hutchison

I have been in the US on a visa since june 2017.
due to not fully understanding Fbar I reported only for the account year 2019 up to 12/31 and only 2 out of 3 accounts I had.

The account I failed to report for 2019 was a Frozen private pension. The two I did report were savings accounts about 25k USD combined.
I have submitted 1040 taxes for all years I have been in US 2017,2018,2019 and paid on time.

All 3 accounts together is just short of 50K USD.

The questions I have are;
1. should I submit an 'amended' Fbar for 2019 account year detailing the additional pension account?.
2. should I submit separate Fbars detailing all 3 accounts for ;2017 , 2018
3. this year deadline has not passed (deadline april 15 / october 15th? to report 2020 accounts) therefore I can just submit Fbar in a normal manner for all three accounts for 2020.

it was unintentional of course, somehow i got the idea 'frozen' pension would not count, and I only had to submit Fbar once, all advice welcomed.

Glasgow Girl

1. Yes
2. Yes
3. Yes.
Include a statement explaining why you did not file for 2017 and 2018. And why you left off the pension in 2019. Keep it short and factual. If you did not fully understand the requirement just say so, don't elaborate unnecessarily. If you declared all income from these accounts and paid all tax due on that income you will be fine. If you did not, then submit amended returns for 2107, 2018 and 2019 and pay the back tax pronto at the same time as you file the delinquent FBARs. You only have until tax day this year to amend the 2017 return, so don’t delay. If you do owe taxes on that income from 2017, 2018 and 2019 then cross your fingers that they are satisfied with the amended returns and missing FBARs. You are unlikely to hear anything back from them, so in this case no news is good news.

hutchison

thankyou, I did not draw on any of the 'income' as such from the two accounts (just current accounts) small interest payments few gbp here and there, does that count as income in IRS eyes?, even although it is not drawn

the private pension (not yet matured) had a little more growth nothing greater than 500gbp/yr.

Glasgow Girl

No tax would be due on the growth of your underlying pension if nothing has been paid out to you. On the savings accounts if they paid the interest into your account as interest and/or dividends then unfortunately it counts as income whether you withdrew it or not. If it was a UK financial institution and they withheld tax on the original payments, then it is very unlikely that you will owe any additional US tax because of foreign tax credits. If not, and it is truly a small amount then while you likely have a tiny amount of tax to pay on it, technically you should refile, declare that income and pay the tax due. That way by filing the FBARs any ammendeding your retursn you are now in full compliance.

With that said if it is truly a small amount then you could perhaps let sleeping dogs lie regarding the amended returns. There may be a small threshold where the IRS does not want to be bothered with amended returns for very small amounts. Someone else would have to advise on that one. In any case, you most definitely should refile the FBARs for all delinquent years, because having completed them for 2019 and including your pension on your 2020 return makes it clear that you now fully understand the FBAR requirement. Ignorance of the law is not an accepted reason for failure to file. Don't sweat filing the delinquent FBARs, just do it and move on. The people they are after on that front are the ones who deliberately hid their accounts.

durham_lad

As Glasgow Girls says, I would get up to date on the FBARs, but I wouldn’t bother with corrected IRS returns as it is only a few pounds missed interest. It will cost the IRS a lot of money to process those corrected returns for a couple of dollars more tax. In the USA banks are even required to produce 1099-INTs on interest less than $10, although you are supposed to report it.

hutchison

sound advice, I will action it.
I had been drawing on the two standard accounts from time to time to send here, so very few interest payments due to withdrawals.

durham_lad

Just noticed an error in my post. I meant to say that banks in the USA are NOT required to produce a 1099-INT on interest paid that is less than $10, and some (many) folks, including my son, never report interest that doesn’t have an associated 1099-INT.

hutchison

I found this useful info about the reporting thresholds of FBar so, anything from $10,000 = Fbar, If any of the thresholds are exceeeded according to this guide, then form 8938 should be submitted. Therefore personally I do not have to submit 8938 because condition 1&2 correspond to me for 2018, 2019, 2020, considering also the Fbar approved exchange rates for the previous years.

However I need to look into 2017 because we were above the 75k threshold when we actually moved.


https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

• Unmarried individual (or married filing separately): Total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.
  
