Liberty and justice for all United States persons abroad

The Isaac Brock Society

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.

3,618 thoughts on “US expat tax and FBAR: Discussion thread (Ask your questions) Part Two”

  2. @MedeaFleecestealer
    Wonderful! That has to feel sweet that the IRS can’t fleece you now. 🙂

  3. It certainly is. I didn’t have much to fleece anyway, having only to file the FBAR’s, but even so. It was always more about how it might affect our banking prospects here in Switzerland than the having to file tax returns in the first place. Would we be able to switch our mortgage if we had to? I doubt it very much and then where would we have been? Trying to pay back the loan and the capital gains tax from having to sell so soon after buying? Or paying a tax preparer every year to file an effective zero return? That’s the sort of thing that gave me nightmares.

  5. Congratulations on the stop of future USA nightmares, Medea. So glad you have made it to the ‘other side’ of all this. Hope you don’t leave us completely as you start your new life of freedom.

  6. Thanks Jane Doe belge, I certainly am.

    Calgary411, nope I plan to stay around for a while yet contributing what I can to help others. You won’t get rid of me that easily! (wink)

  7. @MedeaFleecestealer
    Congratulations – nice to hear you plan to stay around. Your advice helped me a lot last year. My CLN is in and the 8854 is on it’s way. What about an International CLN Day – maybe June 15th 😉

  8. @allou, wow, you’re finished too! Hoorah! Yes, I’ll certainly be up for a glass of something on June 15th, even if I’m only with you in spirit. Will definitely make a toast to all those who have both got their CLN’s and finished with the IRS. Maybe we need a better/more appropriate name though – how about “Dumped IRS Today Day”!

  9. I born in the US but have lived in Canada for about 35 years and got my Canadian citizenship some 10 years ago. Since living in Canada I never paid US taxes – assumed that since I worked in Canada, paid taxes in Canada and lived in Canada there was no need to pay US taxes. When all the news about FATCA came out I realized the error of my ways (as far as the US government was concerned) and did my FBAR filing and back taxes to 2006 with a professional tax consultant from one of the bigger US/Canada tax companies.

    Once I believed I had satisfied my US obligations I renounced my citizenship in 2013. To prepare for 8854 and related IRS forms, I started reading various blogs and forums like this one and became more nervous. I went back over some of the past tax forms including 8938 and found that my tax filer had not marked some accounts as jointly owned and also had never reported any income for my RRSP, RESP on form 1040. Should he have done this or when I complete form 8854 will the IRS then recognize my income as capital gains? I am wondering if I need to send corrections for my taxes for the last few years.

  10. Congratulations, @Medeafleecestealer!!! It must be such a HUGE relief for you to finally be finished.

  12. @monalisa1776, yes it is. All I need do now is track the envelope to its destination so I can get the records of when it was delivered and that’s it. And yes, I take copies of both Swiss Post’s and USP’s tracking info so I have double proof of delivery!

  13. BigStick. Leave well enough alone. They won’t bother you. You are a minnow. They have bigger fish to fry.

  14. @Calgary 411

    No, these forms were never filed. Only forms filed were 1040 and 1116 (Foreign Tax Credit) and, starting in 2011, 8938.

  15. Big Stick,

    We must all make our own decisions based on our knowledge and level of risk. KalC may have given you what you need for your decision.

    My daughter and I both had incorrect US tax filings done — mine by a cross-border accounting firm in my city, my daughter by H&R Block. She was assessed a $10,000 penalty which was later rescinded with help from another accounting firm. I had several years of tax returns redone and resubmitted with a third firm I dealt with and the remaining years done by them, including my 8854. I did the FBARs myself for my husband and myself.

    It is disturbing that yours was not done correctly by “a professional tax consultant from one of the bigger US/Canada tax companies”. How many similar others in our situations for costs of administration re US tax compliance?

  19. Re: sending forms to IRS/Treasury
    Remember to send registered with track and trace – after the package left your country you can log on to usps.com and make a printout of the final results: delivered, with all the date/time details. Keep a copy for your records. Once you have done this, that’s hopefully it!

