US Tax Question
#16
Re: US Tax Question
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.
With my UK employer-based pension plan the value of it can slightly change when I get a statement through the post does this affect taxes? I was auto-enrolled in this plan, if a small % of my check automatically went into this pension previously (before moving) would this be noted anywhere on taxes or am I looking to much into this?
- Would a 3250 not be needed for this type of plan? I understand I can't do anything with the small amount of funds until I retire and withdraw then it will be noted on taxes .
- Am I correct that the 8398 is required if you have over $50k in foreign account/assets OR $100k if you are married.
- Additionally, would I include the pension on schedule B each year in addition to the bank account or my UK bank account only
- I know you mentioned some type of pensions are not required for the Fbar, I did include my pension was this required for the type I have? (Not familiar with the different types of pensions)
Last edited by dee98; Mar 26th 2019 at 4:18 pm.
#17
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Location: The Shire
Posts: 1,117
Re: US Tax Question
IRS reporting and foreign pensions are like trying to mix oil and water. If perfection is required, it's best to use a qualified, highly competent, US/UK tax advisor. The changing value is due to the investment side resulting in growth of the pension funds. Yes, it can be a tax reporting event, but, no, due to unfathomable IRS regulations and in conjunction with the relevant treaty, most don't bother. Cook_County (a frequent poster here) will know all the ins and outs of reporting growth in the pension. I don't.
As a side note, this year is the first time I have seen the words 'foreign' and 'pension' side by side in the general instructions for the 1040 form itself. Yes, it's been on 8938 and others, but never any basic instructions in Pub. 17 or 1040i, including which line to use to declare the foreign pensions - until this year. Who knows what additional information may become available next year!
#18
Re: US Tax Question
For the books, and no other reason than general knowledge, a foreign pension is non-qualified deferred compensation. The non-qualified bit is a killer.
IRS reporting and foreign pensions are like trying to mix oil and water. If perfection is required, it's best to use a qualified, highly competent, US/UK tax advisor. The changing value is due to the investment side resulting in growth of the pension funds. Yes, it can be a tax reporting event, but, no, due to unfathomable IRS regulations and in conjunction with the relevant treaty, most don't bother. Cook_County (a frequent poster here) will know all the ins and outs of reporting growth in the pension. I don't.
Any contributions made before becoming a US Person generally are not a part of year to year IRS reporting.
Are contributions still being made by you or the employer to the pension. I would guess they are not. If they were, and your contributions exceeded the company's contributions, I believe a 3250 would be required (grantor trust). There may be other reasons to file in conjunction to a treaty position, but that is above my knowledge level. Most, rightly or wrongly, allow an inactive plan to remain dormant with no reporting (other than FBAR/8938) until the actual drawdown phase.
If you are resident in the US, the threshold for a single (S, MFS) taxpayer is $50,000 on the last day of the tax year, or $75,000 at any time during the year. For a married taxpayer filing MFJ, the amounts are $100,000 on the last day of the tax year, or $150,000 at any time during the year. NOTE: that is the aggregate value of all foreign assets/accounts, at their maximum amounts during the year, when combined.
No pension information is needed for schedule B during the dormant phase. If the pension pays dividends, then Part II may come into play, but I have no knowledge level on this.
What type of pension do you have? Company pensions can be Defined Benefit, Defined Contribution, auto-enrolled Personal Pensions (and there are now many more auto-enrolled types), plus others. Generally, all pension plans are reported on an FBAR with the exception of the Defined Benefit pension. ALL foreign pensions plans are reported on 8938, including a Defined Benefit plan.
As a side note, this year is the first time I have seen the words 'foreign' and 'pension' side by side in the general instructions for the 1040 form itself. Yes, it's been on 8938 and others, but never any basic instructions in Pub. 17 or 1040i, including which line to use to declare the foreign pensions - until this year. Who knows what additional information may become available next year!
IRS reporting and foreign pensions are like trying to mix oil and water. If perfection is required, it's best to use a qualified, highly competent, US/UK tax advisor. The changing value is due to the investment side resulting in growth of the pension funds. Yes, it can be a tax reporting event, but, no, due to unfathomable IRS regulations and in conjunction with the relevant treaty, most don't bother. Cook_County (a frequent poster here) will know all the ins and outs of reporting growth in the pension. I don't.
