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Canada signs FATCA treaty

Canada signs FATCA treaty

Old Feb 11th 2014, 2:44 am
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Default Re: Canada signs FATCA treaty

Originally Posted by SchnookoLoly
She looked into what she'd need to do to file taxes - she doesn't have a social security number, and has never lived in the US at all... the process just to get all of that is a bit of a nightmare. Then she has to backfile for the past 5 years or whatever it is, and risks getting fined stupid amounts of money for not filing simply because she never realised that she had to, since she's never lived, worked, or earned money at all in the US.
She needs to get up to date with her U.S. federal taxes. Normally the IRS accept 3 years. It's unlikely she will need to pay anything (due to credits for Canadian or British taxes) and highly unlikely that she will be fined, anything more than interest on any underpaid tax. Thousands of U.S. citizens have done exactly the same thing. At a minimum she should work out what her U.S. tax liability is, if it's zero or close to zero, there should not be any problems late filing.

To get a Social Security Number she should contact a Social Security field office dealing with her Canadian province of residence:
http://www.socialsecurity.gov/foreign/index.html

Re. FATCA, it's unlikely in the short term that her bank will identify her as a U.S. person but it may occur in due course. They may even ask the question specifically. And someone who is a U.S. person will be expected to supply a Social Security Number, so if she wants to stay an American it doesn't look like there's any real alternative to obtaining an SSN and getting up to date on her taxes. But she was supposed to have done that long ago, FATCA in itself makes no difference to that.
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Old Feb 11th 2014, 11:33 am
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Default Re: Canada signs FATCA treaty

Here's a slightly different case. An 80 year old relative of mine was born in America and grew up there, but moved to Canada as the bride of a Canadian, and was told over 50 years ago when she applied for a Canadian passport that she would lose her American citizenship, which she agreed to.

She remembers actually handing in her American passport and receiving a Canadian one (not sure this is correct but it's definitely what she remembers). At any rate, from then on she used only her Canadian passport and does not remember ever having a SS number. So...she believes she gave up her US citizenship over half a century ago, and has lived her life accordingly, never filing with the IRS, using only her Canadian passport for travel and everything else.

She has three children born in Canada who are (according to present rules) perhaps American citizens, but who never knew that and don't want USC.

Must all 4 of them get CLNs to confirm what they have always believed--that they are not American?
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Old Feb 11th 2014, 12:33 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by WEBlue

Must all 4 of them get CLNs to confirm what they have always believed--that they are not American?
Surely they are Americans. The obvious options would seem to be:

- say nothing, carry on as usual

- apply for SSNs, file tax returns, hang a Star Spangled Banner

- formally renounce US citizenship.

It'd take me a fraction of a second to choose the first option.
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Old Feb 11th 2014, 12:43 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by WEBlue
Here's a slightly different case. An 80 year old relative of mine was born in America and grew up there, but moved to Canada as the bride of a Canadian, and was told over 50 years ago when she applied for a Canadian passport that she would lose her American citizenship, which she agreed to.

She remembers actually handing in her American passport and receiving a Canadian one (not sure this is correct but it's definitely what she remembers). At any rate, from then on she used only her Canadian passport and does not remember ever having a SS number. So...she believes she gave up her US citizenship over half a century ago, and has lived her life accordingly, never filing with the IRS, using only her Canadian passport for travel and everything else.

She has three children born in Canada who are (according to present rules) perhaps American citizens, but who never knew that and don't want USC.

Must all 4 of them get CLNs to confirm what they have always believed--that they are not American?
A grey area here. The key issue is whether she actually wanted to renounce her US citizenship.

As far back as 1952, the US Supreme Court stated in Kawakita v US that "a person may have and exercise rights of nationality in two countries and be subject to the responsibilities of both. The mere fact he asserts the rights of one citizenship does not without more mean that he renounces the other". Definitely a recognition of dual citizenship there.

Historically, actions such as naturalizing as a citizen of another country or even voting in foreign elections did mean the loss of US citizenship. However, in 1967 (Afroyim v Rusk), the U.S. Supreme Court limited the loss of US citizenship to those cases in which someone engaged in conduct with the intention of giving up US citizenship. A person's intent is hard to prove one way or the other without having them state their intent. Some actions are obvious such as renunciation. Other actions such as naturalizing in another country are not enough to lose US citizenship - there also has to be documented intent to give up US citizenship.

