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.
With regards to 7 FAM 1210 Appendix C, the loss of citizenship prior to Oct 1978 all hinges around a person who “voluntarily sought or claimed the benefits of the nationality of any foreign state”.
I have no idea what these benefits might be. Has anybody seen a list? We need better than logical guesses.
WhatAmI
It’s open to interpretation and it’s an outdated concept but these are examples of what WAS meant:
Using a non US passport, voting in a non US election, obtaining a job that requires non US citizenship.
There were obviously other benefits that could have been claimed.
@DukeOfDevon,
It really is a mythical friend I was talking about, unless I can convince my husband that it is a good idea for me not to acquire any ‘earned’ income for the next 3.5 years….lol.
@WhatAmI, I haven’t filed a 1040 for my FBAR’s. Under the Streamlined program I was told because I have no income that I only need to file the FBAR’s along with the Streamlined questionnaire which is what I’ve done. The FBAR’s for 2006-2011 have gone to the DoT while the 2012 one was sent with the questionnaire to the IRS. Presumably, if she’s under the reporting threshold for the 1040 then she’d only need to file FBAR’s if she meets that requirement.
My FBAR package to Detroit has arrived safely, but still waiting on the IRS one to be delivered in Austin. One day left and it’s currently available for pick up so hoping it gets delivered today! Aaargh! Why do tax preparers leave everything so late!
@Medea Fleecestealer
That is interesting news! Please let us know if you ever find out you needed to submit 1040s to the Streamlined Procedure.
You FBAR deliveries sound backwards. I would expect 2006-2011 to go to the Streamlined Procedure location in Austin, and the current 2012 FBAR to go to the normal Treasury address.
@WhatAmI, oops, yes you’re quite right and I posted it the wrong way around. The 2012 went to the DoT and the rest to the IRS. Apologies.
Well, my tax preparer doesn’t seem to think so (US Tax and Financial Services based in Geneva). Just do the back filing of the FBAR’s with the questionnaire now and then next year I’ll file the 2013 return and the 8854 form. Of course, I’ve already renounced so I don’t know if that would make a difference, but I don’t see why it should. If I had any income and met the thresholds I would have had to fill in the 1040s anyway for the Streamlined program.
Whew! IRS package delivered on Friday, 28th as hoped. So both packages received within the deadline. I’ve printed off copies of the USPS tracking so I have records of due deliveries just in case of problems.
That’s good news, Medea. The 1040 and 8854 did not have to be received by the deadline — but had to be mailed by then. The FBAR, though, is a different story — must have been received by June 28th (this year).
I see in my online banking this morning that the cheque for $250 I wrote to the IRS (the final insult) and sent with my 1040/8854 package for 2012 was cashed, so I know that my last tax return and 8854 were received as well. I got a signed receipt back for receipt of my 2012 FBAR earlier this year.
Note that nothing at all was owed to Canada for 2012.
Good news for you too then Calgary411. Does that wrap everything up for you tax-wise now? Apart from the continuing hassle over your son of course.
Yes, Medea — all but paying for our 2012 filings. It does feel good — but it could feel “gooder” if I had my son’s piece resolved. I am so much more at peace than when this journey started!
True, but it IS one more step completed on the way to finally becoming free.
At our meeting in Toronto it was mentioned that it’s better to use an enrolled agent. Are there any that are particularly useful for us in Canada? Who do you trust. All I see are some that advertise on ACA’s website but, am not sure about using them as they are based in NYC and I intend to renounce. I’m late filing everything. There was just no way I could do this and sit at hospital all last year. I don’t want to use someone who can’t advise me the best way to try and avoid large penalties. I do intend to send a letter with the FBARS. As far as tax I would owe none. I had five years of forms done up last year. Four are full of zeros and the one for 2011 they would owe ME over six hundred dollars as I paid too much off the top of some inheritance from my mother. I had them withhold thirty percent right off the top. That was apparently too much. So, the crazy thing is that I still think they may penalize me on the FBARS!
Is this situation not ludicrous? Maybe they won’t but, maybe they will. After all this entire program was set up to fine and fee and penalize in high tax countries. At any rate, the question I ask is because I’ve not had good luck with those I’ve approached for help and I’m already out what I paid them to prepare those forms. I think they did it wrong so I didn’t send them in at that time, along with health reasons.
