Any New Information About American Foreign Bank Account Report

[steveb]

Anyone have any experience or infomation about Americans being required to report foreign bank accounts with $10,000 (312,350 Tb) or face hefty fines and or imprisonment. This would mean any American on a marriage or retirement visa would be subject to this law. I also read that if you did not report for the last 6 years you will be fined as they are forcing banks to furnish account information on Americans.

I haven't filed a return in a few years but got a love letter from the IRS requesting a return and you must check if you have a forien bank account. As I just recentley found out about this and as most people have never reported but now it looks like we may be fined for the past years. Anyone have any more information or experience they can share.

[BigJohnnyBKK]

Sure, this has been the case for like forever.

Get a decent CPA with overseas expat experience, be completely open and honest about everything you do (in practice at least everything that touches a computer anywhere in the world - if not absolutely everything just on principle) and get yourself back in their good graces.

The trend is for tighter enforcement and harsher penalties, and I'm sure the day will come when you won't be allowed any services from a US embassy without being flagged. A friend of mine got cuffed on re-entry, hadn't got the audit notice while he was away for two years.

In practice if you're small fry and it doesn't seem you were purposefully defrauding them you just pay the fines plus penalties and be a good boy from now on and you'll be OK, after what 6 or is it 7 years the statute of limitations kicks in and you can relax.

Anything less than the above is playing with fire.

If you're wealthy, renouncing your citizenship is worth considering.

[craigt3365]

Lots of info on this topic here:

http://www.thaivisa.com/forum/topic/454691-for-american-members/page__hl__%2090

http://www.thaivisa.com/forum/topic/524567-turbotax-and-form-td-f-90-221/

http://www.thaivisa.com/forum/topic/457253-foreign-bank-account-reporting/

http://www.thaivisa.com/forum/topic/361164-reminder-to-americans-about-foreign-bank-account-reporting

[h90]

Scary.....That would have made Honecker proud....

[phomsanuk]

Lao could make a fortune selling citizenships ala St. Domingo.

[steveb]

Thanks for the replys. I didn't file a return for 2006 because I was under the required income but was asked to file it now. Filed 2007 and 2008 was my last one. Was also asked to file 2009 and 2010. When I last filed I never heard about reporting foreign accounts and checked no on schedule B. Should I know send back dated reports explaining my situarion or any other suggestions.

[rakman]

And don't forget about FATCA, which will make it more difficult to have a foreign account. http://online.wsj.com/article/SB10001424052702304543904577398482312938046.html

Also, it doesn't matter if you don't have a foreign bank account, if you're married to a non-US citizen you still have to report their bank accounts. This is prompting some couples to divorce or give up US citizenship.

[gk10002000]

And don't forget about FATCA, which will make it more difficult to have a foreign account. http://online.wsj.co...2312938046.html

Also, it doesn't matter if you don't have a foreign bank account, if you're married to a non-US citizen you still have to report their bank accounts. This is prompting some couples to divorce or give up US citizenship.

Sorry, but just because one is married, doesn't mean they know or have or have any legal need to get their spouse's bank account information. The US laws are binding on US citizens, but they can't force you to get information about things beyond your control. Reading the IRS website, it looks like the previous $10,000 dollar level is raised to $50,000. And I didn't see anything about the Spouse's /wife's account. But since I have neither at the moment, I did not read the entire posting

[Jingthing]

No! The FBAR reporting level remains at 10K USD (aggregate of accounts) at any point in the previous year.

Spouse accounts under reporting rules as well if they are jointly held accounts.

http://www.cuencahighlife.com/post/2012/04/16/Complaining-of-what-they-consider-an-over-bearing-taxes-some-US-citizens-living-abroad-renounce-their-citizenship.aspx

Edited May 14, 2012 by Jingthing

[gk10002000]

No! The FBAR reporting level remains at 10K USD (aggregate of accounts) at any point in the previous year.

Spouse accounts under reporting rules as well if they are jointly held accounts.

http://www.cuencahig...itizenship.aspx

Go to the IRS website. unless these provisions are in addition to previous ones:

http://www.irs.gov/businesses/corporations/article/0,,id=236664,00.html

"

Reporting by U.S. Taxpayers Holding Foreign Financial Assets

FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return. Reporting applies for assets held in taxable years beginning after March 18, 2010. For most taxpayers this will be the 2011 tax return they file during the 2012 tax filing season. Failure to report foreign financial assets on Form 8938 will result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent."

[gk10002000]

Good comparison summary of

Comparison of Form 8938 (FATCA) and FBAR Requirements

The new Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts). Individuals must file each form for which they meet the relevant reporting threshold

http://www.irs.gov/businesses/article/0,,id=255986,00.html

Ugh.

[JimGant]

When I last filed I never heard about reporting foreign accounts and checked no on schedule B.

If you never had over $10k aggregate in your bank accounts for that year, then "no" is the answer they wanted on Schedule B. The IRS was only interested in a "yes" check from folks subject to the FBAR. However, the guidance was weak, so many were checking "yes" when, in fact, they were below the $10k threshhold. For 2011, the guidance is clearer -- check "yes" for any foreign financial account, regardless of $10k threshold; a new line item then asks if you're subject to filing a FBAR, which cleverly now forces one to read the FBAR instructions, thus no longer allowing the plead of ignorance for non filing.