So here is where the grey area comes in. Only your relative knows her intent at the time. She could claim that she never intended to renounce her US citizenship and that she handed in her US passport because she was given incorrect information about the possibility of dual nationality. So, unless your relative specifically told US officials of her intention to renounce her US citizenship and documentation still exists to prove this, I think she could still claim that she is a US citizen. It would be interesting to know who she gave her US passport to. Since it's the property of the US government, she should not have given it to Canadian officials.

Alternatively, she could claim that she is not a US citizen, fully intended to give up US citizenship when she became Canadian and handing in her US passport was her way of demonstrating the renunciation of her US citizenship.

It's probably in her best interest (and in the best interests of her children) to clarify this situation with the US authorities. Perhaps consult with an immigration/citizenship lawyer first.

Last edited by MarylandNed; Feb 11th 2014 at 12:45 pm.
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Old Feb 11th 2014, 1:05 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by MarylandNed
A grey area here. The key issue is whether she actually wanted to renounce her US citizenship.

As far back as 1952, the US Supreme Court stated in Kawakita v US that "a person may have and exercise rights of nationality in two countries and be subject to the responsibilities of both. The mere fact he asserts the rights of one citizenship does not without more mean that he renounces the other". Definitely a recognition of dual citizenship there.

Historically, actions such as naturalizing as a citizen of another country or even voting in foreign elections did mean the loss of US citizenship. However, in 1967 (Afroyim v Rusk), the U.S. Supreme Court limited the loss of US citizenship to those cases in which someone engaged in conduct with the intention of giving up US citizenship. A person's intent is hard to prove one way or the other without having them state their intent. Some actions are obvious such as renunciation. Other actions such as naturalizing in another country are not enough to lose US citizenship - there also has to be documented intent to give up US citizenship.

So here is where the grey area comes in. Only your relative knows her intent at the time. She could claim that she never intended to renounce her US citizenship and that she handed in her US passport because she was given incorrect information about the possibility of dual nationality. So, unless your relative specifically told US officials of her intention to renounce her US citizenship and documentation still exists to prove this, I think she could still claim that she is a US citizen. It would be interesting to know who she gave her US passport to. Since it's the property of the US government, she should not have given it to Canadian officials.

Alternatively, she could claim that she is not a US citizen, fully intended to give up US citizenship when she became Canadian and handing in her US passport was her way of demonstrating the renunciation of her US citizenship.

It's probably in her best interest (and in the best interests of her children) to clarify this situation with the US authorities. Perhaps consult with an immigration/citizenship lawyer first.
I don't think this is a hornet's nest that needs kicking. There's no immediate need to be American or not-American.

What she could do is to prepare two letters, one stating her intent to renounce, one stating that she never intended to renounce; get then each witnessed by a notary or similar and then ignore the matter. If someone in a subsequent generation has a compulsion to act, the supporting evidence will be there in support of whatever course of action they decide to take. That's the best she can do for her children and their children; they matter more than the current policies of a foreign government.
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Old Feb 11th 2014, 1:36 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by dbd33
I don't think this is a hornet's nest that needs kicking. There's no immediate need to be American or not-American.

What she could do is to prepare two letters, one stating her intent to renounce, one stating that she never intended to renounce; get then each witnessed by a notary or similar and then ignore the matter. If someone in a subsequent generation has a compulsion to act, the supporting evidence will be there in support of whatever course of action they decide to take. That's the best she can do for her children and their children; they matter more than the current policies of a foreign government.
I'm not a citizenship expert so, although I have the best intentions in giving my opinion, I could be talking complete bollocks (wouldn't be the first time). The same might apply to you. Someone more qualified than you or me might well tell her that she is, in fact, a USC and so are her children. Alternatively, they might confirm that they are not. Or they might confirm the grey area that I described. I think I would want to know either way especially with the US insisting on taxing its citizens wherever they live in the world and also the FATCA regulations.
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Old Feb 11th 2014, 7:30 pm
  #37  
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Default Re: Canada signs FATCA treaty

Originally Posted by dbd33
Surely they are Americans. The obvious options would seem to be:

- say nothing, carry on as usual

- apply for SSNs, file tax returns, hang a Star Spangled Banner

- formally renounce US citizenship.

It'd take me a fraction of a second to choose the first option.
Originally Posted by MarylandNed
Alternatively, she could claim that she is not a US citizen, fully intended to give up US citizenship when she became Canadian and handing in her US passport was her way of demonstrating the renunciation of her US citizenship.