The one big firm here is way too expensive and apparently I’m too small a minnow. They don’t really want to do my forms. I’ve left tons of messages. They never call back. All that I’m left with here locally is H and R…that didn’t work out well. I’ve been trying to get this done running into one person after the other who either doesn’t want to do minnow returns and FBARS or firms that are doing the forms incorrectly.
So, as per our meeting…did anyone here use an enrolled agent they liked? If you don’t want to say who on this forum then please email me…my user name atticusincanada @ gmail dot com.
Wanted to note here, that due to the ongoing complexities generated by the IRS and Treasury for those trying to report and file from abroad, some preparers who formerly did US taxes – including some enrolled agents, are no longer willing to do ANY US returns – even routine timely ones. They cited the complexity AND their perception of heightened liability.
So, we are left with even fewer options for help with this useless and oppressive ‘compliance’ burden, in the absence of any significant US economic connection, with only a birthplace decades ago still a shackle. Those of us who seek to comply – in order to finally sever ALL even tenuous US relations are now facing not only the exponentially more expensive fees levied by those advisors outside the US, but even fewer are willing to provide that advice. And those who do are asking astronomical sums – due to heightened demand, as well as due to the complexity and the sheer size of the potential pitfalls.
I type this with my middle finger extended to the country that is holding us against our will.
When this is over for me, I will be detailing this for the Taxpayer Advocate.
The US IRS and Treasury are demanding something that is increasingly unaffordable and impossible for us to comply with. It is a source of injury and injustice – and hellbent on continuing in the same vein.
@Badger
One could say that US tax filing for US persons living abroad is a requirement for which no reasonable processes can be established. But still the USG continues to act as though CBT is entirely reasonable and is willing to inflict serious punishment in support of it.
AtticusinCanada. Beware of H&R Block and the other storefront tax prep firms. My advice to you is that whoever you go with, have a face to face conversation with them and ask them questions about your type of income and whether it is taxable by the IRS. The problem with many of these firms is that you hand your file to one person, and then your return may change hands three for four times. You will probably never even speak to the person preparing your return. If you yourself are not familiar with US taxes, call the IRS international tax dept and ask them about your type of income. Go into your tax preparers office armed with some knowledge, because believe me, some of them have no idea what they are doing.
My parents used them for their 2011 taxes and ended up owing close to $1000 in taxes, which they paid. At the time I had been reading extensively on Canada/US tax issues and grew very concerned because everything I read indicated that people in my parents position would not owe any taxes at all. Most of their income was Canadian govt pensions. I did my homework. I contacted the IRS International tax dept and had them tell me exactly what was taxable and what was not per my parents income. My parents did not owe any taxes at all. Armed with the info I went back to the tax preparer and demanded they make it right. It took them three months and 6 “tax specialists” to come to the conclusion that I had repeatedly told them. Canadian pensions are not taxable by the US if the tax payers reside in Canada, it’s right there on the IRS website. How they did not know this is beyond me. They prepared an amendment which my parents sent to the IRS. They had their money back with interest within about 14 weeks. It’s a situation that could have been totally avoided.
Thank you Marie and thank you for the email. I really appreciate it. H and R did a horrible job with mine and I’d gone back twice, paid twice. I still did not file those forms as even I could see they were wrong and I was afraid to file them. They have made is so difficult to get “in compliance” even if you want to! There’s no help here in Canada at our embassy which given the situation they should immediately start providing again.
The taypayer advocate needs to be aware that it can be impossible in smaller communities to even find someone who is willing to do this for you. When you do find someone they have raised rates to the point in some cases where it is just as well to stick your head in the sand because you are indeed damned if you do or don’t.
Adding this to the FBAR thread as well as having posted it elsewhere. Thanks to Blaze at Maple Sandbox for drawing attention to it.
Interplay between the FATCA regulations, and the pre-existing FBAR. Confirmation that FATCA designed to get around any limitations of FBAR – under the Title 31 Bank Secrecy Act, vs. Title 26 Internal Revenue Code.
Read the entire interview. This is part one, we should watch for part two.
“…“no,” there was no legislative history. But, it was understandable. The regulations under section 6038D were to be legislative, rather than interpretative regulations. When regulations are to be “legislative” it means Congress wanted to give IRS great latitude in drafting the rules. Our job was not to provide an interpretation of the new legislation; it was to provide a set of rules to make the statute “effective.” In other words, we had to make the statute work….”……….
