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Old 19th January 2012, 10:55 PM
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Hello!
I just learned about FBAR on Tuesday when meeting with a tax accountant' I have been a permanent resident of Canada since 1976 and stopped filing US taxes somewhere around that year. In 1989, we (husband is Canadian with permanent resident status in the US) moved to southern Nevada and stayed for 18 years. Left there in December, 2006. We filed joint US returns for all of those years ans subsequent years from Canada.

As it turns out, I haven't had any income to report over $10,000.00 until last year. I believe with the inclusion of a spousal RRSP and a TFSA, both in my name, I may have had over $10K for a couple of months last year.

My question is, am I understanding the laws correctly when I feel I should only have to file an FBAR for 2011 by the June 30th deadline in 2012?

Thanks so much for any help!!

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Old 20th January 2012, 06:23 AM
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Originally Posted by colddigits View Post
As it turns out, I haven't had any income to report over $10,000.00 until last year. I believe with the inclusion of a spousal RRSP and a TFSA, both in my name, I may have had over $10K for a couple of months last year.

My question is, am I understanding the laws correctly when I feel I should only have to file an FBAR for 2011 by the June 30th deadline in 2012?
The $10,000 filing threshold for FBAR does NOT apply to income - it applies to the balance in the reportable financial accounts. And, I believe I've seen somewhere in the instructions that if you don't need to file an income tax return (due to not meeting the threshold amounts) then you don't need to file FBARs.

Just do the one for 2011, along with your regular return, and if the IRS wants to see more they'll be in touch. Just be aware that the filing thresholds are much lower for married filing separately (which you would do if your husband no longer has his permanent resident status).
Cheers,
Bev
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Old 20th January 2012, 10:23 AM
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And, I believe I've seen somewhere in the instructions that if you don't need to file an income tax return (due to not meeting the threshold amounts) then you don't need to file FBARs.
You can file this under useless information if you wish. I'm not agreeing or disagreeing with anyone.

The question of whether to file a 1040 return if you are below the filing threshold for 1040, but do have aggregate accounts over $10,000, came up on another forum. The OP decided to Email the IRS Email Tax Law Assistance help site. The official response they received was as follows:

"If you do not meet the income requirement to file a federal tax return , but must complete a Schedule B, Interest and Ordinary dividends for purposes of Reporting Foreign Bank and Financial Account (FBAR) information.

You should place your name and social security number in the space provided on the Schedule B, then complete part three as required, attach a statement explaining that you were not required to file an income tax return, but must submit the Schedule B for FBAR compliance requirements only.

File the Schedule B as a stand alone document to the address where you would normally submit your federal income tax return if you were required to file.


This was for 2010 tax year.

The instructions for Form 8938 clearly states that if you are not required to file a 1040, then you are not required to file Form 8938.

Inconsistent? Confusing, since you would file the FBAR for being over $10,000, but not file a 8938 for being over $200,000 (MFS, depending on circumstances)? At times, as much as all this is maddening, the obtuse instructions can also be amusing (well, sort of...).
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Old 20th January 2012, 10:41 AM
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And to make things even worse, the IRS doesn't even stand behind its own information. Any advice they give you is subject to change if they decide for some reason to take an interest in your case.

One good strategy is to disclose everything necessary to show them you don't owe any taxes. (Assuming you don't owe anything.)

After a few years of filing tax returns even though he was under the various limits, my Dad even got a letter from the IRS telling him he didn't need to file anymore. (The caveat was, of course, "unless your circumstances change.")
Cheers,
Bev
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Old 20th January 2012, 03:33 PM
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Argh-h-h-h-h-h-h!! I suppose I will get through this stuff somehow.

Thanks so much to you both for the help. These forums are so much more helpful than trying to decipher the IRS site!! ;-}

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Old 21st January 2012, 08:34 AM
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There are two sections on the IRS website that may be of use to you when trying to figure out this FBAR and FATCA stuff:

For FBAR

There is also an FBAR telephone line you can use for questions.

For FATCA

Cheers,
Bev
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Old 24th January 2012, 02:41 AM
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Quote:
Originally Posted by Bevdeforges View Post
The whole FBAR thing has received a tremendous amount of publicity in some parts of the world. In other parts of the world it's virtually unknown.

The key seems to be just how much you have in "overseas" holdings and whether or not you've actually been "avoiding" applicable US taxes by not reporting them and your regular US income taxes.

If you have been reporting your income from any and all financial accounts and investment assets in Germany, then you may not owe any taxes to the US at all - only the reporting. (The taxes you pay in Germany can be used to offset any US taxes that would otherwise be due on the income from those assets.)

The official statute of limitations on US taxes is still, I believe, only 4 years, so the first thing to do is to file the current year (2011 - due June 15th 2012) and the three prior years returns. In the course of preparing those, you'll see if you have any investment income that you haven't already paid taxes on in amounts adequate to cancel out what you would have owed the US. If everything is accounted for, then I'd just file the FBARs for those years and see what the IRS comes back with (if anything).

The whole purpose of FBAR and FATCA (which requires reporting of certain financial investment assets) is to find tax evaders who have been hiding income they should have been reporting. If you've been reporting your investment and interest income and paying your taxes on it where you live, you're not really within the IRS scope of interest. You could probably even safely contact the IRS office in Frankfurt for guidance.
Cheers,
Bev
Bev, I partly agree with you.

First, the Internal Revenue Code applies to global income, subject to credits, deductions and exemptions.

There are multiple elements to the statute of limitations. First and foremost, it doesn't start running until the return is filed. The general rule is 3 years from the later of the due date or the filing date. Special rules apply to fraud or a substantial understatement of taxable income (6 years) and certain foreign matters (10 years).

A key is reporting income from all sources on the 1040 - interest and dividends on Schedule B, and other investment and business income that ties into the FBAR and FATCA. FBAR is due June 30 in Detroit following, no extensions. Penalties are obscene and can run to 100% of the maximum amount that was in each account each year, plus interest.
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Old 24th January 2012, 06:22 AM
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A key is reporting income from all sources on the 1040 - interest and dividends on Schedule B, and other investment and business income that ties into the FBAR and FATCA. FBAR is due June 30 in Detroit following, no extensions. Penalties are obscene and can run to 100% of the maximum amount that was in each account each year, plus interest.
While I don't disagree with you, I note that the IRS seems to have been engaged in one of their all-too-frequent "shock and awe" campaigns this year - particularly in Canada. Yes, there are obscene penalties for failure to file and for late filing of FBAR and FATCA, but as with so many IRS things, if you can show through your filing that you have been filing all along and/or not concealing any "ill gotten gains" or other forms of income or investment they are looking for, it's unlikely the IRS will invoke full penalties (or any penalties at all).

Also, check the instructions carefully. There are often "outs" or "loopholes" in the fine print. (The current $200K and $400K thresholds for overseas residents on certain forms only just came out at the end of 2011 - so the situation is still evolving.) I'll also stand by my comments that the staff in the foreign IRS offices are generally pretty helpful when asked a sincere question without any "attitude." (I admit I avoided dealing directly with the IRS when I was in the US.)
Cheers,
Bev

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Old 24th January 2012, 04:36 PM
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Thank you, Bev -- I'm not sure I understand exactly what Steve said.
I put a "like" on it so that I can get more access to the site, my bad.


Last edited by colddigits; 24th January 2012 at 04:38 PM. Reason: forgot some info
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Old 4th February 2012, 01:27 PM
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Re the comment "The official statute of limitations on US taxes is still, I believe, only 4 years." The limitation applies to returns already files that may have errors or omissions...there is no statute of limitation for non-filing when filing is required.

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