It's probably in her best interest (and in the best interests of her children) to clarify this situation with the US authorities. Perhaps consult with an immigration/citizenship lawyer first.
Thanks very much for your input, Dbd33 and MarylandNed. My relatives would strongly prefer to ignore the whole thing. The mother has lived the majority of her life as a Canadian only, and her children have lived ALL their lives as such, so they don't understand why anything has changed for them, and why they have to do anything differently.

MarylandNed, thanks for the timeline showing the US legal stance on dual citizenship. I believe my older relative married and moved to Canada around the time of the 1952 Kawakita case, and applied for her Canadian passport around 5 years (?) later. Whatever official she spoke to who gave her the idea that she couldn't have both citizenships was perhaps unaware of the possibility of dual citizenship for Americans.

But what about Canada's acceptance of dual citizenship? Is it true (as I've heard) that Canada didn't allow Canadians to have more than one citizenship up until the late 70s? Would this be a factor in preventing a new Canadian like my relative from realizing in the 60s-70s that she even COULD have both citizenships?

Last edited by WEBlue; Feb 11th 2014 at 7:35 pm.
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Old Feb 11th 2014, 8:58 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by WEBlue
But what about Canada's acceptance of dual citizenship? Is it true (as I've heard) that Canada didn't allow Canadians to have more than one citizenship up until the late 70s? Would this be a factor in preventing a new Canadian like my relative from realizing in the 60s-70s that she even COULD have both citizenships?
Canada restricted dual citizenship up until 1977 but people who became naturalized Canadian citizens did not have to provide proof that they had renounced other citizenships.

Regardless of this, how the US views your relative's citizenship status has absolutely nothing to do with Canada or Canadian citizenship laws. Only US law matters to the US. So unless your relative has communicated to the US that she intended to give up US citizenship, then the US could still consider her to be a USC.

Last edited by MarylandNed; Feb 11th 2014 at 9:06 pm.
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Old Feb 14th 2014, 2:59 am
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Default Re: Canada signs FATCA treaty

Originally Posted by WEBlue
Here's a slightly different case. An 80 year old relative of mine was born in America and grew up there, but moved to Canada as the bride of a Canadian, and was told over 50 years ago when she applied for a Canadian passport that she would lose her American citizenship, which she agreed to.

She remembers actually handing in her American passport and receiving a Canadian one (not sure this is correct but it's definitely what she remembers). At any rate, from then on she used only her Canadian passport and does not remember ever having a SS number. So...she believes she gave up her US citizenship over half a century ago, and has lived her life accordingly, never filing with the IRS, using only her Canadian passport for travel and everything else.
First priority should be not to panic.
It sounds like she could probably claim to have kept her American citizenship, but at the same time could just as easily claim it was her intent to give it up, back in the 1960s or so. As long as she doesn't take any action, or make any declarations in writing or otherwise, both those options appear to remain open. Take a look at: http://www.richw.org/dualcit/ - this dates from some years ago, but the information is still largely valid.

She has a U.S. birthplace, so in theory her Canadian bank (under the FATCA agreement) may one day ask her for a SSN, or evidence she's not a U.S. citizen. However, they may accept a self-declaration to that effect. And if she has less than $50,000 in her account, it's not even clear if they will ask.

If she's a high net worth person, then it may be more important to work things out immedately (U.S. estate tax, etc), but for 95%+ of persons, this should not be a concern.

She has three children born in Canada who are (according to present rules) perhaps American citizens, but who never knew that and don't want USC.

Must all 4 of them get CLNs to confirm what they have always believed -- that they are not American?
Let's assume one of the children wanted to be recognized as a U.S. citizen. Assuming they were born in the window between cut-off dates in 1952 and 1986, and assuming parents were married, they would need to show evidence that their mother was in the U.S. for 10 years, including 5 years after age 14. Unless and until they did so, any claim to U.S. citizenship would not be accepted. Could they even show such evidence, even if they wanted to?

So any potential claim to U.S. citizenship is dormant and it's hard to see how this could be enforced against them without some action on their part to supply the necessary evidence.

So their options include, but are not limited to:

1. Leave any U.S. citizenship claim dormant, ignore it meanwhile.
2. Claim U.S. citizenship, get passport/SSN, file taxes, etc.
3. Claim acquisition of U.S. citizenship at birth, followed by subsequent expatriating act (documented with CLN).
4. Claim acquisition of U.S. citizenship, catch up on tax filing, then renounce U.S. citizenship.

One of the factors that should come into their decision is whether they are ever likely in future to meet the net worth criteria or other criteria for being a "covered expatriate" for U.S. tax purposes if they establish a claim to U.S. citizenship and then renounce/relinquish.

