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.
@ pacifica777 – – How interesting (about the 2013 for DS4079) – – I just looked more closely at the printout of what was sent to me from Toronto (that I filled out electronically & returned to them) – – it’s a DS-4079 dated 01-2011!!! So mine was definitely out of date. But this is what they sent me, I went through the whole process & no one said anything. Is there different information requested?
The DS-4081 that was sent to me electronically has a date of 06-2007!
Hogwarts – I have no interest in writing to the IRS to MAYBE get a POSSIBLY correct answer from one of their minions. Hubby renounced in 2012 and has gone through the whole process; he is an obsessive-compulsive economist who has meticulously & for close to 50 years done all our tax filing so I depend on him. We, also, have depended a bit on the excellent cross-border accountant we have worked with to REALLY know all the subtleties of “IRS forked-tongue speak” and what one can and cant (should and should not) do.
With that in mind, I WILL be filing an FBAR for 2014 (in April 2015) for the 3.5 months that I was a US “person” in 2014. My energy needs to go elsewhere so I’m just going to do it and be done with them as fast as possible.
@MedeaFleecestealer
I don’t believe there is much, if any, difference (other than expiry date).
@Em & pacifica777
Might be consulate specific. I believe Vancouver emails an updated DS4079 as an attachment.
If it were me, I’d ask the consulate if it’s really OK to use an expired DS4079. Wouldn’t want to go thru the whole rigmarole only to hear back 5 months later from the State Dept that my relinquishment/renunciation was denied due to use of an “invalid” form. That seems unlikely to happen as I don’t believe DS4079 is officially required, but I’m a ‘better-safe-than-sorry’ kind of person.
@LM
DS4080 and DS4081 (at least the ones pointed to in MedeaFleecestealers post) do not have explicit expiry dates. The dates I see in them may be creation/issue dates, but it’s hard to tell for sure. DS4079 has an explicit expiry date.
@ tdott,
I found the new one, “Expires 01/31/2017”
Thanks for solving the mystery. That is people had noticed the 2013 expiry date, but no one mentioned seeing (or being aware of) a newer version until you did, and when I’d googled “DS-4079” a few times in the past month I got the 2013 one, and coincidentally TO sent me the link to the 2013 version a few days ago. But after reading your comment, I got the idea to google “DS-4079 2014,” and that led me to it.
http://eforms.state.gov/editdocument.aspx?documentid=240&from=2&categoryid=1&form_format=3&Width=1270
In comparing it to the old version, as you also noticed, it looks like none of the questions have changed, so that must explain why we haven’t heard of any problems with people using the old one.
The changes I found, both on the final page, are:
(1) At the end of the “PRIVACY ACT STATEMENT,” they added:
“More information on the Routine Uses for the system can be found in System of Records Notice, State-05, Overseas Citizens Records and the Prefatory Statement of Routine Uses published in the Federal Register.
DISCLOSURE: Although furnishing the information is voluntary, applicants may not be eligible for a U.S. passport or for relinquishment or renunciation of U.S. nationality if they do not provide the required information.”
(2) At the end of the “PAPERWORK REDUCTION ACT (PRA) STATEMENT,” regarding the estimated time burden to fill it out,
“If you have comments on the accuracy of this burden estimate and/or recommendations for reducing it, please send them to …”
they changed the office and address to send your comments and recommendations to.
I came across this blog recently and thought I could get some advice. I’m a Canadian born citizen that took up a job in the US a few years ago. I went to an accountant to do my US taxes, as I was a US resident for tax purposes. I also filed a few tax years by myself. I kept most of my financial assets in Canada during those years (mostly cd’s, mutual funds). To my horror I have recently discovered about the FBAR’s and form 8938, etc requirements. My accountant never filed those forms or advised me to file them. Now I leave in fear ’cause even the non-willful penalties arising from failing to file those forms are awful. A lawyer I contacted told me to join OVDI, which I think is not a good idea;I have committed no crime. There might be some unreported income because of the PFIC rules that both my accountant and I screwed up with. Unreported income, if any, would not be high ( I guess less than 2K over many years)
I don’t have a lot of assets in US, no property, just a bank account. I’ve been doing a lot of reading lately and I believe I am left with a few options:
1-Comply forward for this year with an audit risk for past years
2-Make a QD which I believe is more risky since the FBAR e-filing will trigger penalties (multiple accounts)/multiple years
3-Make a loud disclosure, with again an audit risk.
