Importing Money Into the US and Uncle Sam

[meand]

I have a couple of questions that I am not clear on, and I find it very hard to read actual tax code.

I'll just put my question out there with an example...

What if you work in the US, save say 100,000 dollars. You have been taxed on this money in the US already. You now take the money with you to Thailand.

You put the money into a Thai bank account for 10 years, and now you want to return home and want to bring all your money with you.

Let's not confuse things with the money you may or may not have earned while in Thailand, and let's just say for the sake of argument that you withdrawal your 100,000 dollars from the bank account, and now want to take it back to the US.

Now, uncle sam is going to have some questions for you about possible tax on this money.

I guess that was a long way of asking how you can prove to the US govt you have already payed taxes on a certain amount of money. I don't understand how they tease out what you have already paid tax on, and your earnings over a few years at work. Especially if a person just happens to hold some cash, how are you supposed to prove "this money over here I earned in the US and was taxed already".

It is very confusing to me because it seems if you have one dollar over here on your left (that has already been taxed when earned in the US), and one dollar on your right (that has not been taxed by the US), you may be better off spending the dollar on the right, but I am sure to them this does not matter and I wonder how it all gets cleared up with them which money you did in fact spend. Confusing

Any thoughts or clarifications appreciated.

Edited August 27, 2014 by meand

[WaywardWind]

Under the scenario you present, there is no income tax.

The easiest way to accomplish it would be to have it wire transferred from the Thai bank to an account in a US bank.

The only way you might wind up with queries from the IRS would be if you had not filed US tax returns during your years in Thailand (if necessary based on the income in Thailand) nor filed the FBAR report each year showing the funds on deposit in the Thai bank.

Edited August 27, 2014 by WaywardWind

[meand]

Under the scenario you present, there is no income tax.

The easiest way to accomplish it would be to have it wire transferred from the Thai bank to an account in a US bank.

The only way you might wind up with queries from the IRS would be if you had not filed US tax returns during your years in Thailand (if necessary based on the income in Thailand) nor filed the FBAR report each year showing the funds on deposit in the Thai bank.

Ok, but to get more to my question, what if I instead of leaving the 100k usd in that bank, I spent it all, and then I had a job and earned 100k USD in Thailand and put it in there. Will that then be taxed upon import?

Do you see what I am getting at? Are you saying that it does in fact depend on which dollars you do spend (incoming earned from work vs already taxed)?

Edited August 27, 2014 by meand

[WaywardWind]

Under the scenario you present, there is no income tax.

The easiest way to accomplish it would be to have it wire transferred from the Thai bank to an account in a US bank.

The only way you might wind up with queries from the IRS would be if you had not filed US tax returns during your years in Thailand (if necessary based on the income in Thailand) nor filed the FBAR report each year showing the funds on deposit in the Thai bank.

Ok, but to get more to my question, what if I instead of leaving the 100k usd in that bank, I spent it all, and then I had a job and earned 100k USD in Thailand and put it in there. Will that then be taxed upon import?

Do you see what I am getting at? Are you saying that it does in fact depend on which dollars you do spend (incoming earned from work vs already taxed)?

Income earned worldwide by American citizens is taxed by the US; if the gross income is higher than the minimum thresholds (they are increased every year), then a tax return is required and if, after subtracting deductions and exemptions (including the important Foreign Earned Income Deduction), taxes are owed, then it has to be paid. If the gross income does not reach the minimum threshold, then no return is required.

That is different from the FBAR report, required to be filed every June if you had over $10,000 in a Thai bank on any day during the previous year. If your bank balance was under $10K for the entire year, then no FBAR report is required.

[CaptHaddock]

As the OP knows, it is up to him to declare his income when he files his tax returns with the IRS. The IRS does not calculate your tax bill, whether you are resident in the US or not. However, the IRS can decide to audit your tax return and require you to demonstrate that you have fully declared your income. Such an audit can require whatever level of the detail the IRS auditor determines to be appropriate. The IRS does not automatically regard every bank deposit as evidence of undeclared income.

So, if the OP saves bank statements for his US and Thai bank accounts he should, in the event of an IRS audit, be able to demonstrate the source of the funds in his bank account.

