D-a-n

Just found out about it and am reading the horror stories about half million dollar bills in penalties. Please advise!

I've not hidden income in my foreign accounts, I've declared anything related to their interest etc (except for many small amounts in one easy saver account that I appear to have missed, that wouldn't amount to any actual payment anyway). But I didn't know about FBAR until this week and have thus never filed.

I've done tons of reading now and really don't know what to do. Streamlined procedure? Quiet disclosure? I don't even know how to track all my bank account details from 6 years ago. I'm the type to move money around all the time to get the best interest rate, so my money has been all over the place. :/

We're talking about £60k in total savings, down to £30k after a house purchase a year ago.

Thanks for any and all advice. So worried.

Bob

To get you started, have a search on BE, this subject has come up loads, so there's a lot of info to get you started.

Welcome to BE though and good luck!

JAJ

If you have paid your taxes - don't worry. Despite all the scaremongering and horror stories, there is not one single reported case of a compliant taxpayer having been fined for not having filed FBAR.

Except certain individuals who self-incriminated by going into the voluntary disclosure program - not a good idea most of the time unless there is large scale evasion of tax.

If your taxes are correct, you don't need to consider amending your returns.

You do need to become FBAR compliant, however. The standard advice from the IRS is to file the outstanding reports and always be compliant going forward. See Question 17:
http://www.irs.gov/Individuals/Inter...ns-and-Answers

D-a-n

Regarding becoming compliant: how? Streamlined, or just by mailing them all in with a letter explaining?

D-a-n

Thanks for the help btw!

JAJ

Just file the FBARs as normal with the U.S. Treasury at their address in Detroit. There is no "streamlined" process.

There is normally a 3 year statute of limitations on tax returns, unless a significant amount of income is omitted. In other words, after 3 years the tax year concerned is "closed" and can only be reopened in quite special circumstances. But you should always discuss with your tax adviser.

Steerpike

I have about $30k tied up in some retirement account in UK. All gains/losses are kept within the account and are tax exempt (from UK taxes). I was assuming I wouldn't have to do anything about it until I cash it in and then realize some gains ... maybe I need to do some research ...

Cook_County

Steeerbank - A UK pension plan has no special treatment under US domestic law. It may be a foreign grantor trust requiring filing of forms 3520 and 3520-A as well as PFIC, 8938 and FBAR reporting. You can - if you choose - defer US tax on growth within the plan by electing into the treaty on form 8833 each year.

JAJ

Since the IRS has issued virtually no guidance on the taxation of foreign retirement accounts:

- If there is no ability to access the funds then it's not even clear whether or not there is any "income".

- No evidence from the IRS that a foreign retirement account is a "trust" in the normal understanding of the term (and very few 3520 forms are filed).

- It is well established that retirement accounts do need to be reported on form 8938, although depending on what other foreign assets are held, it may all fall below the threshold for needing to report.

- If it's an employer pension it may not necessarily be reportable on FBAR, otherwise it probably does need to be reported.

As always - consult with your tax adviser.

Disenchanted

I too have recently discovered FBARS, FACTA, Shed B part III, Form 8938 and TDF 90-22.1 and haven't slept for over a week for fear of being made an example of by some zealous, or even not so zealous, IRS agent. To say I'm freaking out is a bit of an understatement.

I need to file amended returns and delinquent forms but I'm not quite sure which way to go. OVDP or QD. I probably owe back taxes (unless I paid UK tax and can get a foreign tax credit) and certainly penalties, which is what I fear most as right now if things don't change I will possibly be looking at loosing my house even without all this.

Should I file amended tax returns first and if so do I do them oldest first and one at a time? Then what about the FBAR's, back 8 years, all at once or one at a time?

Just a little history. I have a bank account in the UK from when I started work at 16. When I divorced my first wife we sold the house, split the funds and I left them there in my bank. I came to the USA in 1985, married a USC and started fresh. The funds in the UK account were not added to other than the small amount of interest they probably gathered. I gave my sister some money from it to help her out financially which indirectly also helped my Mum.

I'm at my wits end and it's starting to get to me. I haven't even told my wife yet but it's starting to affect me and my daily mood is becoming depressed and uncharacteristic.

Do I need professional help? If I do I don't have the funds, unless I take a 25% (taxable in the US of A) cash payment from my pension that will be available to me in August (see my other post) - but then I will probably need that and more to pay the fines and penalties.

I'm hoping someone can at least relieve some of my tax anxiety but I have a feeling I'm in for a lot more sleepless nights. Just to add to my misery my Mum was just diagnosed with lung cancer that has metastasized to her liver so the inevitable trip back to the UK will be quite likely and my remaining UK funds will most likely go to funeral and burial arrangements.

2013 is looking rather bleak so far.
Greg.

Englishmum

Sorry to hear of your woes.

I spotted this article on the UK-Yankee website, perhaps you may wish to send an e-mail to the 'Taxes for Expats' accountants with your questions, although I have had no dealings with them personally:

http://uk-yankee.com/articles/us-exp...r-not-disclose

http://www.taxesforexpats.com/index.html (the 646 telephone area code is for New York City).

D-a-n

By streamlined I meant this:
http://www.irs.gov/uac/Instructions-...r-US-Taxpayers

Is it better to use that, or just mail them all with a letter to the Detroit address?

All of my tax returns themselves are all filed, so it is just the FBAR.

ian-mstm

I can't speak to the rest of your questions, but FBAR has only existed since 2011, so there's nothing that needs to be done for anything prior to then.


Remember that most of this is simply a reporting requirement. It's unlikely that you're actually going to have to pay anything.

Ian

JAJ

To begin with - don't panic. Your tax situation probably isn't nearly as bad as you think it is.

You should work all this out with a competent CPA, but a few principles to guide you first:

As long as any understatement of income did not amount to 25% of your adjusted gross income, there is a three year statute of limitations on your tax returns. There are exceptions to this, but in general, assuming you filed on time, 2009 will be considered "closed" on April 15 (2013) and you then only need to concern yourself with 2010, 2011 and 2012.

The standard way to amend your tax returns is to file a form 1040X. The special disclosure programs are mainly for those with large-scale tax evasion issues who want to get immunity from criminal prosecution. If you have thousands of dollars of underpaid tax you absolutely need to look at this option. The horror stories aren't about cases like yours so don't let yourself be scared into joining a voluntary disclosure program that may be unnecessary

You can also decide not to amend and simply file correctly going forward. Especially so if the amounts are immaterial ($5 or $10 extra tax due, for example, it would cost the IRS more to process the amended return).

Fourthly, did you register for gross interest in the U.K.? If not, the bank should have been taking 20% tax anyway so any additional U.S. tax due will be limited. Your bank statements should make this clear.

FATCA: Assuming you're filing married/joint, if your total foreign financial assets exceeded $75k then you need to attach a form 8938. If you amend for 2011, include form 8938. You may have to include one for 2012.

FBAR : You should discuss with your CPA whether you should back-file for 6 years, or whether it's better simply to file for 2012 (this year) and be compliant going forward. The FBAR form isn't filed with the IRS, it goes directly to the U.S. Treasury Department.


There is probably no alternative to finding a competent CPA in your area able to re-work your returns back a few years and identify how much tax has been underpaid. Then discuss the best way to resolve the issue (comply going forward, or amend tax returns + what to do with FBAR). Most experienced tax CPAs have dealt with resolving prior year tax issues.

Since interest rates have been so low in 2009-11, and especially if there's 20% U.K. tax already deducted, you may find you owe little or nothing.

celticgrid

I think things were amended in 2011 but have existed quite some years before that. The amendment in 2011 did not wipe out requirements prior to that change.