4-Do nothing, quit my job and move out asap,and relocate to Canada, knowing that ‘CRA will not collect U.S. tax owed by a Canadian citizen if the individual was a Canadian citizen when the liability arose.’
I feel like most people here living a nightmare. I used to like that country but those policies are just plain wrong.
@monkeymind,
I am sorry to hear of the predicament you are in. We are aware that people moving to the US are not informed about “foreign” accounts. Unless you have a compelling reason to remain there, I would choose #4. This situation is likely to get much worse over time.
@pacifica, inspired searching re the new DS-4079 2014, and re the additional wording; “Although furnishing the information is voluntary, applicants may not be eligible for a U.S. passport or for relinquishment or renunciation of U.S. nationality if they do not provide the required information.””
Right. How could furnishing the info be VOLUNTARY IF applicants may not be eligible otherwise for the very thing they are there for – expatriation? Sort of like extortion and blackmail are VOLUNTARY.
Negligent failure to file the FBAR form for foreign accounts can trigger a penalty of $10,000 per account per year.Who in his right mind would be willing to pay that? For someone earning a middle class salary, it takes discipline and years to save 10K. Just sickening.
Zwerner: Jury Determines 150% FBAR Penalty Applies – What Next?
OVER THE TOP and EXCESSIVE
@OVER THE TOP and EXCESSIVE
Yes, this does seem to point to some form of elder abuse, concerning how the agent coerced the elderly man into signing a declaration.
Interesting “carrot” from the IRS, “Do voluntary disclosure and we’ll only take 150% of your assets.”
Hmmm.
Americans Abroad soldiers bravely on, but this does spell out the writing on the wall for all those US persons – accidental or not- who do not plan to return to/relocate to the US:
http://americansabroad.org/issues/taxation/rebuttal-gao-study-foreign-earned-income-exclusion/
An accountant told me that losing the FEIE would have little or no effect on Canadians. The reason is that the FTC would take over. This is mentioned in the article. Does anybody disagree?
@FEIE/FTC
If you are living in a high tax country then the FTC would probably negate most US taxes. However the form for the FTC is somewhat more complex than the FEIE=more time and money to file. If you work in a low tax country then you will end up paying tax to the US even though you have few/no US tax financed services (schools, roads etc not financed by US taxes). Some low tax countries have much higher cost of living than the US and these are often the places where US persons would be working on a less permanent basis. Obviously not in the future if the FEIE is repealed. The GAO report seems to focus of whether the FEIE promotes US exports/employs US persons in US firms abroad. It does not appear to concern itself with US persons who are permanently abroad. That is what I meant by the writing on the wall. Without the FEIE it will be a great disadvantage to be a US person abroad in low tax countries. At the same time some of these countries may be more unstable and US persons living there may be more reluctant to renounce. Rock and a hard place.
Great resource here guys. Thought I’d share my situation. Any comments greatly appreciated.
I’m an expat, living in Australia since I was 6 and filed tax returns with the IRS until 2010 at which stage I got tired of the process, and considering I had never owed any taxes I simply stopped filing my US Tax Returns. Last weekend I get my first awareness of FBAR and FATCA, and now am considering my options going forward. It would appear that by filling out a return in 2009 I have removed my option of applying for the Streamlined Process, and since I haven’t filled out my tax forms for 2010, 2011, 2012 (and soon 2013) I am not eligible to simply file my delinquent FBARs.
Or is it possible that I am misinterpreting the streamlined eligibility? And am I eligible for simply missing any of my returns since 2009? The relevant clause as I see it is:
“Failed to file tax returns since Jan 1, 2009”.
