US Taxes on Thai Bank Accounts

[AAArdvark]

The US requires all foreign bank accounts over a certain amount to be reported to the IRS.  ฿800.000 would be above that amount.  Has anyone had any IRS issues, like being taxed, on any Thai hank accounts?

Edited January 24, 2019 by AAArdvark
typo

[DogNo1]

You will need to report your holdings in the account to the Treasury Dept. ( FBAR) and you should report any foreign earnings of any kind on your 1040 (FATCA) but the foreign earnings exemption is so high ($104,100 for 2018) that you won't need to pay any tax.  I always report my foreign earnings but haven't had to pay any tax since I retired six years ago.

[TallGuyJohninBKK]

Your OP comment really raises two separate questions/issues:

 

1. what are the U.S. govt reporting requirement for U.S. citizens who have Thai bank deposits.

 

2. what are the U.S. tax implications of interest earned from Thai bank accounts.

 

Re 1, the FBAR law requires annual reporting to the feds when a U.S. citizen's total foreign bank accounts exceed $10,000 U.S. at any point during the calendar year.  There's also the separate FATCA reporting requirements, but those involve varying larger threshholds depending on one's personal circumstances. Both of those reporting requirements are annual and in addition to the federal tax return process.

 

Re 2, generally speaking as I understand the tax law, a U.S. citizen with Thai bank account deposits that earn interest who's required to file a federal tax return would need to report that interest just as they would U.S. bank account interest. But, any withholding tax deducted by the Thai bank can also be used as an offset credit on one's U.S. tax return.

Edited January 24, 2019 by TallGuyJohninBKK

[steeltownguy]

TallGuyJohn has it exactly right.  To convert to USD for the IRS use the official Treasury exchange rate which is

Baht 32.35 to $1.00 for CY2018.

 

[noise]

Foreign banks wanting access to the U.S. banking system are required by U.S. law to report all U.S. citizens having accounts.  

[TallGuyJohninBKK]

1 hour ago, steeltownguy said:

TallGuyJohn has it exactly right.  To convert to USD for the IRS use the official Treasury exchange rate which is

Baht 32.35 to $1.00 for CY2018.

 

 

Yes, from what I've read from the IRS on that, there's two basic choices for doing the currency conversion...

 

1. use the year end exchange rate figure published by I believe the Treasury Department that gives an official currency exchange rate for each country for the year., or...

 

2. use a current exchange rate for whenever the actual amounts were received/earned during the year, which obviously is changing constantly, and would be pretty hard to constantly track and calculate.

 

I've always used the end of calendar year official exchange rate published by Treasury.

 

https://www.fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/current.html

 

Also remember, unlike U.S. institutions, Thai banks don't automatically, or even ever AFAIK, issue their customers with a year end annual statement of interest earned. So it's up to us, the account holders, to go back and figure out just what we've been paid monthly or semi-annually, and do the calculations from there.

Edited January 25, 2019 by TallGuyJohninBKK

[JimGant]

Quote

The US requires all foreign bank accounts over a certain amount to be reported to the IRS.  ?800.000 would be above that amount.

The FATCA agreement has $50,000 as the de minimus amount for reporting US person account holder's data. Apparently many banks are (or plan to) report all US person account data regardless of de minimus, as trying to determine whether or not aggregate account amounts exceeded $50,000 ain't worth the effort, especially for banks with many branches, where all of Joe Blow's accounts in these branches need to be aggregated. What Thai banks are doing, and on what timeline, I don't know. But, at some point, expect your earnings -- possibly on account aggregates well below $50,000 -- to be reported to the IRS. If those amounts don't show up on your Schedule B, you might get an audit letter in the future, as such Thai reporting will be the same as a 1099, which don't need human intervention to marry up with reported income on your tax return.

 

Quote

Foreign banks wanting access to the U.S. banking system are required by U.S. law to report all U.S. citizens having accounts.  

See above about de minimus.

 

Quote

You will need to report your holdings in the account to the Treasury Dept. ( FBAR) and you should report any foreign earnings of any kind on your 1040 (FATCA) but the foreign earnings exemption is so high ($104,100 for 2018) that you won't need to pay any tax.

The FEIE is for earned income (wages for providing a service), not for unearned income like interest. So, yes, you have to report your measly $10 interest from your Bangkok Bank savings account on your Schedule B. For FATCA reporting on your Form 1040, you attach Form 8938 -- but for us expats, that's not required until you exceed $200k in specific financial holdings, if you're single, or $400k if married (end of year aggregated holdings).

 

Quote

But, any withholding tax deducted by the Thai bank can also be used as an offset credit on one's U.S. tax return.

By most accounts here on TV have shown it's relatively easy to get that 15% tax withholding at source on your fixed account interest refunded. As such, the following from Pub 514 would apply:

"Foreign tax refund:

You cannot take a foreign tax credit for income taxes paid to a foreign country if it is reasonably certain the amount would be refunded, credited, rebated, abated, or forgiven if you made a claim."

 

But, if somehow the bureaucrat at the tax office is dense about refunding that 15%, duly note such and take the credit. Nothing says you can't take the credit if it becomes "UNreasonably certain the amount would be refunded."

[TallGuyJohninBKK]

3 hours ago, JimGant said:

The FATCA agreement has $50,000 as the de minimus amount for reporting US person account holder's data.

 

Just some added detail on the trigger amounts for FATCA reporting. The >$50K amount Jim mentions above is only for an unmarried person living in the U.S.   The trigger amounts for U.S. citizens living OUTSIDE the U.S. are much higher starting at >$200,000 and above depending on your filing status, as follows:

 

 

https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers

 

The $200,000 U.S. amount mentioned above is roughly 6.4 million baht. So reaching that trigger means an unmarried person living here has, I'd say, an unusually large amount of money held in Thailand financial institutions (although the limits apply to any/all foreign accounts, not just those here or in any one foreign country).

 

Thus I'd imagine (just my guess) that the share of U.S. expats living in Thailand who get captured by FATCA requirements is a pretty small share. Not because U.S. folks don't have that kind of money, because many probably do. But because those who do probably often choose or need (IRAs etc.) to keep more of it invested back in the U.S. vs. here.

 

 

 

Edited January 25, 2019 by TallGuyJohninBKK