US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
Participants will need to provide their e-mail address (real or fake) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
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.
FBAR’s are insanity for those who don’t live in the United States. There’s no way on earth anyone who doesn’t live inside the U.S. should be required to fill out those things. The penalties on them and all the ridiculous information required of long term expats is about nothing but, raising penalty fees. There’s no need to track Americans abroad.
Yes, it needs to go away and only be required of you if you live in the U.S.A. and are indeed holding “off shore” accounts.
For those itching to say good riddance to the US forever, and file last return;
http://uk.reuters.com/article/2013/10/22/usa-tax-filing-idUKL1N0IC1R520131022
Interesting new resources posted by Phil Hodgen – re expatriation.
Particularly interesting section re FBARs and expatriation.
http://hodgen.com/expatriate-without-filing-fbars-sure-thing/
Also a lot of other good stuff there.
@badger,
Wow, this is huge. I bet everyone here who has renounced has included FBARs.
Isn’t there a new IRS tax form that duplicates the FBAR because the IRS couldn’t legally have access to filed FBARs?
The (FATCA) form 8938 is mostly duplicative and has to be filed WITH the 1040.
Aren’t the thresholds for 8938 $50k for residents and $200k for non, whereas only $10k for FBAR,s?
Right Bubblebustin!
The IRS website says non-joint filers living abroad must file if their assets are more than $200K on the last day of the year or more than $300K at any time during the year. It’s $400K and $600K for joint filers living abroad. Below those limits — no 8938.
@WhoAmI,
Hodgen’s blogpost is interesting to ponder.
Am not posting the link to the Hodge entry as advice, just for FYI. Interesting that he wrote it and posted it though.
@badger
Yes, usually the Hodgen types like to error on the side of caution. This message was quite different, almost a gleeful tell-them-where-to-put-their-FBAR message! FBAR’s are relics from some bygone era yet cannot be relinquished by the lumbering behemoth.
@Em
Thanks for expanding on my comment.
I had a Green card a long time ago left 35 years ago. I long ago was not a legal alien due to their regulation
Can anyone confirm if you submit an I-407 whether you will receive a whole bunch of US Tax forms? Last 5 year and exit taxes. I do not plan to file I may only need I-407 if investment firm ask file w8-ben. I do not hold US assets.
Does w8-ben refer to US does it use IRS rules which mean you have to file all the various back taxes and FBAR?
Does this happen with CLN?
Harry: Let me get this straight. Presumably you were not born in the US. You had a green card and left 35 yrs. ago. WTF. Why would you dream of doing ANYTHING?
Lets assume you purchased some dividend paying US stocks or bonds. Your broker would ask you to sign a W8 BEN so that the dividend paying US corp. would withhold taxes at source. No big deal. This happens every day. It has NO other tax implications.
I do not want to file a false statement. I am just as happy to own only Canadian stock. I like the dividend tax credit. It was just someone at Maple sandbox mentioned one company was sending out W8- ben to people with no USA holding.
@ Harry
I sent in an I-407 for a long expired green card and got no response whatsoever, even with follow-up inquiries. That was May of 2012. USCIS would not send tax forms, it’s not their purview. Good luck if you try that route. Perhaps taking the I-407 into a US consulate would work better but I did not want to go there. I don’t have any U.S. holdings either.
The question is for people who have successfully sent in CLN or I-407 do you get sent a letter from IRS or tax form, Does that put you on the IRS radar.
@Harry,
My husband filed a I-407 at a US Embassy in 2012. They handed him an 8854 and stamped “Form 8854 handed” on the I-407.
That was it. We never heard from anyone. He didn’t have the GC long enough to have to file the 8854.
If the regulations were different back when you left the US you may not owe any forms at all.
Phil Hodgen (who I respect beaucoup) also says (in a big, scary voice) that to expatriate you should file the last 5 years of 1040s even if you had 0 income but the form actually says you need to be “tax compliant” and you’re compliant if you didn’t file when you didn’t have to. So err on the side of caution if you will, but my int’l accountant said I didn’t have to file for my 0 years. She said her IRS liaison said the IRS doesn’t care about people like me.
Sorry, typo: I meant 0 income in general, not $0. I’m not referring to US-earned income vs. other income.