Yes, I have failed to file tax returns since 2009, just not all of the tax returns.
Thanks
Answered my own question. IRS eligibility form for the streamlined process says:
“Have you filed a U.S. tax return for tax year 2009 or later?”
If the answer is yes, then you are not eligible for the streamlined process and will be treated as a high risk candidate (with all the trappings it entails).
@Hogwarts et al!
RE: FBAR previous citizens
Intrigued and a bit hopeful after Hogwarts’ reply received from the FBAR email help line (May 23), I also “took the bull by the horns” and sent a similar inquiry in hope of receiving a similar reply of no obligation to file FBAR for 2013. The only difference in our circumstances is that my relinquishment was in 2013, not 2014 – so according to the answer Hogwarts received earlier I should have had even less of an obligation (is less than zero is possible 🙂 ) and even the ambiguity of the answer s/he received should have been eliminated.
Today I received my answer which took about a week:
Though disappointed I am not in the least bit surprised. They are obviously making it up as they go along, and the answer you get apparently depends on the particular individual who answers you.
I was also given no source for the ruling. There quite possibly isn’t one.
@shunrata
I’m not surprised by this. I asked the question a slightly different way and received an answer that appeared to conflict with the previous response. It seems the “Tax Law Specialists” don’t even know. I’ve come to the conclusion that there is no “answer” and unless they come out with a firm statement it will only ever be resolved if it ever went to court. I’ve decided to report for the year prior (2013) even though I am not a US Person on the filing deadline.
=> If someone is no longer a U.S. citizen or resident at any time in 2014 , before the filing deadline of 6/30 then that person would have no obligation to file an FBAR to report foreign accounts held during the 2013 calendar year. …..(in my case earlier years…. I-407 etc.)
This is the way I see the issue and in case of an FBAR audit will litigate for.
I will let you know how things go but the IRS has to take me to court to get FBAR penalties out of me for years where imo. I was no USP for FBAR purpose anymore.
Read this today and it seemed appropriate to post here:
— Christopher Hitchens, Hitch-22: A Memoir
http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/new-irs-amnesty-program-offers-expats-a-ray-of-hope/article19063135/#dashboard/follows/
‘New IRS amnesty program offers expats a ‘ray of hope’
BARRIE McKENNA
OTTAWA — The Globe and Mail
Published Sunday, Jun. 08 2014,
.”….New IRS commissioner John Koskinen, a successful corporate and government troubleshooter, acknowledged in a speech last week that his agency has been fixated on tax cheats, with too little regard for “non-willful” victims of its crackdown.
New IRS commissioner John Koskinen, a successful corporate and government troubleshooter, acknowledged in a speech last week that his agency has been fixated on tax cheats, with too little regard for “non-willful” victims of its crackdown.
“We are well aware that there are many U.S. citizens who have resided abroad for many years, perhaps even the vast majority of their lives,” he said, promising more details of the amnesty program in “the very near future.”…”….
“……Suddenly, however, the IRS appears to be softening its stance with a promise to overhaul its voluntary disclosure, or amnesty, program. Mr. Koskinen’s motives may not be entirely altruistic. The promise to create an easier amnesty program comes just weeks before the Foreign Account Tax Compliance Act comes into effect July 1. The law, which Canada has agreed to help implement, is expected to create a flood of information for the IRS to sort through.
The Harper government’s budget bill, which includes measures to implement FATCA in Canada, is expected to become law before Parliament breaks for the summer later this month. The law gives the Canada Revenue Agency the authority to collect account information and remit it to the IRS.
The IRS is ill-equipped to deal with all this big data. The agency’s budget has been cut by 7 per cent since 2010, leaving it with 10,000 fewer employees…”…..
@BC_Doc posted this in articles open for comment.
