newadventure

Hello,
I am trying to file my own taxes this year as they are very similar to last when I paid a CPA to do them. I am using TurboTax. Last year (2013 return) the CPA included form 8833 'Treaty-based Return Position Disclosure under section 6114 or 7701(b)' to report my SIPP in the UK. I have seen lots of talk of form 8938 this year and initially thought this was a replacement for 8833, but it appears not. Should I continue to report using 8833, or should I be reporting on 8938?

Just to complicate matters further, the laptop I installed turbo tax on has died. I am hoping I can resurrect it and not have to reinstall and type all the info in again...

Thanks

nun

The two forms are completely different. The 8833 declares a treaty position. What are your claiming? Exemption from current taxation on gains....what Article of the DTA is used?

The 8938 is a foreign account reporting form and is only necessary if you go over the threshold amount....those can easily be found for your circumstances by reading the instructions.

robin1234

If you have last year's tax submission, as prepared by your CPA, wouldn't it be more simple and direct to prepare this year's by the traditional "pencil and paper" method, modeled directly on last year's? Because trying to use TurboTax or similar, you'd constantly be guessing how to achieve a similar output to last year's, assuming you were happy with last year's result. (And I don't even know if Turbo Tax can manage 8833 and similar arcana...)

newadventure

Thanks for the responses

robin1234 - yes, I considered this and may end up having to do it anyway. But I thought going through the pain this year would make it much easier next

nun - I was really just comparing the output from this year with last year. If I didn't need 8938 last, and nothing has changed, then I presume I don't need it this year. On 8833 it is relying on Article 18 para 1, which overrules the IR codes 679(a)(1), 6048(b)(1), 1291 (a). It goes on to state that no income accrued within the SIPP has been reported on 1040 nor 8621 and no disclosure of the SIPP on 3520.

nun

OK you are taking the stance that the SIPP is a foreign trust, but falls within the definition of a is a pension plan in the DTA and claiming exemption from tax on gains under Article 18.1. That is a common thing to do.

You should make sure you still don't need 8938 because rules change from year to years. Don't file blindly, take the time to understand what you are doing. Read the 8938 instructions, also TT should ask about the size of your foreign accounts to see is 8938 is required.

MMcD

Don't forget to file FBAR if your circumstances meet the income threshold:

Report of Foreign Bank and Financial Accounts (FBAR)

Turbo Tax won't include this form as it:

1) is not filed with the IRS

2) must be electronically filed from a specific Treasury Dept. website

Steve_

As Nun said, that is a pretty common thing to do and hat off to you to actually having it in a SIPP because if it was in a ISA there is no tax treaty provision that covers it.

Once claimed you don't necessarily have to claim it again but the general thinking is that it doesn't hurt to send in the completed 8833 every year. Just to clarify that you're still claiming it.

Turbotax imo just makes your life more complicated when you've got things like an 8833 involved, if you've got a paper copy of last year's return and nothing has changed significantly, may as well use the fillable PDFs on the IRS website. Your previous accountant appears to have been competent.

newadventure

Thanks for your help so far. I guess the issue is that reading through the instructions on 8938, it looks like I should fill it in as the value of the SIPP was above the threshold for married taxpayers filing a joint return. And from P2 'Value of an interest in a foreign estate, foreign pension plan and foreign compensation plan, as I received no distributions during the year and I don't know the fair market value of the pension on the last day of the tax year, the value should be zero.
However, the SIPP also met the criteria last year (and the year before that), and my CPA did not fill in 8938 so I am wondering what I am missing?

nun

Fill in the 8938. If you have account statements for the SIPP you should be able to fill in the amount....it's harder with a defined benefit plan. The 8938 is purely for information purposes, it will not change your tax.

Steve_

Yeah, a SIPP is not exempt from 8938 reporting even with a tax treaty claim. Bizarre that an accountant would know how to do the 8833 but forget the 8938 which is by any reasonable standard, much easier to do.

Neillc37

Why do people think they need to file 8833 for a foreign pension? The code contains an exception so you don't have to file the form for pensions:

26 CFR 301.6114-1(c)(c) Reporting requirement waived.
(iv) That a treaty reduces or modifies the taxation of income derived from dependent personal services, pensions, annuities, social security and other public pensions, or income derived by artistes, athletes, students, trainees or teachers;

nun

Yes, but are gains in a pension that are not distributed income?

Professionals will always file an 8833 to cover their behinds. Filing also explains what you have done.

Neillc37

It's only income you put in the tax return. So dividends generate by the pension etc.
8938/FinCen 114 has to still be done.

nun

Most people that claim reduced withholding or exemption from income tax on a US sourced pension will be filing a W-8BEN and so do not need to also file an 8833. A US citizen cannot file W-8BEN so an 8833 becomes useful.

There is no exemption for gains in foreign trusts, so I would always explicitly claim the treaty exemption for those trusts that are pensions under the DTA. It's also a good way to document what you are doing for both you and the IRS. Whenever there is a possible fine for not filing a form I will file it to be on the safe side.

newadventure

Much as I hate form filling and generally take the option of less is better, I agree with Nun that in this case it makes sense to send in an 8833. Couple of points that may be relevant to my particular case: I am not a US citizen, I am here on L1 visa. Also the SIPP contains investments that pay dividends so it generates 'income' although this is all within the SIPP wrapper. I cannot access any of the money in the SIPP until I am at least 55