Under the scenario you present, there is no income tax.

The easiest way to accomplish it would be to have it wire transferred from the Thai bank to an account in a US bank.

The only way you might wind up with queries from the IRS would be if you had not filed US tax returns during your years in Thailand (if necessary based on the income in Thailand) nor filed the FBAR report each year showing the funds on deposit in the Thai bank.

Ok, but to get more to my question, what if I instead of leaving the 100k usd in that bank, I spent it all, and then I had a job and earned 100k USD in Thailand and put it in there. Will that then be taxed upon import?

Do you see what I am getting at? Are you saying that it does in fact depend on which dollars you do spend (incoming earned from work vs already taxed)?

[maxman71]

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Under the scenario you present, there is no income tax.

The easiest way to accomplish it would be to have it wire transferred from the Thai bank to an account in a US bank.

The only way you might wind up with queries from the IRS would be if you had not filed US tax returns during your years in Thailand (if necessary based on the income in Thailand) nor filed the FBAR report each year showing the funds on deposit in the Thai bank.

In addition to WaywardWind's comments and others' concerning proper filing of FBAR's and using a wire transfer to move the money back and forth, make sure you keep ALL the wire transfer docs. Not only may it help with any inquiries the IRS may undertake, but it will also be invaluable with the Thai bank officers. They are likely to want to know the source of the funds you have in a Thai bank when you want to transfer funds out of Thailand, and unless you have a Thai work permit, they are likely to want to see the wire transfer docs from when you originally transferred the funds from the US as well as any other subsequent transfers to identify the source of funds. And don't rely on your US bank to have those docs archived; make sure you obtain your own copies at the time of transfer, as the US banks either don't retain all the docs, or if they do, they don't keep them for more than a few years.

[maxman71]

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As the OP knows, it is up to him to declare his income when he files his tax returns with the IRS. The IRS does not calculate your tax bill, whether you are resident in the US or not. However, the IRS can decide to audit your tax return and require you to demonstrate that you have fully declared your income. Such an audit can require whatever level of the detail the IRS auditor determines to be appropriate. The IRS does not automatically regard every bank deposit as evidence of undeclared income.

So, if the OP saves bank statements for his US and Thai bank accounts he should, in the event of an IRS audit, be able to demonstrate the source of the funds in his bank account.

Under the scenario you present, there is no income tax.

The easiest way to accomplish it would be to have it wire transferred from the Thai bank to an account in a US bank.

The only way you might wind up with queries from the IRS would be if you had not filed US tax returns during your years in Thailand (if necessary based on the income in Thailand) nor filed the FBAR report each year showing the funds on deposit in the Thai bank.

Ok, but to get more to my question, what if I instead of leaving the 100k usd in that bank, I spent it all, and then I had a job and earned 100k USD in Thailand and put it in there. Will that then be taxed upon import?

Do you see what I am getting at? Are you saying that it does in fact depend on which dollars you do spend (incoming earned from work vs already taxed)?

I'll jump in here. I've lived and worked in LOS since 2005 and I am the MD of a Thai Ltd. Co. that pays me regular salary. You are required to file a US return EVERY year if you meet the minimum annual income requirements, and you must report the income you earned ANYWHERE in the world. Of course if you paid any income taxes in Thailand or anywhere else outside the US, you are likely to be able to claim the Foreign Earned Income Tax Credit. My best advice is to get with a US tax accountant to set you straight on all of this. And if you do earn income in LOS, get a Thai accountant as well. Under the recently implemented FATCA law, Thailand and the US now share bank/financial institutional account info with each other concerning their citizens' having such accounts in each others' countries.

[el jefe]

It would be much easier to answer the OP's questions if he answers two simple questions for us:

1. Did you file the required FBAR returns with the US govt, reporting the amount you had in foreign bank accounts?

2. If you earned money in Thailand did you file a US tax return to report it, even if you owed no tax on it?

If you're trying to bring in money that you hid from the IRS, there is some risk. The potential penalties are onerous.

If you're bringing money into the US that the IRS already knows about, then you should have no problems.