I could use some direction; I was born in Winnipeg, MB, so was my Dad, my mother is a landed immigrant who was born in Minnesota. My 2 brothers and I were given the opportunity to go to school from 8 – 12th grade in the US, I had a couple part time jobs while in high school and filed taxes there between 1997 and 2001. (in fact my 2001 return had an earned income credit due to me of approx $3200 which I’ve still never received from the IRS) My last return filed indicated my date of departure. In the 14 years I’ve been back in canada 7 of them I didn’t work as I was either attending school or at home with my children. I only returned to work in 2013 and as the 6 previous years my income was less than $10,000 my concern is not about the past, it’s the future. I work at one of the big 5 banks in Canada. I’m a personal banker, That’s actually how I came to find out that I’m supposed to be filing US taxes every year (apparently even before I ever lived resided there)
So far my understanding is this:
-I have to file a return and report my worldwide earned income so that the IRS can take their cut, should they decide I haven’t paid enough. (I receive the disability tax credit for my son, max out my RRSPs, have medical expences and charitable contributions so I get everything I’ve paid back plus some. I have to have earned income over 40K before I start paying any income tax, and still have student tax credits remaining – so much for the foreign income tax credit)
I- have to disclose all my accounts that have a $10,000 balance or higher, Including my RRSP and TFSA which are both 100% mutual funds. I’ve been advised that those could be taxed as they would be in the US, regardless of the tax free/deferred status they have here.
-If I sell my home I could actually lose money and have to hand over any equity I may have built even if I put all the equity into the purchase of my next home etc etc…
SO, I get all these privileges because I don’t reside on US soil, wasn’t born there, I’m not a burden on US Society by living on welfare, don’t receive food stamps or a recipient of MA, (state medical aide given to ALL low income US hoseholds), my mailing address has never been a US jail or prison, I’m provided zero services that tax dollars are used to finance, and the kicker is I don’t qualify for the EIC -despite my children being born and having working SIN numbers- or any other tax credits that “US Citizens” get as my address is not in the US. (I’m guessing it because they would have to start writing cheques instead of collecting them)
So in a nutshell: the US gov wants our money. In exchange they are offering to provide us with NOTHING but the threat of huge penalties if we don’t comply.
Kinda sounds a lot like how the Hells Angels operate; They use extortion – although the US gov just makes it legal by passing a new law
So I guess my question then becomes What is the worst case senario? Can I lose my house? Can my financial institution liquidate my accounts and send my money to them? Do I need to start hollowing out my mattress? I got what 15 days?
@Devon, others will be able to answer your specific questions better than I can, but for your last paragraph the answers are no you can’t lose your house, no your financial institution can’t liquidatate your accounts and no you don’t need to start hollowing out your mattress. Canada will NOT collect any taxes/penalties on behalf of the US, that’s been made clear for some years.
Nor do you have just 15 days to sort this all out. Yes, the FBAR filing date for reporting of foreign accounts is 30th June, but it’s not going to do any harm to take a step back and begin sorting this out after that date. As far as bank accounts go the figure you work with is an aggregate one of $10,000+ at any time of the year, not each individual account that passes that figure.
Firstly you need to slow down and decide what you want to do. Keep the citizenship or renounce? What about your disabled son? Does he also have US citizenship through you? This could cause problems long term that you need to understand before making any decisions. Read Calgary411’s story here about her battle with the US over her disabled son’s status.
http://isaacbrocksociety.ca/2011/12/14/my-story-calgary411/
You may want to make a quiet disclosure or enter the Streamlined program to get back up to date with your US flings. Research both thoroughly as well as other options I’m sure other posters here will suggest and only then decide what’s the best way forward for you. This IRS page will also help you get started in finding out what you need to do:
http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad
Thanks for your response I’m more frustrated right now than anything. Both of my kids were born in the US. 10 years ago I had every intention of returning to the US, however I married a Canadian and we got divorced the judge added a situation that I cannot move out of the city of Winnipeg without further order of the court. So I filed a motion to very and even though my ex-husband is an addict and in jail the judge refused.
I attempted to get help from the US consulate but that got me nowhere. But hey on the bright side i still get to pay taxes to them. I remember at one time I was proud of my American heritage, now I’m disgusted. I used to think there were benefits to having “dual citizenship ” yet now I can’t even name one.