Any contributions made before becoming a US Person generally are not a part of year to year IRS reporting.
Are contributions still being made by you or the employer to the pension. I would guess they are not. If they were, and your contributions exceeded the company's contributions, I believe a 3250 would be required (grantor trust). There may be other reasons to file in conjunction to a treaty position, but that is above my knowledge level. Most, rightly or wrongly, allow an inactive plan to remain dormant with no reporting (other than FBAR/8938) until the actual drawdown phase.
If you are resident in the US, the threshold for a single (S, MFS) taxpayer is $50,000 on the last day of the tax year, or $75,000 at any time during the year. For a married taxpayer filing MFJ, the amounts are $100,000 on the last day of the tax year, or $150,000 at any time during the year. NOTE: that is the aggregate value of all foreign assets/accounts, at their maximum amounts during the year, when combined.
No pension information is needed for schedule B during the dormant phase. If the pension pays dividends, then Part II may come into play, but I have no knowledge level on this.
What type of pension do you have? Company pensions can be Defined Benefit, Defined Contribution, auto-enrolled Personal Pensions (and there are now many more auto-enrolled types), plus others. Generally, all pension plans are reported on an FBAR with the exception of the Defined Benefit pension. ALL foreign pensions plans are reported on 8938, including a Defined Benefit plan.
As a side note, this year is the first time I have seen the words 'foreign' and 'pension' side by side in the general instructions for the 1040 form itself. Yes, it's been on 8938 and others, but never any basic instructions in Pub. 17 or 1040i, including which line to use to declare the foreign pensions - until this year. Who knows what additional information may become available next year!
No contributions are being made. I am unsure what type of pension I have, I just know that all employees beer auto-enrolled. I do see on the statement that it has units and price per unit, you are correct regarding the investment pension fund increasing.
Would the pension fund go on a 8938 only if the value was above the $50k or $100k if MFJ? Is this for reporting purposes like a FBAR but it does not get taxed due to the treaty .
Last edited by dee98; Mar 26th 2019 at 7:00 pm.
#19
Re: US Tax Question
per IRS.
If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you.
Foreign pensions, deferred compensation plans, or foreign 'social security'
Q1. I have an interest in a foreign pension or deferred compensation plan. Do I need to report it on Form 8938?If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you.
#20
Re: US Tax Question
per IRS.
If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you.
Foreign pensions, deferred compensation plans, or foreign 'social security'
Q1. I have an interest in a foreign pension or deferred compensation plan. Do I need to report it on Form 8938?If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you.
#21
Re: US Tax Question
Correct.
As long as it didn't meet the threshold at any time, as can sometimes happen, especially with currency exchange rates being variable.
I'm assuming you haven't started taking anything from the pension?
Sorry, haven't had time to read past posts.
You have no other non-US accounts?
Last edited by Hotscot; Mar 26th 2019 at 7:56 pm.
#22
Re: US Tax Question
Correct.
As long as it didn't meet the threshold at any time, as can sometimes happen, especially with currency exchange rates being variable.
I'm assuming you haven't started taking anything from the pension?
Sorry, haven't had time to read past posts.
You have no other non-US accounts?
As long as it didn't meet the threshold at any time, as can sometimes happen, especially with currency exchange rates being variable.
I'm assuming you haven't started taking anything from the pension?
Sorry, haven't had time to read past posts.
You have no other non-US accounts?
No that's fine, I have not taken anything out from my pension yet as I am not of age to be able to do so. The only other non US account I had was my UK bank account which I put down on my Fbar as I had funds that just went over $10k at one point in the tax year.
#24
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Joined: Apr 2011
Location: The Shire
Posts: 1,117
Re: US Tax Question
If you are filing MFJ, and if you are resident in the US, and if the only foreign assets/accounts are your UK pension and one UK bank account, and if the amount of your pension on 31 Dec. plus the amount of your bank account on 31 Dec. is below $100,000, and if the maximum amount of your pension at anytime during the year plus the maximum amount of your bank account at anytime during the year is below $150,000, you are not required to file 8938.
