tax credits (FTCs) for paying Canadian taxes; FTCs are directly applied to the same foreign-earned income

But these provisions may not be enough — especially if Americans hold certain investments.

“There’s a whole set of [vehicles] that unfortunately work really well for Canadians but don’t work well for the U.S. side,” says Matt Altro, a cross-border financial planner, and partner and chief operating officer at Altro Levy in Montreal.

If you live in Canada and you’re in a mixed marriage (one of you is Canadian, one American), don’t let the American spouse get caught in the following investment traps — or Uncle Sam will come knocking.