Monomial Posted June 10, 2016 Share Posted June 10, 2016 Hi everyone, I am really struggling trying to figure out how to categorize a Thai Prudential Life Insurance plan on my US tax returns. It does not meet the qualifications for a life insurance plan, therefore that category is out. That leaves me with recording it as 1. A traditional bank account - don't see how this is possible 2. A PFIC of some kind - can't see how to do this either, as it requires reporting share holdings 3. Some kind of foreign trust - this seems to make the most sense, but I have no idea how to record this, as the sum of the cash value of the policy plus the distribution I received is significantly less than what I invested. Has anyone ever reported one of these things before to Uncle Sam, and can you give some advice on how I need to do it? Seriously...this kind of ridiculous bureaucracy really makes me want to renounce. There does not appear to be any category for this type of financial instrument. I wholly detest June 15 and would just like to go on record as hoping that anyone who works for the IRS be inflicted with a terrible disease. There are no innocents supporting that grotesque organization. Sorry...just have to vent. What a waste of my time. You can take FACTA and shove it up my .... Link to comment Share on other sites More sharing options...
DogNo1 Posted June 10, 2016 Share Posted June 10, 2016 It sounds as though it qualifies for 1099 treatment. Is your distribution paid periodically? If so, it is annuity like and can probably be reported on a 1099 that you create. Just remember that it is foreign-earned so it can be excluded from your total income using a Form 2555. I struggle with a pile of Schedules K-1 so I sympathesize wth your frustration. Do you know any people who work at the IRS? I do and they're just worker bees making a living. The real object of your anger should be the congress. Do you really pay your taxes in June? If so, you must be charged interest on the number of months that you are late unless, of course, you pay your quarterly estimated taxes in advance. Isn't it fun being citizens of a country that makes us pay no matter where we live in the world? BTW, don't forget to submit your yearly FBAR. The penalties for not submitting it are draconian! Link to comment Share on other sites More sharing options...
csabo Posted June 11, 2016 Share Posted June 11, 2016 United States persons are required to file an FBAR if: 1 The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; AND 2 The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported. United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States. Exceptions to the Reporting Requirement Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are filing exceptions for the following United States persons or foreign financial accounts: Certain foreign financial accounts jointly owned by spouses United States persons included in a consolidated FBAR Correspondent/Nostro accounts Foreign financial accounts owned by a governmental entity Foreign financial accounts owned by an international financial institution Owners and beneficiaries of U.S. IRAs Participants in and beneficiaries of tax-qualified retirement plans Certain individuals with signature authority over, but no financial interest in, a foreign financial account Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf of the trust) Foreign financial accounts maintained on a United States military banking facility. Link to comment Share on other sites More sharing options...
husky Posted June 11, 2016 Share Posted June 11, 2016 Just a note; if you are talking about the FBAR there is a pull down for 'type of account'. The options are Bank, Securities or Other. On the FBAR you could select other and be good to go. Link to comment Share on other sites More sharing options...
Jonmarleesco Posted June 11, 2016 Share Posted June 11, 2016 Short of finding a certified accountant to sort the form out for you, try asking the company (the Pru), or their agent (if not Thai). But whatever the forms say - and I'm not American - you undoubtedly have an insurance policy, possibly set up as a savings plan, but still insurance; certainly not a trust - though it could be wrapped in a trust. Link to comment Share on other sites More sharing options...
husky Posted June 11, 2016 Share Posted June 11, 2016 https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements Under Types of Foreign Assets and Whether They are Reportable: Foreign-issued life insurance or annuity contract with a cash-value: yes it is reportable Link to comment Share on other sites More sharing options...
hawker9000 Posted June 11, 2016 Share Posted June 11, 2016 (edited) It sounds as though it qualifies for 1099 treatment. Is your distribution paid periodically? If so, it is annuity like and can probably be reported on a 1099 that you create. Just remember that it is foreign-earned so it can be excluded from your total income using a Form 2555. I struggle with a pile of Schedules K-1 so I sympathesize wth your frustration. Do you know any people who work at the IRS? I do and they're just worker bees making a living. The real object of your anger should be the congress. Do you really pay your taxes in June? If so, you must be charged interest on the number of months that you are late unless, of course, you pay your quarterly estimated taxes in advance. Isn't it fun being citizens of a country that makes us pay no matter where we live in the world? BTW, don't forget to submit your yearly FBAR. The penalties for not submitting it are draconian! 'Don't agree with the "worker bees making a living" bit. Not the auditors anyway. They're incentivized to get collections, just like public prosecutors are incentivized to get convictions. Years ago I was audited a couple of years in near succession. Both times I ended up actually claiming an additional refund. Despite earning significantly more and being in higher tax brackets in succeeding years, I've never been called again, and I expect it's because, based on my tax history, I'm not considered a "good bet". I realize that's just anecdotal, but I worked with a reservist doing his annual two weeks several years ago who had been an IRS employee in real life - and he was very emphatic about the role "incentive" plays at the IRS. And if you're still not convinced about their "objectivity", try Googling Lois Lerner... (Yeah, the photos alone are pretty scary.) Lastly, I'm not sure but think that if you call the IRS to get this question about your insurance policy answered, and end up getting incorrect answers from them leading you to have to tangle with the IRS later, you'll still be held completely accountable... So, (and I really hate to say this), you're safest bet is probably to speak with a competent tax accountant or attorney who you know is up on this area of the tax rules. Edited June 11, 2016 by hawker9000 Link to comment Share on other sites More sharing options...
Misty Posted June 12, 2016 Share Posted June 12, 2016 It doesn't sound like this is earned income (i.e. salary), so I'm not sure Form 2555 applies in this case. Why not contact H&R Block's new Expat Tax services? Could be a cost effective way to get help: https://www.hrblock.com/expat-tax-preparation/ Link to comment Share on other sites More sharing options...
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