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-   -   US Tax Question (https://britishexpats.com/forum/usa-57/us-tax-question-923526/)

dee98 Mar 25th 2019 12:13 am

US Tax Question
 
Rather than create a new topic I hope you dont mind me asking this tax related question in this one!

When filing taxes I understand if your UK bank account had over $10k at anypoint in the tax year a FBAR is required I also understand the gist of the foreign earned income exclusion.

If your UK bank account has any interest (even if it is a extremely small amount) throughout the year is this to be reported in addition to the FBAR and FEIE?

tom169 Mar 25th 2019 12:18 am

Re: US Tax Question
 
I report as if I'd received 1099-INT

dee98 Mar 25th 2019 12:22 am

Re: US Tax Question
 

Originally Posted by tom169 (Post 12659760)
I report as if I'd received 1099-INT

is that for a foreign bank account? If the interest is less than $10 would you add it to 6b on the 1040 with the US interest? Though if both UK and US interest are higher than $10 then the 1099-INT is required?

tom169 Mar 25th 2019 12:40 am

Re: US Tax Question
 

Originally Posted by dee98 (Post 12659763)
is that for a foreign bank account? If the interest is less than $10 would you add it to 6b on the 1040 with the US interest? Though if both UK and US interest are higher than $10 then the 1099-INT is required?

Are you running a tax software like TurboTax? If so it should do it all for you. If not then I believe it's 2b on the 1040. Convert the £ to $ and add it in there.

dee98 Mar 25th 2019 1:02 am

Re: US Tax Question
 

Originally Posted by tom169 (Post 12659771)
Are you running a tax software like TurboTax? If so it should do it all for you. If not then I believe it's 2b on the 1040. Convert the £ to $ and add it in there.

Cheers mate!

The 1099-INT is this a form a US based bank sends you if you have over $10 of interest on a US account as I have never received this before.

Would you advise adding both UK and US amounts for 2b. I believe our interest rate when added up may not even be $10 though I assume it should be included?

Would a 1040x be needed for the year prior even though it is a small amount about $3-5 and may not be taxable?

I have another tax related question that you or another BE member may be able to assist with. I have a previous UK work based pension plan that has a small bit of money in it I noted it on the fbar though am I correct in saying this is not included on taxes yet as I am not distributing from it yet. Though when I do retire in the far far future this will then become relevant on 2b in the 1040?

durham_lad Mar 25th 2019 2:04 am

Re: US Tax Question
 
On the FBAR question, if you have signature authority on that pension pot of yours and can withdraw from it, move it etc, then it should be reported on the FBAR. Intent on when to withdraw does not matter.

I don’t know at what threshold or at what detail my UK bank reports into the IRS via FATCA so I report all interest no matter how small. Same goes for the pension provider. I don’t like to think of the US Treasury getting reports that I have accounts in the UK and I am failing to report them.

dee98 Mar 25th 2019 2:28 am

Re: US Tax Question
 

Originally Posted by durham_lad (Post 12659805)
On the FBAR question, if you have signature authority on that pension pot of yours and can withdraw from it, move it etc, then it should be reported on the FBAR. Intent on when to withdraw does not matter.

I don’t know at what threshold or at what detail my UK bank reports into the IRS via FATCA so I report all interest no matter how small. Same goes for the pension provider. I don’t like to think of the US Treasury getting reports that I have accounts in the UK and I am failing to report them.

Definitely agree, I understand that both your UK and pension accounts are noted on the fbar my question was that I assume your pension is not noted on your yearly US taxes until you start to withdraw from it after retirement/eligible.

durham_lad Mar 25th 2019 2:42 am

Re: US Tax Question
 

Originally Posted by dee98 (Post 12659808)
Definitely agree, I understand that both your UK and pension accounts are noted on the fbar my question was that I assume your pension is not noted on your yearly US taxes until you start to withdraw from it after retirement/eligible.

My mistake, misread your post.

Definitely no need to report pensions of any sort on your tax return until you make withdrawals.

dee98 Mar 25th 2019 10:15 am

Re: US Tax Question
 

Originally Posted by durham_lad (Post 12659815)

My mistake, misread your post.

Definitely no need to report pensions of any sort on your tax return until you make withdrawals.

No worries, so for the interest this is just related to the bank accounts and not to do with the value of your pension

MidAtlantic Mar 25th 2019 11:31 am

Re: US Tax Question
 
You only get 1099-INT for US accounts where the interest exceeds $10k, but ALL savings interest has to be reported on your US 1044 including US sums under $10 and UK savings interest.

dee98 Mar 25th 2019 1:39 pm

Re: US Tax Question
 
Thanks for the help BE members much appreciated. I had a question about 1040 schedule B .

I note this is where you include interest though for part 3 do you still answer even if your interested is less than $1500?

Last year was our first time doing taxes we did a FBAR (as at one point during that year I had above $10k in my UK account) and we included a 2555 though I don't recall attaching a 1040 schedule B. Should I file an amended tax return to include this, we used TurboTax though I don't recall anything coming up about foreign account . I want to ensure that we are filing correctly.

