Warning: TurboTax, Foreign Assets & Form 8938
#61
Re: Warning: TurboTax, Foreign Assets & Form 8938
Last year we did our own but reading this thread think I need to go back to the tax accountant. Knew we would have to do the FBAR as have a couple of bank accounts still in the UK plus an inheritance but now we are meant to declare pensions and endowments that don't even pay out for several years. Come on! Just hope the tax accountant knows what this is all about because it certainly seems to be confusing people here.
#62
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Joined: Dec 2002
Location: texas
Posts: 910
Re: Warning: TurboTax, Foreign Assets & Form 8938
You've always had to include foreign pensions on your US taxes if you are a "US person", even if they don't come to the FBAR or FATCA thresholds. Contributions and or gains in foreign accounts have to be dealt with. If you are lucky a treaty exemption will make it relatively simple....but you have to take the treaty position and file an IRS 8833. Also make sure you deal with ISAs and UK unit trusts appropriately, which usually means selling them before you move to the US.
#63
Re: Warning: TurboTax, Foreign Assets & Form 8938
We have only ever listed our banks. You mean you have list your pensions even if you are not receiving any monies from them yet - we don't retire until 2023 and the endowment (old mortgage account) doesn't mature for a few years yet, so again no actual income. We told the accountant about them but he didn't say at any time we had to declare them.
The pension thing is often forgotten about. Generally employer sponsored pension plans don't need to be included on FBAR, but the situation is in flux for FATCA. Even so as a US person you should be including your worldwide assets on your US taxes. The gains inside foreign pensions are not automatically sheltered from US taxes. If the foreign pension is a qualified pension under the tax treaty, then a claim can be made to shelter the gains from US tax until income is taken out. If you don't do this the IRS will consider the pension as a foreign trust.
Last edited by nun; Mar 6th 2012 at 3:03 pm.
#64
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Joined: Dec 2002
Location: texas
Posts: 910
Re: Warning: TurboTax, Foreign Assets & Form 8938
Is your accountant UK and US qualified and dealing with cross border taxes on a regular basis?
The pension thing is often forgotten about. The gains inside foreign pensions are not automatically sheltered from US taxes. If the foreign pension is a qualified pension under the US/UK tax treaty a treaty then a claim can be made to shelter the gains from US tax until income is taken out. If you don't do this the IRS will consider the pension as a foreign trust.
The pension thing is often forgotten about. The gains inside foreign pensions are not automatically sheltered from US taxes. If the foreign pension is a qualified pension under the US/UK tax treaty a treaty then a claim can be made to shelter the gains from US tax until income is taken out. If you don't do this the IRS will consider the pension as a foreign trust.
I would assume as they are all company pensions they will be under the tax treaty. How can there be gains if you are not receiving anything? Just confirms what I have thought for a long time, way too complicated for me.
#65
Re: Warning: TurboTax, Foreign Assets & Form 8938
As a UK/US dual citizen planning a move to the UK I will have to declare all my US retirement funds to HMRC and I will claim the exemption from UK tax on any gains within them on my SA100 self assessment under Article 18(1) of the Uk/US tax treaty. If you have UK pensions and live in the USA you should declare your UK pensions to the IRS and claim the same exemption on form 8833.
Last edited by nun; Mar 6th 2012 at 3:54 pm.
#66
Just Joined
Joined: Aug 2010
Posts: 10
Re: Warning: TurboTax, Foreign Assets & Form 8938
Glad i'm not the only onenot liking this form, has been my first year doing tax and all but this form has been pretty smooth. First I was using Turbotax online which let me put all 3 of my accounts on but would not let me see schedule B. Then when I went back to it this month it told me my 2nd two accounts had to be submitted using the desktop version. lol! Now on the desktop version which seems quite a bit better.
Anyway, I think i'm ready to file but want to know if I filled Part III in correctly. In Section Ia "Interest" I put my amount in the first column, and then in the third column "Schedule B Line 2". Is that correct? Line 2 of part one of Schedule B shows that same amount (though with cents - Turbotax seems inconsistant with rounding)
Anyway, I think i'm ready to file but want to know if I filled Part III in correctly. In Section Ia "Interest" I put my amount in the first column, and then in the third column "Schedule B Line 2". Is that correct? Line 2 of part one of Schedule B shows that same amount (though with cents - Turbotax seems inconsistant with rounding)
#67
Heading for Poppyland
Joined: Jul 2007
Location: North Norfolk and northern New York State
Posts: 14,545
Re: Warning: TurboTax, Foreign Assets & Form 8938
Glad i'm not the only onenot liking this form, has been my first year doing tax and all but this form has been pretty smooth. First I was using Turbotax online which let me put all 3 of my accounts on but would not let me see schedule B. Then when I went back to it this month it told me my 2nd two accounts had to be submitted using the desktop version. lol! Now on the desktop version which seems quite a bit better.
Anyway, I think i'm ready to file but want to know if I filled Part III in correctly. In Section Ia "Interest" I put my amount in the first column, and then in the third column "Schedule B Line 2". Is that correct? Line 2 of part one of Schedule B shows that same amount (though with cents - Turbotax seems inconsistant with rounding)
Anyway, I think i'm ready to file but want to know if I filled Part III in correctly. In Section Ia "Interest" I put my amount in the first column, and then in the third column "Schedule B Line 2". Is that correct? Line 2 of part one of Schedule B shows that same amount (though with cents - Turbotax seems inconsistant with rounding)
Pt. 3 Section 1a Col 1; amount of interest
Pt. 3 Section 1a Col 2; "1040 line 8a" (or whatever your specific case)
Pt. 3 Section 1a Col 3; "Schedule B Pt. 1 Line 2" (or similar)
This is just my interpretation, others may see it differently.... !!