• Married individual filing jointly: Total value of assets was more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the year.
  

Specified individuals living outside the US:

• Unmarried individual (or married filing separately): Total value of assets was more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.
  
• Married individual filing jointly: Total value of assets was more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year.
  

Specified domestic entities:
Total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the tax year.

hutchison

2017 Fbar value is 283k USD (not yet submitted) , but it was not in the UK accounts for long, therefore accue'd zero interest, it was being transferred through u.k accounts from property sale and bank accounts. 2017 i was resident just more than half year in US using the presence rule (184 days) , and i completed returns for UK and US for 2017.

would I also have to file 8938 for 2017?

durham_lad

This happened to me in 2017 and I did file form 8938. We did have some small amount of interest from UK accounts. On Schedule B we summarized all the interest from the different accounts on 1 line as we had divided among many deposit accounts to keep below the government insured limit.

Of the accounts reported on form 8938 they require every account regardless of whether they earned interest or not.

hutchison

hmm, before i go and submit Fbars for 2018, and 2017, i need to talk to Deloitte asap, they did my taxes for those 2 transition years, I think they should have been responsible for form 8938, Fbar, aswell as the 1040.

Glasgow Girl

Form 8938 should have been filed with your tax return, so I would agree that your tax preparer should have taken care of that if it was applicable and they knew of the account. It is possible that they were unaware of the size of the accounts if the high balance was only for a short time, or perhaps the high balance was prior to you becoming subject to US taxes, or perhaps they were never told about the accounts? The penalties for failing to submit Form 8938 are substantial if the IRS identifies that you failed to do so (which is unlikely if you have not heard from them by now). If you did not submit it and you should have then your 2017 tax return will remain open for audit for up to 3 years after you do submit Form 8938. If it were me I would just submit an amended return for 2017 with a statement as to why you did not submit it with the original return. As before, keep the statement short and sweet. You might as well throw in the missing interest on your foreign accounts if you do that. You only have until tax day this year to correct that way.

FBARs are a totally distinct responsibility from your tax return, and go to a different government department. For the FBAR, your tax preparer could argue that is a separate service although a good tax preparer should certainly have taken care of it, and at the very least advised you to submit it. The big question is did you tell them about the accounts? In any case it is relatively easy to submit prior year FBARs and if it was me I would just get on with it.

hutchison

it appears I have 'lucked out' .


according to my (well known) tax attorney for that year 2017 I filed a tax return as a nonresident alien. (having spent only 173 days in the US, not the 183 I originally thought) A nonresident alien is not obligated to file either an FBAR or a Form 8938. that means all monies from house sale, accounts and otherwise in 2017 did not count for Fbar reporting purposes, great news I am not on the hook for 2017, which would have been over the 8938 threshold. I did input all of those items into the 'tax organizer' which would have generated an Fbar notice to me, IF, it were valid.=, even better news is I transferred all of the monies over during 2017.

However. For the 2018 year on the 1040, I did check the box which says no account value above 10,000USD so I am guilty of not realizing my 'frozen private pension', was, reportable for 2018.

I may not have received a distribution or made a contribution , but it is still reportable.
No distributions means no change to 1040 taxes, if I understand correct?
therefore all should do is submit Fbar late for 2018.

I allready amended for 2019 , and made a fresh submission for 2020.

hutchison

for 2018 , I found out was married filing jointly status, with foreign account values of <53k, so 8938 threshold falls under this ruling; so i will just submit my late 2018 Fbar and hope that will be enough to satisfy them.
married filing jointly looks at how much we BOTH had in our accounts, we transferred all overseas through one account so safe to say my Fbar covers both persons for 2018,2019,2020.

Having learned how to actually do this and what it stands for is why I investigated if it had been done in previous years, it set alarms bells off, because I had little knowledge about how it works and even less memory retention of the actual returns. at least I know more now, fingers crossed I wont get penalized for declaring the other accounts to <53k.

thank you so much for the help.

tht

Don’t forget that it’s the highest balance (maximum value) in an account during that year, not the same day. So if you had $10k in an individual account and so did your wife would both declare it on Part II of your own FBAR, if it was then combined in a joint account you would both have to declare it as $20k on Part III if each of your forms.