US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
@Nobledreamer
I used 2555 and 1116 for the final year but not the standard deduction. I also put GICs under cash and like you used only 1/2 value of my house. It’s been over a year and I haven’t heard back. I think if I couldn’t use 2555 or 1116. I would have received a tax bill by now. Guessing it was good enough.
http://sharptaxlaw.com/wp-content/uploads/2011/06/Navigating-Offshore-Tax-Hazards-An-Update.pdf
“Navigating Offshore Tax Hazards: An Update
by William M. Sharp Sr.
Reprinted from
Tax Notes Int’l
, May 13, 2013, p. 695
“…..FBAR Statute of Limitations
Regarding the U.S. administration of the OVDP as
well as opt-out and related cases, a key issue is the ap-
plicable statute of limitations for FBAR filings. In gen-
eral, under Title 31, the U.S. may review and may take
action on any FBAR under a six-year statute of limita-
tions.
30
However, the IRS apparently has informally
developed a policy that would reopen what would oth-
erwise be a closed statute by execution of the FBAR
consent form, ‘‘Consent to Extend the Time to Assess
Civil Penalties Provided by 31 U.S.C. Section 5321 for
FBAR Violations,’’ on the theory that such execution is
a waiver of a defense. In Title 26, it is black-letter law
that the execution of Form 872, ‘‘Consent to Extend
the Time to Assess Tax,’’ with respect to an otherwise
closed year will not under any circumstances open that
closed year.
31
For the IRS to reach an interpretation to
the contrary under Title 31 without adequate statutory,
regulatory, or even case law support seems beyond the
scope of IRS authority.
Further, IRS representatives, including field agents
and IRS counsel, have informally commented over the
years that similar to the treatment of closed years un-
der Title 26, under Title 31 the execution of the FBAR
consent form would not reopen an otherwise closed
year, even after the execution of Form 872. If the IRS
presses this position, it is unlikely it would prevail in
court. Taking a step back from such a technical per-
spective and reflecting on sound tax administration,
this appears to be another unfortunate situation in
which the IRS has suddenly engaged in what amounts
to a bait-and-switch tactic by articulating a policy posi-
tion that is contrary to decades of practice. ….”
@Justme, sorry for my delay in reply to that. Thank you very much for taking the time to write all that for me. It is very useful. However, would this change anyone’s advice now? http://americansabroad.org/issues/taxation/quiet-disclosures-jig/
Here’s another take, taxconfuzaled.
http://isaacbrocksociety.ca/2013/04/27/gao-report-reveals-ovd-minnows-paid-up-to-129x-more-in-penalties-than-in-tax-owed/comment-page-4/#comment-373199
Hello
I have a possibly stupid question re FBAR filing when trying to get back into compliance (i.e. 6 years of FBARs).
You’re supposed to come up with the highest balance in an account in any given year. That’s all well and good if you’ve got your monthly statements for the account, or they are all available online. However, if neither option exists (and this could well be true for less recent years), then you have to specifically order the statements from the bank. The banks I deal with charge $5 or $10 for a statement – that’s $60 or $120 per year per account for statements. That can add up quickly if your name is on multiple accounts.
Since it really seems nobody is looking at these damn things once they’re filed, what do folks think of just estimating (on the decidedly high side)? I imagine an actual audit would require you to provide statements (at which point you bite the bullet and pony up the cash), but what would the reaction be if the actual statements indicate that you gave incorrect (but overly *high*) balances?
TIA
Tdott
If you have to choose between an estimate or not filing because you can’t get the account details in time, then I would estimate.
What they are data mining is bank and account numbers to add to their Meta-DATA storage on ALL Americans, so they can ship them over to the NSA storage facility in Utah. I have yet to hear of anyone being audited on the actual perfection of the high aggregate calculation. I am sure I have made mistakes on mine in the past. In an my examination, they never did try to perfectly verify the high on the FBAR to the aggregate high they were calculating for penalty calculation.
Just figure your FBAR date eventually ends up here, along with the new FATCA data sucking…
http://rt.com/news/utah-data-center-spy-789/
@tdott
We ran into the same problem, but when we mentioned IRS and how other FI’s were willing to provide statements free of charge, the major Canadian bank I was dealing with decided they would waive the fee for me. It’s worth asking your bank manager.
Greetings. What year did it become mandatory to file the exit tax?
