With tax deadlines approaching on both sides of the border, there are a few key points advisors should be talking about with clients who hold both Canadian and U.S. citizenship.

“[Advisors] should at least make [clients] aware that they should be looking at what the tax consequences are in the U.S.,” says Linda Leung, senior manager, U.S. tax planning wealth planning group, BMO Nesbitt Burns Inc. in Toronto. “So, not just considering the Canadian income tax consequences.”

For example, income earned in tax-free savings account and registered education savings plans is still taxable in the U.S., says Leung. As such, advisors may want to suggest other savings options for those clients.

On the other hand, U.S. citizens with registered retirement savings plans or registered retirement income funds, says Leung, can use an election in the Canada/U.S. income tax treaty to defer U.S. federal tax on any income earned in those vehicles.

Advisors, however, should not wait until April to raise this topic with their U.S. clients, says Leung. “That’s something that should be done throughout the year,” she says. “Throughout the year advisors could be looking at their clients and, if they have U.S. citizenship, bring up that there are potential issues with TFSAs and RESPS.”

In addition to considering which savings vehicles to use, advisors should also remind U.S. clients of the different annual reporting forms that need to be filled out for Canadian and U.S. tax purpose.

These forms include:

> U.S. individual income tax return (Form 1040)
Reports worldwide income on an annual basis, and includes foreign tax credits, which can reduce the overall amount of U.S. income tax payable.

> Canadian income tax return
For any American who is considered to be a Canadian resident for Canadian income tax purposes.

> Report of foreign bank and financial accounts – FBAR (Form TD F 90-22.1)
For any U.S. citizen with a financial interest (or signature authority) in one or more accounts in a foreign country (non-U.S.) and the aggregate value of those accounts exceeds $10,000 USD.

> Statement of specified foreign financial assets (Form 8938)
For U.S. citizens who have foreign accounts/assets with an aggregate value exceeding certain thresholds.

> Information return by a shareholder of a passive foreign investment company or qualified electing fund (Form 8621)
For those with an interest in a non-U.S. passive foreign investment company (PFIC) such as some Canadian Mutual Funds