……..”….Yates: Well, we all knew the reason for section 6038D. Section 6038D was enacted in order to put the kind of foreign bank account reporting required by Form 90-22.1, Foreign Bank Account Report (FBAR), under Title 26, the Internal Revenue Code. FBAR reporting is required pursuant Title 31, the Bank Secrecy Act. Because of this, IRS could not initiate an audit of a taxpayer based solely on an FBAR filing. The taxpayer being examined had to have an underlying Title 26 issue. Only with a Title 26 issue could IRS use account information found on an FBAR in furtherance of an audit or exam of the taxpayer. Hence, Congress gave IRS section 6038D, Title 26 of the Internal Revenue Code. In short, Congress gave IRS its own FBAR….”
http://blogs.angloinfo.com/us-tax/2013/07/01/fatca-interview-with-bill-yates-former-attorney-office-of-associate-chief-counsel-international-irs/
Robert Wood, Forbes on FBAR: Will IRS Find Your Small Foreign Bank Account?
Canada (and how many other countries?) will not collect FBAR penalties for either Canadian / US dual citizens nor for US citizens who are resident in Canada.
http://isaacbrocksociety.ca/renunciation/comment-page-29/#comment-419616
Here’s my question:
When will the two Senators Baucus and Camp be arriving in Canada to hear firsthand from the greater than 1 million Canadian households with a US deemed ‘taxable person’ or dual citizen how to reform the US tax and financial reporting system that shackles us? Many of us are available and easily accessible to the Senators in our border communities – just a short drive from Buffalo, Niagara Falls, Maine, Washington state, Montana, etc.
Oh right, they don’t give a damn about fairness and complexity if we’re living OUTSIDE the US – just interested in raising penalty revenues levied on our legally and locally generated and held Canadian assets. I forgot that we’re only ‘US taxable persons’, not US ‘citizens’ worthy of any voice or justice.
http://www.accountingtoday.com/news/Congressional-Tax-Leaders-Begin-Tax-Reform-Road-Show-67354-1.html
‘Congressional Tax Leaders Begin Tax Reform Road Show’
St. Paul, Minn. (July 8, 2013)
By Michael Cohn
“….The leaders of Congress’s two main tax-writing committees kicked off their national tax reform tour Monday …”
….”…“The U.S. tax code has not been updated in close to 30 years,” they said in a joint statement. “In that time, it has become increasingly complicated. Our tax code today contains nearly four million words and is riddled with loopholes that are acting as a brake on our economy. We have an opportunity to change all that. Tax reform can make the code simpler and fairer for America’s families and businesses and spark a more prosperous economy.”…”…..
I just received yesterday the return receipt confirmation for my FBAR that I sent in….. March!
Not sure what it means, maybe they just entered it in the system and got to the letter…
So we can infer that there is a 3 to 4 months delay. No wonder why they want us to submit them online now.
On the negative side, I am freaking out about an audit now and have a hard time dealing with anxiety.
Chris,
I’m sure it varies for the individual, but I wonder which is worse: the anxiety of complying or the anxiety of not complying? There’s something wrong with the system if this question has to be asked.
> ….The leaders of Congress’s two main tax-writing committees kicked off their national tax reform tour Monday … they said in a joint statement. “In that time, it has become increasingly complicated …”
It “has become” complicated?. All on its own? How about some honesty here? Why not say “congress uses the tax code as a Swiss army knife to tackle every problem under the sun, throwing in an average of 300 changes every year, and in doing so has now broken it entirely?”
If anyone can answer a few questions for me, it would be much appreciated. Please forgive my ignorance; I am still new to FATCA and generally don’t understand money talk at the best of times.
1. If the Canadian government says the CRA will not collect taxes and penalties on behalf of the IRS, why should we be worried? The IRS does not have jurisdiction on Canadian soil, right?
2. How will banks determine if you are a US citizen?
3. What is considered ‘US source income?” I keep seeing this term when reading about FATCA and see something about a 30% holding on US source income.
4. If the bank discovers you are a US person, they report to CRA who then reports to the IRS. Then what happens to you?
5. Is there still a possibility that the whole thing can be repealed/rejected.
Again, sorry for being so ignorant, but I am just trying to make sense of it all
meincanada
1 Right
2. They won’t unless you tell them.
3. Say you own 100 shares of AT&T Any dividend paid into your account is US source income.
4. Not much unless you live in the US.
5. Unlikely but anything is possible. Sen Ran Paul and congressman W. Posey among others realise how unworkable it is and would like to see it repealed.