Joe Expat says
June 11, 2013 at 10:06 pm
Not sure where to post this article about the FEIE traps that can be encountered by short-term expats so I’ll put it here:
“Living Abroad? Your ‘Tax Home’ Could Still Be U.S.”
http://www.forbes.com/sites/robertwood/2013/06/11/living-abroad-your-tax-home-could-still-be-u-s/
Important information from Phil Hodgen’s site:
http://hodgen.com/2012-tax-filing-deadline-tips-for-friends-of-bander/
“Two important deadlines for 2012 income tax returns are approaching fast. If you are a U.S. citizen (or green card holder) living outside the United States, do the following things now:
File Form 4868 to get an extension of time to file your tax return until 15 October 2013.
Prepare and file Form TD F 90-22.1. I recommend getting this form in a courier envelope for delivery to the IRS no later than Monday, 24 June 2013.”………
@ Just Me, and Bubblebustin
Thanks for the responses.
Re asking for the fee waiver (which is a good suggestion); not terribly interested at this point in waving a red flag at my bank.
@tdott
Quite understandable, just wasn’t sure how ‘out’ you are…
@tdott
Any chance you can call your bank and ask them to give you the high balance over the phone? At least one of my banks was very helpful in this regard.
What would a person in the following situation need to do to officially free himself from all USA tax/filing obligations? Person is a non-USC with a green card, has lived in the USA for > 2 decades and intends to leave the USA.
Assuming your up-to-date on your tax filing, you’d need to get hold of the relevant forms to terminate your residency. See here:
http://www.irs.gov/Individuals/International-Taxpayers/Residency-Starting-and-Ending-Dates
Providing you have no assets, investments, etc, still in the US once you’ve sent back all the paperwork that should be it I would think. Most important is to terminate the green card itself because until that is done, even though it may be expired, the US could/would still consider you resident for tax purposes.
@Medea Fleecestealer
Thanks for the link, that’s just what I was looking for. (BTW it’s for a friend with a green card who seems to think that he’s off the hook simply by leaving the USA.)
If only it was that easy, notamused. Once the US have you in their tax grip they’re very reluctant to let you go. I fear there are a lot more green card holders out there like your friend, who think FATCA will have no effect on them because they’ve already left or are planning to leave soon. Their US tax filings are up-to-date so everything is fine, right? Unfortunately, no, not if the green card isn’t cancelled properly. Get him to do his homework so he knows exactly where he stands.
Indeed, it’s a mess. To make matters worse, he may not be willing to give up his green card, since his wife and child are Americans. It’s not easy getting people like him to come to the realization that they have the exact same obligations as Americans.
Then you’ll also have to warn him not to have joint accounts with his wife once they move, otherwise they will have to be reported to the IRS on the FBAR forms and possibly, as is happening here in Switzerland, any new bank may want her/them to sign a W-9 allowing the bank account details to be passed on.
Where are they thinking of moving to?
They’ll definitely have to file FBARs as soon as they start opening accounts with a total > 10K, which I assume will be immediately. I know they’ll be asked to sign W-9s as well, as I did when I was a USP. They’re coming to Germany.
Well, I don’t think Germany is having the same sort of banking issues with US persons as Switzerland is so hopefully they won’t have too much problem setting up the accounts.
That’s correct, it hasn’t been a problem to date, at least. That may change once FATCA really kicks in, though.
@notamused, your friend with the green card and the USC wife and family is actually in a pretty good position to give up the green card. He should be able to get a new green card again in future if he needs it, through his wife (easiest) or (less easy) children. A bit of a wait and some filing fees, but none of the hurdles, delays and impediments that face people trying to qualify on employment grounds. Much less irreversible for him than for others.
Of course, with so much US citizenry in the rest of the family he also doesn’t gain that much overall by surrendering. Some peace of mind and not having to file. But his wife’s hassles won’t go away, and joint accounts with his wife draw him back into the IRS information reporting net. And he can’t use his non-USCness to open tax-favoured accounts in Germany for his children because they are USCs.
@Watcher
That’s a good tip about the green card, but as you say his family will keep him from extricating himself completely. Thanks for your comment.
Tax returns done, FBAR done, Form Nation sated (I hope), 8854 done – I’m all done. In the the mail in the morning.
Our Canadian taxes were done in an evening – my US taxes were a month-long stressful ordeal. I have no idea if I did it right, but as Jane Jacobs said “It’s absurd to make your life absurd in response to absurd governments.”
AN ALIEN WITH RESPECT TO THE UNITED STATES. I like the sound of it.