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.
@Fred, ALL
My Enrolled Agent gave me some “Off the record advice” back in 2012 when I had my OMG moment. He said If I were one of his relatives and considering the fact that I did not owe any taxes that I should just file GF “Gowing Forward” and see what happens.
He’s been filing for me ever since and I’ve never heard a word from the IRS.
I’m not sure what the chances are now with GF in 2015, but in 2012 it worked for me. So far at least 🙂
I appreciate H & R Block’s frankness here, Badger. It makes it clear just how harmful CBT is to ordinary Canadians.
FX rates for 2014 FBAR/FINCEN114 and Form 8938 Treasury Reporting Rates of Exchange as of December 31, 2014
i renounced in 2014 and need to do the fbar for that year. is it for the entire year or only from 1.1.2014 until the expatriation date?
@swisscookie, just up to your renunciation date as you’re taking the highest figure only during the time of year that you’re still an American. After you renounce you’re not, so any figures after that date aren’t something the IRS/Treasury needs to know about.
@Swisscookie, my accountant told me I only needed to include till the expatriation date on my final Fear (though I deliberately held off from opening any new accounts till the following calendar year). I don’t believe there is any definite ruling on this though.
@UncleTell: THANKS. I’m meeting an accountant tomorrow… we’ll see.
A question: I am a dual Canadian/American citizen who was unaware of the need to file us taxes. Have been a Canadian citizen since 1975 and resident from 1970. However, for the last few years I have been a resident of Mexico (retired here in 2007). I have no Mexican returns or income and of course only Canadian income and accounts. Can a Canadian tax preparer do to three years of returns and six years of FBARs for me if I am not technically a Canadian resident right now. I would prefer not to have the tax preparers here do the work as they want to be paid in US dollars.
Thanks
I don’t see why not. As long as you have all the necessary paperwork (T-Forms, etc.), there shouldn’t be a problem. Good luck.
Ken, Why bother?
I´m a USC married 25 years to a German national with 2 dual daughters. After long consideration we three girls have decided to renounce. I have brought myself into compliance via the Streamlined procedure already however, I am wondering how best to prove that my daughters are/have been compliant as well. They were both in school up to late summer/fall of 2014 where both started apprenticeships and have not had enough earnings to come near the threshold requirements of having to file returns or FBARs. One daughter will earn enough in the year 2015 to have to file her first return but, if we renounce within the year of 2015, it would presumably be her first and last return filed… Still I am wondering how to best prove that they were also compliant in the 5 years prior to renouncing… Has anyone had a similar situation?
@3muskateers: perhaps a letter explaining that no filing was done because under thresholds for filing.
@Ken, @Portland. Why file? If you have a US birthplace you have “toxic” ID papers (is that the term? that’s how I feel anyway) that will at one point hamper all your banking. If you don’t have a US birthplace…
I have a US birthplace and hope to be able to bank freely again with my CLN. My daughters were born in Germany so it’s not as big a deal for them… Or should I say yet… I already see that banks ask new customers if they have any affiliation to the US. So in effect, the FATCA situation is already a problem even if you have a German citizenship with german birthplace.
Re: Fred and Portland. Both are questioning why file. I opened an investment account and had to fill out a form which will be sent to the IRS at some point I presume and so I will be vulnerable. Should I not take advantage of the amnesty program? I love the idea of a lawsuit in Canada to stop the sharing but realistically how long will that take to accomplish?
@medea,@mona lisa
thank you both!! i will be so glad when this is finito!!
@swisscookie, hang in there, it’s nearly over.
@Ken.
OK, first, why file. Well, apart from the law saying you must file, the reason is that from now on anything that shows you are a US person makes you reportable to the IRS by your bank.
Flying under the radar is only, I think, an option nowadays if one has another passport and wasn’t born in the US.
So you must file, in order to be able to tell your bank, yes, I’m a US person, and I’m compliant. They can transmit your bank account information to the local authorities who will forward them to the IRS.
Filing, nowadays, includes 1/ tax returns and 2/ FBARs, info about your bank accounts.
Once you’ve decided to file, you must decide how. I am not a professional, but have read much about it around here. My take is:
1/ Better to start filing before the IRS gets information about you from someone else
2/ if you have a fortune, and owe taxes, you will need professional help, and may need to use the IRS disclosure programs, but this makes you be considered a potential tax evader.
3/ if you probably owe nothing, or not much, in taxes, you can file 3 years of delinquent tax returns and 6 years of delinquent FBARs. I think this is called “streamlined” disclosure. Apparently it is fairly common, and supposed to be treated with some benevolence by the IRS, meaning they will probably not address fines.
4/ if you probably owe nothing, you could also file “from now on”, or “going forward”. This means filing in 2015, only one return. This is easy, but could be frowned upon by the IRS. Nobody has been able to tell me clearly if this is a viable option, except one person here who started filed going forward 2 years ago and has not heard from the IRS. This is probably more risky than option 3/ but it’s also cheap and easy. One could hope that if the IRS doesn’t like it they will ask for more returns, but not consider that you need to be fined.
Yike, please read elsewhere here about “amnesty” programs such as OVDI
Ken, You say “I opened an investment account and filled in a form which will be sent to the IRS at some point.” So what? You are a retired Canadian living in Mexico . Do you honestly believe they will bother you? If you do, then you better get busy.
Ken, I see that this discussion is moot. You ceased to be American in 1975 and have NO tax filing obligations. Lucky man. Perhaps you will now send a donation to ADCS since we have saved you a world of pain.
@Ken
@ken
If you have not done anything American like renew your US passport or vote then you relinquished your US citizenship in 1975. You have no taxes to file but you should obtain a CLN for the banks. The key word is ‘intent’ when you go to the embassy to report your relinquishment
@ken
If you have done anything American since becoming Canadian then you need to renounce and file 5 yrs of back taxes and 6 yrs of fbars so as not to be considered a ‘covered’ expatriate. 3 yrs of taxes are only if you want to stay American and file for life.
@Heidi: 3 years, or not. Why not just going forward?
@Fred
It seems Ken is not an American, he relinquished in 1975 when he became a Canadian and has done nothing American since. See the relinquishment/renunciation discussion section.
The choice of the 3 yr streamlined versus filing going forward depends on which you consider to be the lesser risk
@fred
Once you file going forward you are demonstrating to the IRS that you are now cognizant of the need to file. If you do not give them the 3 yrs they ask for, then they could claim that you are non compliant. On the other hand they have limited resources and probably would not go after a minnow. It depends where you stand.
@Heidi. Thanks. Right now going forward looks like a reasonable choice to me – but am still weighing options. I was quoted 3000 euros to do all the forms (3 years) for no tax owed… As a low net worth dual citizen living in a high tax country since 1997 I imagine they would leave me alone. But who knows. Even submitting 3 + 6 years is no guarantee is it?