For the above, if during the year your bank account obtained a maximum amount of $50,000, but by 31 Dec. it was $8,000, and during the year the value of your pension reached $101,000, but on 31 Dec. it had dropped (market crashed) to $39,000, you would be required to file 8938.
For FBAR, if the aggregate (combined) maximum amounts of both your pension and your bank account are over $10,000, you must file the FBAR. From what you have said, you know the value of your pension (and it sounds like an FBAR reportable pension - Defined Benefit pensions have no value until the point of drawdown).
#25
Re: US Tax Question
You may well be under the threshold for filing 8938, but let's word your situation correctly.
If you are filing MFJ, and if you are resident in the US, and if the only foreign assets/accounts are your UK pension and one UK bank account, and if the amount of your pension on 31 Dec. plus the amount of your bank account on 31 Dec. is below $100,000, and if the maximum amount of your pension at anytime during the year plus the maximum amount of your bank account at anytime during the year is below $150,000, you are not required to file 8938.
For the above, if during the year your bank account obtained a maximum amount of $50,000, but by 31 Dec. it was $8,000, and during the year the value of your pension reached $101,000, but on 31 Dec. it had dropped (market crashed) to $39,000, you would be required to file 8938.
For FBAR, if the aggregate (combined) maximum amounts of both your pension and your bank account are over $10,000, you must file the FBAR. From what you have said, you know the value of your pension (and it sounds like an FBAR reportable pension - Defined Benefit pensions have no value until the point of drawdown).
If you are filing MFJ, and if you are resident in the US, and if the only foreign assets/accounts are your UK pension and one UK bank account, and if the amount of your pension on 31 Dec. plus the amount of your bank account on 31 Dec. is below $100,000, and if the maximum amount of your pension at anytime during the year plus the maximum amount of your bank account at anytime during the year is below $150,000, you are not required to file 8938.
For the above, if during the year your bank account obtained a maximum amount of $50,000, but by 31 Dec. it was $8,000, and during the year the value of your pension reached $101,000, but on 31 Dec. it had dropped (market crashed) to $39,000, you would be required to file 8938.
For FBAR, if the aggregate (combined) maximum amounts of both your pension and your bank account are over $10,000, you must file the FBAR. From what you have said, you know the value of your pension (and it sounds like an FBAR reportable pension - Defined Benefit pensions have no value until the point of drawdown).
Last edited by dee98; Mar 26th 2019 at 10:16 pm.
#26
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Location: Boston, MA
Posts: 28
Re: US Tax Question
As an associated question, I made a withdrawal from my private UK Pension in 2018 and moved that to the US. I am over 55 and wanted to hedge against a rapid decline in the pound to dollar exchange rate as the Brexit chaos progressed. This will be reflected in a revised FBAR and 8938, but I understand that it is classed as income by the IRS.. Can anyone confirm where it gets reported - is it just a standard income item as line 7 on Form 1040 ? Thanks
#27
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Joined: Nov 2012
Posts: 902
Re: US Tax Question
As an associated question, I made a withdrawal from my private UK Pension in 2018 and moved that to the US. I am over 55 and wanted to hedge against a rapid decline in the pound to dollar exchange rate as the Brexit chaos progressed. This will be reflected in a revised FBAR and 8938, but I understand that it is classed as income by the IRS.. Can anyone confirm where it gets reported - is it just a standard income item as line 7 on Form 1040 ? Thanks
#28
Re: US Tax Question
As an associated question, I made a withdrawal from my private UK Pension in 2018 and moved that to the US. I am over 55 and wanted to hedge against a rapid decline in the pound to dollar exchange rate as the Brexit chaos progressed. This will be reflected in a revised FBAR and 8938, but I understand that it is classed as income by the IRS.. Can anyone confirm where it gets reported - is it just a standard income item as line 7 on Form 1040 ? Thanks
You were a US tax resident in 2018?
#29
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Location: Boston, MA
Posts: 28
Re: US Tax Question
Yes - US resident throughout 2018
#30
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Joined: Feb 2016
Location: Boston, MA
Posts: 28
Re: US Tax Question
Cook County - sorry i overlooked this yesterday but thanks for the inout on this. Apparently Mr Trump's simplify thetax return so its the size of a postcard isn't quite ready for primetime yet:-).