#68
Just Joined
Joined: Mar 2012
Posts: 5
Re: Warning: TurboTax, Foreign Assets & Form 8938
Hello all. Just signed up to the forum. I've been here six years, married to a US Citizen, with a green card since 2008.
For me, up until now I haven't been declaring any of my UK interests as they were either small pensions, and I thought not declarable as no income is received from them currently. ISAs, where I have not received any income, and a bank account with pocket money for home visits that receives less than $10 interest per year.
I considered any gains (and losses) in pensions and isas to be unrealized capital gains and wouldn't need to be declared until I receive income from them or sold them. For the ISAs, paying capital gains tax on the difference between buy and sell price.
This year I intend to complete an FBAR as the two ISAs and bank account are $14k. They've been around the $10k mark so hadn't FBAR'd previously as honestly, I didn't know I had to. I thought the Tax Treaty would apply to the pensions, although I didn't know I had to file a form for that either. I don't have to worry about 8938 thankfully.
With the information I've read in this thread, I need to make a decision on how I go about completing this years return. Whether to continue as I have been or consider a major change.
Does anyone know someone who has actually had the IRS come down on them for these scenarios?
For me, up until now I haven't been declaring any of my UK interests as they were either small pensions, and I thought not declarable as no income is received from them currently. ISAs, where I have not received any income, and a bank account with pocket money for home visits that receives less than $10 interest per year.
I considered any gains (and losses) in pensions and isas to be unrealized capital gains and wouldn't need to be declared until I receive income from them or sold them. For the ISAs, paying capital gains tax on the difference between buy and sell price.
This year I intend to complete an FBAR as the two ISAs and bank account are $14k. They've been around the $10k mark so hadn't FBAR'd previously as honestly, I didn't know I had to. I thought the Tax Treaty would apply to the pensions, although I didn't know I had to file a form for that either. I don't have to worry about 8938 thankfully.
With the information I've read in this thread, I need to make a decision on how I go about completing this years return. Whether to continue as I have been or consider a major change.
Does anyone know someone who has actually had the IRS come down on them for these scenarios?
Last edited by Odo; Mar 14th 2012 at 1:21 pm.
#69
Heading for Poppyland
Joined: Jul 2007
Location: North Norfolk and northern New York State
Posts: 14,545
Re: Warning: TurboTax, Foreign Assets & Form 8938
Anyway, I think i'm ready to file but want to know if I filled Part III in correctly. In Section Ia "Interest" I put my amount in the first column, and then in the third column "Schedule B Line 2". Is that correct? Line 2 of part one of Schedule B shows that same amount (though with cents - Turbotax seems inconsistant with rounding)
#70
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Joined: Apr 2011
Location: The Shire
Posts: 1,117
Re: Warning: TurboTax, Foreign Assets & Form 8938
Don't be mislead by the simple treatment of UK Cash ISAs for US tax. They are a completely different circumstance.
As for the remainder of your post, hopefully others will be along to answer your questions shortly. I'm staying out of this one.
#71
Just Joined
Joined: Mar 2012
Posts: 5
Re: Warning: TurboTax, Foreign Assets & Form 8938
That does not make me feel good, theOAP, but thanks for replying.
#72
Just Joined
Joined: Mar 2012
Posts: 5
Re: Warning: TurboTax, Foreign Assets & Form 8938
Has anyone transferred any UK based assets to family members over there so it no longer becomes your tax burden? I'm thinking as mine are so small, relatively, it may make more sense to get rid of them instead.
#73
Re: Warning: TurboTax, Foreign Assets & Form 8938
Hello all. Just signed up to the forum. I've been here six years, married to a US Citizen, with a green card since 2008.
For me, up until now I haven't been declaring any of my UK interests as they were either small pensions, and I thought not declarable as no income is received from them currently.
ISAs, where I have not received any income, and a bank account with pocket money for home visits that receives less than $10 interest per year.
I considered any gains (and losses) in pensions and isas to be unrealized capital gains and wouldn't need to be declared until I receive income from them or sold them. For the ISAs, paying capital gains tax on the difference between buy and sell price.
I considered any gains (and losses) in pensions and isas to be unrealized capital gains and wouldn't need to be declared until I receive income from them or sold them. For the ISAs, paying capital gains tax on the difference between buy and sell price.
This year I intend to complete an FBAR as the two ISAs and bank account are $14k. They've been around the $10k mark so hadn't FBAR'd previously as honestly, I didn't know I had to. I thought the Tax Treaty would apply to the pensions, although I didn't know I had to file a form for that either. I don't have to worry about 8938 thankfully.
With the information I've read in this thread, I need to make a decision on how I go about completing this years return. Whether to continue as I have been or consider a major change.
Does anyone know someone who has actually had the IRS come down on them for these scenarios?
Does anyone know someone who has actually had the IRS come down on them for these scenarios?
Bottomline, see a professional and get this sorted out. You might want to sell the ISAs too.
#74
Just Joined
Joined: Mar 2012
Posts: 5
Re: Warning: TurboTax, Foreign Assets & Form 8938
Nun, thank you for your informed reply. I have contacted Pete Newton at britishexpatstax.com and look forward to hearing from him.
#75
Re: Warning: TurboTax, Foreign Assets & Form 8938
Good move. Let us know what he advises, I'm an enthusiastic amateur so knowing what a professional recommends is always interesting. His take on the pensions and ISAs will be good to hear.