britishnick

Hi Folks,

Apologies if this has been answered deeper down within the forums but a quick search didn't deliver anything. I've been given a sum of money, it's around 20K GBP, I want to be able to transfer this from my bank in the UK, to my account in the US, where i reside, and have done so for the past 5+ years.

The tax will have been paid on this sum of money in the UK, however what i'm interested in are the implications of transferring a large sum of money into my account in the eyes of the IRS, are there any? A friend of mine who is a CPA mentioned that there are forms that i may need to fill out, however finding out what exactly i need to do, is like finding a needle in a haystack!

Thanks in advance, and again, if this has been answered elsewhere, please point me in the right direction!

Nick

Pulaski

Moving YOUR money from the UK to the US, (i.e. the money is already yours in the UK) or vice versa, has no tax consequence.

MidAtlantic

But don't forget that this will trigger the need for an FBAR, if you do not already do one.

Bob

If your CPA friend isn't aware of FBAR and FACTA, I wouldn't recommend using him for help.

Plenty of threads on BE about the above though, to get you going.

Michael

Other than FBAR reporting, there isn't any other form and there isn't any tax consequences.

durham_lad

+1

Even if you don't move money you should be reporting its existence each year using FBAR forms.

I've moved larger sums than 20k GBP with no tax issues

Hotscot

I'm aware of FBAR, I have not looked up the details behind it so far but what is the rationale for it? Why is it any business of the Govt. how much money you have in foreign account if it legally belongs to you and that it's not illegal to have a foreign account?

penguinsix

Part of money laundering legislation passed decades ago. They want to know about those who have foreign bank accounts as they consider them more likely to be hiding money than those who have all their money in the USA. Of course the failure to file the FBAR is a "penalty kick" goal--easy to get a conviction on--more so than tax evasion, so this just make is easier to go after money launderers who are hiding cash overseas.

It should also be noted that large transactions "outside of the norm" will be reported by the bank to the US government behind the scenes. If you are moving say £1000 a month, no big deal. But if you are moving £1000 a month and suddenly move £40,000 in one month, then they'll report this as 'suspicious'.

Again, it has no actual tax liability involve, just more of a warning flag to the government of a large amount. XX number of warning flags and you can trigger an audit (and no, I have no idea what the formula is to trigger an audit).

Michael

Besides money laundering, it is also trying to catch tax evaders. It didn't work very well for money laundering or tax evaders since many funneled their money through the Cayman Islands or Switzerland and didn't report the accounts or any income from the accounts. However both Switzerland and the Cayman Island have signed the FATCA agreement which will make it more difficult to evade taxes or money laundering.

Pulaski

That is not exactly correct. The reporting process is not automatic, and typically requires a two step process. A small bank might not have the first, automated step.

First it has to trip a filter, i.e. be sufficiently "out of the norm" for you and similar accounts. This means orders of magnitude out of whack. The banking system in the US processes millions of $10,000+ transactions daily, your $20,000, $50,000, or even $100,000 transaction is hidden in a fog of countless thousands of similar transactions, so the chances of a single item even tripping a filter is very small. (Now, $20,000 three times on consecutive days in the same account is a very different matter. )

THEN, it will go for manual review, where the tripped transaction is considered in the context of your customer profile, other account activity, other account types, other data available publically (registered property and vehicles, known addresses, professional licences, criminal record, etc.) For a wire, the contents of the memo field would also be considered. Once as complete a picture as possible is created (and this may be a horribly incomplete picture), a decision will be taken on whether the transaction(s) is (are) "suspicious". Transactions aggregating to less than $5,000 are effectively exempt, and single transactions are rarely reported, especially when well documented, e.g. a wire from the UK from someone who provided a British passport as ID when the wire memo says "Net proceeds of house sale".

JAJ

A tax practitioner CPA should at least be aware of the foreign asset reporting issues, however not every CPA is involved in tax day to day.

Not an issue in this case, but if an inheritance/gift exceeding $100k is received from a non-U.S. source, an information return (form 3520) must be filed with the IRS.

nun

The only tax that would be involved with moving cash between countries would be US tax on any foreign exchange gains.

Bob

Depends on the bank though.

Where the missus is, what trips a verification depends on the local bank branch market, not the company or region...and for a lack of bothering, they just report it than spend time investigating it as it's quicker to cover their arses than to not.

JAJ

Or just as easily, creation of a capital loss. From memory there is a de-minimis exception for small transactions.

Pulaski

But you can't make a gain on a one-way movement. Only if you moved funds in one direction, then move them back could you create a gain, or suffer a loss.