In terms of foreign account this is what I gathered

Fbar - if you have above $10k at any point in the tax year
FEIE -
8938 - Above $50k in foreign account.




theOAP Mar 25th 2019 4:35 pm

Re: US Tax Question
 

Originally Posted by dee98 (Post 12660061)
I had a question about 1040 schedule B .
I note this is where you include interest though for part 3 do you still answer even if your interested is less than $1500?

Last year was our first time doing taxes we did a FBAR (as at one point during that year I had above $10k in my UK account) and we included a 2555 though I don't recall attaching a 1040 schedule B. Should I file an amended tax return to include this, we used TurboTax though I don't recall anything coming up about foreign account . I want to ensure that we are filing correctly.

In terms of foreign account this is what I gathered

Fbar - if you have above $10k at any point in the tax year
FEIE -
8938 - Above $50k in foreign account.

If you have a foreign (non-US) bank/building society/and lots other types of foreign accounts, you complete Part III of Schedule B no matter what, including if there is no interest paid. Instead of the $1,500 level on Part I, if there is a foreign account, the level is $0.

As I understand, you now have a green card. Therefore, may I ask what FEIE has to do with any of this - unless you have now decided to claim you're not a resident of the US? BTW, interest is not earned income and is never included on an FEIE.

As for the last year return, if you filed an FBAR and declared any interest income from the foreign accounts on your US 1040 return, then the Schedule B might be overlooked, but, be sure you file Schedule B accurately going forward. If you didn't declare the foreign interest income, then do consider filing a 1040X.

dee98 Mar 25th 2019 7:03 pm

Re: US Tax Question
 

Originally Posted by theOAP (Post 12660170)
As for the last year return, if you filed an FBAR and declared any interest income from the foreign accounts on your US 1040 return, then the Schedule B might be overlooked, but, be sure you file Schedule B accurately going forward. If you didn't declare the foreign interest income, then do consider filing a 1040X.

Thanks for the reply much appreciated, apologies for bringing up the FEIE I see it is not of importance to what I was inquiring about. I will definitely include it for this year's return. On the Fbar I included my UK bank account and UK work-based pension plan and amount (does the pension get noted on the 1040 Sch.B.)

When I file a 1040x does this mean I will most likely be audited? I feel this is probably the best thing to do to file and have it correct, despite some apparent tax "expert" they called themselves telling me I should just do it for this year going forward as it is non-taxable or won't change my tax bill...that piece of advice sounded off to me when they mentioned that!

dee98 Mar 26th 2019 1:05 am

Re: US Tax Question
 

Originally Posted by theOAP (Post 12660170)
If you have a foreign (non-US) bank/building society/and lots other types of foreign accounts, you complete Part III of Schedule B no matter what, including if there is no interest paid. Instead of the $1,500 level on Part I, if there is a foreign account, the level is $0.

As I understand, you now have a green card. Therefore, may I ask what FEIE has to do with any of this - unless you have now decided to claim you're not a resident of the US? BTW, interest is not earned income and is never included on an FEIE.

As for the last year return, if you filed an FBAR and declared any interest income from the foreign accounts on your US 1040 return, then the Schedule B might be overlooked, but, be sure you file Schedule B accurately going forward. If you didn't declare the foreign interest income, then do consider filing a 1040X.

Upon logging on to digital banking I do not have any interest 😂 for the past few years, I got myself worked up about it thinking I did as well!

I will file schedule B this year to note my bank account going forward. I was wondering if I was correct about the pension/schedule B from my prior post?

Many Thanks

theOAP Mar 26th 2019 2:02 pm

Re: US Tax Question
 

Originally Posted by dee98 (Post 12660526)
Upon logging on to digital banking I do not have any interest 😂 for the past few years, I got myself worked up about it thinking I did as well!

I will file schedule B this year to note my bank account going forward. I was wondering if I was correct about the pension/schedule B from my prior post?

If an FBAR was filed, and there was no interest on foreign accounts to report, then, IMO, it might be best to let sleeping dogs lie. If you want to do a belt and braces by filing a 1040X, you could, but you've already given all information about the need to file FBAR and information on the foreign account by actually filing the FBAR. The IRS have used Schedule B as a weapon (Swiss banks, UBS, Manafort, etc.) but the funds involved were probably significantly more than yours and mine combined.

There is the current flap over Facebook et.al. and it's gathering of personal data. The IRS feeds off far more personal data than Facebook could ever dream of, but you've already supplied it, albeit not quite correctly this time. If you do hear from the IRS in the future concerning this (most unlikely) plead you've complied with furnishing the required information (FBAR, no taxable income) and have corrected going forward.

On Schedule B, Part I, in the future, list all accounts both foreign and domestic. If there was no interest, state $0 in the 'Amount' column. Then complete Part III.

Again, all IMO.

As for the UK pensions, provided they are currently dormant (no contributions), then no reporting is required to the IRS other than 8938 (if you meet the threshold) and form 3250 if the pension is a grantor trust or you wish to take a specific position in relation to the treaty. Defined Contribution pensions are included on FBAR, Defined Benefit pensions are not included. The UK State pension is not included.


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