On the other hand, U.S. citizenship can be a significant asset in life to a Canadian, allowing many opportunities to work, live and study south of the Canada/U.S. border. Most of the discussion around U.S. citizenship is entirely focused on the negatives, however the tax/financial issues can usually be managed. And since the benefits of U.S. citizenship can be substantial, think carefully before deciding to go down the renounce/relinquish path.
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Old Feb 14th 2014, 11:55 am
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Default Re: Canada signs FATCA treaty

Originally Posted by JAJ
First priority should be not to panic.
It sounds like she could probably claim to have kept her American citizenship, but at the same time could just as easily claim it was her intent to give it up, back in the 1960s or so. As long as she doesn't take any action, or make any declarations in writing or otherwise, both those options appear to remain open. Take a look at: http://www.richw.org/dualcit/ - this dates from some years ago, but the information is still largely valid.

She has a U.S. birthplace, so in theory her Canadian bank (under the FATCA agreement) may one day ask her for a SSN, or evidence she's not a U.S. citizen. However, they may accept a self-declaration to that effect. And if she has less than $50,000 in her account, it's not even clear if they will ask.

If she's a high net worth person, then it may be more important to work things out immedately (U.S. estate tax, etc), but for 95%+ of persons, this should not be a concern.
Thank you, this is good to hear, JAJ. I don't know how much money she has banked (none of my business). She's quite frail and there's been talk in the family about her possibly going into a nursing home. This whole business irritates her--as far as she's concerned she's solely Canadian.

Originally Posted by JAJ
Let's assume one of the children wanted to be recognized as a U.S. citizen. Assuming they were born in the window between cut-off dates in 1952 and 1986, and assuming parents were married, they would need to show evidence that their mother was in the U.S. for 10 years, including 5 years after age 14. Unless and until they did so, any claim to U.S. citizenship would not be accepted. Could they even show such evidence, even if they wanted to?
I presume the answer is yes, since she grew up in the US, didn't leave until her marriage to her Canadian husband, and was not a teenage bride.

Originally Posted by JAJ
So any potential claim to U.S. citizenship is dormant and it's hard to see how this could be enforced against them without some action on their part to supply the necessary evidence.

So their options include, but are not limited to:

1. Leave any U.S. citizenship claim dormant, ignore it meanwhile.
2. Claim U.S. citizenship, get passport/SSN, file taxes, etc.
3. Claim acquisition of U.S. citizenship at birth, followed by subsequent expatriating act (documented with CLN).
4. Claim acquisition of U.S. citizenship, catch up on tax filing, then renounce U.S. citizenship.

One of the factors that should come into their decision is whether they are ever likely in future to meet the net worth criteria or other criteria for being a "covered expatriate" for U.S. tax purposes if they establish a claim to U.S. citizenship and then renounce/relinquish.

On the other hand, U.S. citizenship can be a significant asset in life to a Canadian, allowing many opportunities to work, live and study south of the Canada/U.S. border. Most of the discussion around U.S. citizenship is entirely focused on the negatives, however the tax/financial issues can usually be managed. And since the benefits of U.S. citizenship can be substantial, think carefully before deciding to go down the renounce/relinquish path.
Hmmm, as far as I know all of her children are happiest NOT to be American (especially now!). However, one granddaughter visited us in England and did express interest in becoming a dual Canadian/US citizen. My husband & I are both duals (UK/US) and she was wondering how it worked & speculating as to whether she could be a dual through her grandmother. Not sure if she's discussed this with anyone in her family, or done anything to forward the idea....
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Old Feb 14th 2014, 4:00 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by MarylandNed
Yes, it is based on residency like it should be. The US tax system affects the ability of its citizens to live freely in other countries without interference from the US government. Many are put off the idea of living abroad because of this. Others take the more drastic step of renouncing their US citizenship in an attempt to escape the clutches of Uncle Sam.
Well... I kind of understand why the US does it this way, because if it did it the way Canada does it, then Grand Bahama would look like Monaco.

I just think they should be more clever about exempting people who aren't rich. Say if you're under the foreign earned income exclusion limit and have less than say, $500,000 in investments, you're just exempt from filing any paperwork.

What I would say to anyone in this situation is to file a Paperwork Reduction Act request.
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Old Feb 14th 2014, 4:11 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by WEBlue
Here's a slightly different case. An 80 year old relative of mine was born in America and grew up there, but moved to Canada as the bride of a Canadian, and was told over 50 years ago when she applied for a Canadian passport that she would lose her American citizenship, which she agreed to.
US nationality law isn't as straightforward as is often made out, depends on her intent, depends on any actions she took, also depends on when her children were born and what the law was at the time.