So, for the OP, if your "no" checkmark coincided with less than $10k aggregate, you're ok. And, for the filing of back tax forms, same goes for those too. However, if indeed you had above $10k in any of those years, checking "no" may back you into a corner. That the IRS is asking for back tax filings (vice just an explanation) says: your 2007 and 2008 filings must have been interesting, and 2. you're in their crosshairs.

Hope you reported any Thai bank account interest on your '07 and '08 Schedule B's.....

A lot of pros and cons on coming clean with FBAR on Google. Suggest you ponder your options there. But, being small fry, plus being one of millions unfamiliar with FBAR reporting, should get you parole.

[JimGant]

FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return.

$50k is the lowest threshhold -- for a single taxpayer living in the US. For a married expat living in Thailand, the threshhold is $400k, to not include one's house and property. Doubt many of us reading this will be subject to filing the Form 8938.

[Jingthing]

No! The FBAR reporting level remains at 10K USD (aggregate of accounts) at any point in the previous year.

Spouse accounts under reporting rules as well if they are jointly held accounts.

http://www.cuencahig...itizenship.aspx

Go to the IRS website. unless these provisions are in addition to previous ones:

http://www.irs.gov/b...=236664,00.html

"

Reporting by U.S. Taxpayers Holding Foreign Financial Assets

FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return. Reporting applies for assets held in taxable years beginning after March 18, 2010. For most taxpayers this will be the 2011 tax return they file during the 2012 tax filing season. Failure to report foreign financial assets on Form 8938 will result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent."

OMG. I was referring to the FBAR requirement. It is 10K USD. It is not 50K USD.

[JimGant]

Also, it doesn't matter if you don't have a foreign bank account, if you're married to a non-US citizen you still have to report their bank accounts.

No. Only if you decided to get an ITIN number for your alien wife, in order to file your US income taxes "jointly," Then, yes, she is subject to FBAR reporting.

This is prompting some couples to divorce or give up US citizenship.

I doubt anyone has gotten divorced because of FBAR filing requirements. And, as said, if foreign wife has no ITIN, she's not subject to FBAR reporting, nor to US income tax. So, if your wife suddenly inherits a zillion, now subject to US income tax on its earnings, she justs cancels her ITIN (as a rich wife, in this case, no longer makes filing "jointly" advantageous). No more joint Form 1040's, and no more FBAR reporting requirments for the wife.

[steveb]

Hope you reported any Thai bank account interest on your '07 and '08 Schedule B's.....

Didn't know that you have to report interest from Thai bank. I thought we are already taxed on the interest here as most banks deduct the tax before paying the interest. You must enter this on Schedule B and add it to your income? Do you have to fill out another form for foreign tax credit?

It's getting more confusing and how are you supposed to know all these things?

[el jefe]

Hope you reported any Thai bank account interest on your '07 and '08 Schedule B's.....

Didn't know that you have to report interest from Thai bank. I thought we are already taxed on the interest here as most banks deduct the tax before paying the interest. You must enter this on Schedule B and add it to your income? Do you have to fill out another form for foreign tax credit?

It's getting more confusing and how are you supposed to know all these things?

It's simple. US citizens must report all of their worldwide income, even if none of it was earned in the US or you never even set foot in the US. The explanation is on the tax forms. If you're having problems with those, get yourself a US accountant ASAP. It's well worth the fee. we can't tell you whether you've just avoided a few dollars in taxes, or committed fraud.

[JimGant]

I thought we are already taxed on the interest here as most banks deduct the tax before paying the interest. You must enter this on Schedule B and add it to your income? Do you have to fill out another form for foreign tax credit?

Fixed accounts usually have 15% withheld from interest earned. If you're a resident of Thailand, and have no earned income from Thai sources, this withheld 15% can be refunded from your local Amphur with little fuss (as I understand it -- haven't done it personally). Then, yes, since it is refundable by the Thais, you then have to include this interest earned with your other worldwide income on your Form 1040 . If you're still in the 15% tax bracket, it's a wash. If you've climbed to a higher bracket, that's the price of being an American.

Interest from Thai bank savings accounts, in my experience, do not have withheld taxes. However, this interest also has to be reported on your Form 1040. And, if your Schedule B also reflects having a foreign bank account(s) over $10k, you might think the IRS would expect to see some interest earnings from this sum of money (only the really bright agent would consider it possibly a one day transitory amount, passing through on its way to buying your new house). The fewer red flags, the better with this game.

If your'e part time in Thailand, the 15% withheld can be considered a final tax, but you can file for the foreign tax credit for this amount. But, you would still have to declare the interest on your 1040. This is a case of, you still have to pay (someone) the 15% tax, but in this case Thailand gets to keep the money (per tax agreement). And double taxation is avoided.

It would be simpler to do this as a resident of Thailand too. However, the IRS rules state that if you're not obligated to pay the tax to Thailand, then you can't pay it (or not ask for a refund), then file for a foreign tax credit. Now, if you had trouble, say, getting a statement of residence (required by the Amphur for the refund), or getting a run around with the Amphur, then I might be persuaded that going the tax credit route was just grey enough in this situation....

Bottom line -- yes, you have to show interest earned on your Thai bank accounts in your Federal tax filing. But, double taxation is avoided -- with a few extra steps.

It's getting more confusing and how are you supposed to know all these things?

Time to consult a pro, I would imagine. Your tax/FBAR situation seems to warrant it.