  20. @Shunrata, hopefully your package will be delivered soon. I posted mine on the 15th and it was delivered yesterday so really fast considering there was a weekend. I’ve copies of both Swiss Post and USPS’s tracking info. Only annoying thing is USPS doesn’t have an easy way of printing the tracking info. I had to take a picture of it using print screen and then paste it into another program to save it and print it out. Grr!

  21. @medea

    Happy to hear it got there.

    You must be relieved, but are people still looking over their shoulder for the next three years?

    Personally I won’t feel relaxed until 2017. 🙁

  22. The US is at it again, pretending that they are using objective criteria in order to rationalize the same old conclusions that CBT is equitable and just, and threatening the bandaids like the FEIE, while whining that those abroad aren’t filing, and pretending that they are comparing apples with apples, while jiggering the results to fit their prejudices and foregone conclusions:
    GAO-14-387
    entitled ‘Tax Policy: Economic Benefits of Income Exclusion for U.S.
    Citizens Working Abroad Are Uncertain’ which was released on May 20,
    2014.
    http://www.gao.gov/assets/670/663337.txt
    “…..Benefits received principle: An individual’s tax payments should bear
    some relationship to the government benefits that individual receives.
    Some experts we interviewed noted that U.S. citizens working abroad
    for the long term receive significantly smaller benefits from U.S.
    government services than those living in the United States, and that
    this difference may justify some tax relief for the former. However,
    other experts said that U.S. citizens living and working abroad
    benefit from federal services–such as national defense, foreign
    affairs, income maintenance, and basic research–that produce social
    or humanitarian benefits that are not directly apportioned to specific
    individuals. For example, citizens abroad benefit from years of public
    investment in their education, the cost of which is typically
    recaptured over their lifetimes. Regardless of the benefits they
    receive, U.S. citizens overseas must file a U.S. tax return and pay
    taxes owed unless they renounce their citizenship.[Footnote 63] …”

  23. More on the GAO report ‘Economic Benefits of Income Exclusion for U.S. Citizens Working Abroad Are Uncertain’ GAO-14-387: Published: May 20, 2014. Publicly Released: May 20, 2014.
    ( http://www.gao.gov/products/GAO-14-387 ) re the FEIE:

    See http://www.accountingtoday.com/news/tax_planning/benefits-uncertain-of-tax-break-for-us-citizens-working-abroad-70708-1.html

    As usual, the GAO and the US government conveniently ignores all those who were actually born and live their lives entirely outside the US, yet are claimed as US taxable persons – because this report pretends that those being taxed extraterritorially by the US are all people who went abroad to work for corporations, or for short stays, or to avoid US taxes and are located in ‘low tax’ jurisdictions with little or no local income tax. It pretends that they all receive/d actual benefit and services from the US. It does not address all the obvious glaring inequities we have identified, and instances of double taxation, or the foreign account reporting burdens and penalties, etc. It also pretends that it some kind of ‘equity’ can exist when the US is taxing extraterritorially.

    Usual BS assumptions given that the largest population of US persons abroad are in Mexico, Canada and the UK. I don’t know anything about Mexico, but Canada CERTAINLY IS NOT A ‘LOW TAX’ country. AND, duals born abroad certainly did not arrange to be born outside the US by some magic feat in the womb. AND, people pay taxes that the US refuses to recognize and give credit for, etc.

  25. @Shunrata, well luckily I only needed to file FBAR’s so I’m not giving the matter another thought. For me it was a paper exercise so I could sign the 8854 form truthfully. I can understand others worrying though; why the IRS can’t manage to send out a simple notice stating what you owe or don’t owe when other countries do it on a regular basis I don’t know. I get a notice from the UK to say I owe them £0.00 each year and I’m just doing the Swiss payments for extra tax owed from last year, both dealt with within a few months of filing the returns. It’s really simple guys, why can’t you do it and put peoples’ minds to rest?

    The annoying thing for me is that because I didn’t have to file a tax form I can’t track the FBAR’s in any way just to make sure there’s no problem with them.

    Try not to get too stressed about it Shunrata. Keep calm and try not to think about it too much.

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