New on Mopsick blog: http://mopsicktaxlaw.blogspot.ca/2013/10/ovdi-streamlined-procedure-could-be.html
With regards to the Mopstick blog, he says that you can’t be in the Streamlined Proceded if you ever resided in the US. That should read “resided in the US since January 1, 2009”. His point is well taken, though, that “resided” is not defined.
I like the interesting opening of the letter to the editor reproduced by Mopsick:
from Tax Analysts, by Richard Westin;
…”For reasons of its own …. the IRS announced a much-needed set of streamlined filing procedures for non-resident U.S. taxpayers,…”
What are those reasons?
Was it to help prop up the disingenuous claims made by the US Ambassador Jacobson, to the people and government of the trading partner and neighbour Canada that the US, IRS and Treasury were not ‘unreasonable’ and ‘unsympathetic’ to the ‘Canadian grannies’ they are aggressively pursuing in order to pay off the irresponsible US domestic debt?
Was it to allow our Finance Minister to claim (erroneously) that “I am happy to report the U.S. government has listened to our concerns and the concerns of Canadians” http://www.carp.ca/2012/06/15/minister-flaherty-canada-continues-to-press-for-fair-tax-deal-with-united-states/2/#sthash.g67I3bmz.dpuf” the US has ‘listened’ to Canada’s concerns and was ‘responsive’ to them http://www.carp.ca/2012/06/15/minister-flaherty-canada-continues-to-press-for-fair-tax-deal-with-united-states/2/ ? That of course was merely the IRS Fact Sheet FS-2011-13, December 2011 ‘clarification’ by the IRS, http://www.prweb.com/releases/2012/7/prweb9725498.htm followed by the foot-dragging nine month delay for the ‘Streamlined’ procedure (which now more than a year later has not been updated or any further demystified).
Was it to further the signing of a FATCA IGA by Canada – as an inducement to get other countries to follow Canada’s lead and fold?
@Badger
The entire sentence is weird:
“For reasons of its own in June 2012, the IRS announced a much-needed set of streamlined filing procedures for non-resident U.S. taxpayers, to go into effect on September 1, 2012.”
It sounds as though the author is saying that Treasury didn’t necessarily do it because it was needed, but did it for other reasons.
…or there was a need to do something even though that something may invariably be useless for the most part?
@bubblebustin, I took it to mean that the IRS/Treasury did it not because it was concerned about helping those who needed it, and not because they gave a rat’s ass about the burden and jeopardy of the innocent, but for reasons of their own goals/concerns. The context of the letter was …..”…In making the announcement, the government explained that there was a population of innocents abroad who could be relieved of past failures to file federal income tax returns or FBARs (Form TD F 90-22.1) who, “have recently become aware of their filing obligations and now seek to come into compliance with the law.” “…
and then the author went on to describe the failure of the Streamlined process to serve much of the population it is purported to address, and being too narrow.
The IRS/Treasury and Obama designers and supporters of the offshore crusade, and FATCA have their own agendas. They wouldn’t have introduced the December 2011 factsheet and Streamlined except under pressure or for their own reasons. They don’t give a damn about justice or minnows or ethics, etc. That is obvious since they still have those who very obviously qualify for Streamlined stuck in the OVDs, and they haven’t bothered to clear up any of the quicksand in the Streamlined questionnaire, or the murk in the process.
If they truly recognized that there are millions of minnows and krill worldwide who first of all wouldn’t even owe them zip in taxes, and furthermore have only legal local accounts and assets, then they’d have to have actually done something more effective, clearer and less onerous than what we’ve seen. And they’d have adjusted Streamlined and move those stuck in OVD. And make it fair – so that those in Streamlined are all only considered on the same time period – not some going back to 2003, and others only until 2009, etc. And stop this bs about going after the quiet disclosures – which are not against the law.
But they haven’t. And the GAO spurred them on to promise to pursue and punish more quiet disclosures, but doesn’t give a toss about making the Streamlined more attractive and less onerous – in order to attract more overt filings, make it cheaper to comply, and thus give advisors and the krill and minnows a reason to consider it a truly attractive alternative to quiet filing forwards.
I don’t think anybody has posted this link:
http://www.accidentaluscitizen.com/accidental-americans-and-us-tax-compliance-a-discussion-with-the-irs/