Just reading through all of the above they've covered some of it but the actual birthdate of her children is also quite important.

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Old Feb 15th 2014, 3:51 am
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Default Re: Canada signs FATCA treaty

Originally Posted by WEBlue
Thank you, this is good to hear, JAJ. I don't know how much money she has banked (none of my business). She's quite frail and there's been talk in the family about her possibly going into a nursing home. This whole business irritates her--as far as she's concerned she's solely Canadian.
If she was younger, it would probably be more important to resolve the issue either way. But as of now, it may be ok to leave the question of whether she's an American undetermined. As noted, she's probably a U.S. citizen if she wants to be, but could (probably) just as easily get a backdated Certificate of Loss of Nationality if she really wanted one.

If she is a multi-millionaire it may be necessary to adopt a more finessed strategy, but if she's like 95%+ of persons, the situation as it stands may not present many problems.

You obviously don't know how much she has banked. I would suggest it prudent to open some new bank accounts with Canadian banks before July 1, 2014. Just in case her existing bank starts asking her about her potential U.S. citizenship. For example, see the Royal Bank of Canada information on FATCA: http://www.rbc.com/aboutus/fatca.html

There are no indications as of now that the United States expressly wants to enforce the obligations of citizenship against those who left the United States long ago and consider themselves as sole citizens of other countries (and have acquired that other citizenship). Or against their children who may or may not have acquired derivative U.S. citizenship. As opposed to those who claim or activate U.S. citizenship. They absolutely need to file income taxes and comply with the other obligations of United States citizenship.


Hmmm, as far as I know all of her children are happiest NOT to be American (especially now!). However, one granddaughter visited us in England and did express interest in becoming a dual Canadian/US citizen. My husband & I are both duals (UK/US) and she was wondering how it worked & speculating as to whether she could be a dual through her grandmother. Not sure if she's discussed this with anyone in her family, or done anything to forward the idea....
Generally speaking, in order for U.S. citizenship to pass automatically to the following generation, there's a residence/physical presence requirement that applies to the American parent. Since the children have it seems, never lived in the U.S. then it's unlikely that the grand-daughter acquired U.S. citizenship at birth.

If she's under 18 then expedited naturalization based on her U.S. grandparent's presence in the United States might be an option. She should do her own research, but otherwise it's hard to see how she could claim U.S. citizenship even if she wants it.
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Old Feb 15th 2014, 1:57 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by JAJ
There are no indications as of now that the United States expressly wants to enforce the obligations of citizenship against those who left the United States long ago and consider themselves as sole citizens of other countries (and have acquired that other citizenship). Or against their children who may or may not have acquired derivative U.S. citizenship.
It's good to hear this. I hope (for my elderly relative's sake) that it doesn't change....



Originally Posted by JAJ
Generally speaking, in order for U.S. citizenship to pass automatically to the following generation, there's a residence/physical presence requirement that applies to the American parent. Since the children have it seems, never lived in the U.S. then it's unlikely that the grand-daughter acquired U.S. citizenship at birth.

If she's under 18 then expedited naturalization based on her U.S. grandparent's presence in the United States might be an option. She should do her own research, but otherwise it's hard to see how she could claim U.S. citizenship even if she wants it.
Yes, I remember talking to her about the "Grandparent Route" to US citizenship. I didn't have much knowledge of it then, but I knew there was such a route. She's now over 18, and I suspect she didn't pursue it, since her grandmother would have had to self-identify as American (at the TIME of the application) as well as provide the necessary proofs of the required residence years in the USA (5 years total, 2 after the age of 14)... and the grandmother has not self-identify as American since the late 1950s

Last edited by WEBlue; Feb 15th 2014 at 2:01 pm.
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Old Feb 15th 2014, 2:07 pm
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Default Re: Canada signs FATCA treaty

Originally Posted by Steve_
US nationality law isn't as straightforward as is often made out, depends on her intent, depends on any actions she took, also depends on when her children were born and what the law was at the time.

Just reading through all of the above they've covered some of it but the actual birthdate of her children is also quite important.
IIRC, the three children were born from 1960-66. My relative remembers that she got the Canadian passport (and maybe "handed in" the US passport?) while pregnant with the first child, so she is certain in her own mind that all three children are only Canadian.

The only other witness, the person who helped her with getting Canadian citizenship and accompanied her to the appointments, was her husband, who died 10 years ago.
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