REPORTING BANK BALANCES to the IRS

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REPORTING BANK BALANCES to the IRS


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Old 19th January 2015, 12:12 AM
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Default REPORTING BANK BALANCES to the IRS

I know I read somewhere in past Forum threads that the Philippine Banks will report local bank account balances to the United States Internal Revenue Service for all accounts listed in a US Citizens name when and if the account balances go above a certain amount.

My question is this...How often do the Banks report these balances to the IRS? Daily, Weekly, Monthly or Annually?

The reason for my question is I am preparing to make a substantial down payment, (about one million peso's), on a home and this initial property payment is above the amount where the Philippine Banks are required to report these bank balances for US citizens living in the Philippines. However, the money will only be in the bank for a week or two while my purchase documents, deed and other paperwork is being processed.

After I make this initial deposit payment for the home, my bank balance will be back below what needs to be reported to the IRS.

Will the local banks report to the IRS immediately, as soon as my balance goes above the set balance amount for reporting or do they report at the end of each year what my current balance is at that time?

Should I be concerned about this temporary increase in my bank balance? Or should I consider splitting the deposit payment between my account and my wife's account so that I do not go over this IRS required reporting limit?

My plan was to have my bank cut one single check for the total initial property payment but I could have two checks issued, one from my account and one from my wife's account. Or I could write one check from my account first...then transfer the money from my wife's account to my account and then write a second check from my account so that the entire payment is written from one account but in two separate checks, with the entire payment being in one name and from one source...thus avoiding having my account balance going over the set reporting limit and keeping Uncle Sam out of my personal bank account business.

Then again...maybe this is all unnecessary as the home I am buying will probably need to be reported to the IRS anyway and I am just avoiding the inevitable.

Any thoughts or suggestions?????
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Old 19th January 2015, 12:23 AM
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My understanding ( I have Philippine bank accounts) is that they report once (don't know what month) per year. But they report ANY AND ALL AMOUNTS that you have in your account during the year. Even if you only deposit ten dollars-it goes in the report. That extra work is the main reason some local banks are no longer accepting new accounts owned by US expats.

Your home *and land* will have to be in your wife's (a Philippine citizens) name and can not be in your name by Philippine law.
Due to that, being in your wife's name, you should not have to pay US taxes on it..

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Last edited by Asian Spirit; 19th January 2015 at 12:27 AM.
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Old 19th January 2015, 12:27 AM
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BPI has not asked permission yet to report. But BDO sent me a request. They said if they do not get it back within 30 days they will close my account... but it took more than 30 days to receive it from Manila ha ha. I only have p15 in BDO - they can close it.

I don't keep any money in the PI's so I have not concerned myself with this. I only send my monthly allowance here to BPI. Everything else stays in my USAA account.

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Old 19th January 2015, 12:55 AM
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Also as I understand(could be corrected) that if the balance goes above the threshold at any time during a year even though the normal balance may be well under, it is subject to reporting. As I said, this is my understanding, and if reported, you will be subjected to additional scrutiny.

Fred
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Old 19th January 2015, 01:24 AM
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Quote:
Originally Posted by Jet Lag View Post
My understanding ( I have Philippine bank accounts) is that they report once (don't know what month) per year. But they report ANY AND ALL AMOUNTS that you have in your account during the year. Even if you only deposit ten dollars-it goes in the report. That extra work is the main reason some local banks are no longer accepting new accounts owned by US expats.

Your home *and land* will have to be in your wife's (a Philippine citizens) name and can not be in your name by Philippine law.
Due to that, being in your wife's name, you should not have to pay US taxes on it..
I think that this is probably the reality as the $10,000 threshold is for a total of ALL accounts outside of the US. How else could they determine if you have breached the threshold if you had accounts in multiple countries beneath the limit?

Why not deposit it all in the wife's account and then transfer to the seller's account when it is time to pay? I am surprised that they are even entertaining a check for deposit vs. a bank transfer or cash transaction.

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Old 19th January 2015, 08:10 AM
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This topic gets confusing because there are actually two U.S. laws involved, and people get them inter-mingled.

1. FBAR - This the reporting YOU have to do and has been around for several years.

Report of Foreign Bank and Financial Accounts (FBAR)

Quote:

Who Must File an FBAR
United States persons are required to file an FBAR if:
1. the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

FBAR is your first responsibility.

2. FATCA

FATCA is the recently enacted law that forces the overseas banks to report. IMO one of the key reasons for FATCA is so that the IRS can cross check your FBAR to see that it was filed.

FATCA does have some individual filing requirements too but the thresholds are much higher. 50 K USD is the minimum but the thresholds are higher for many expats. Read all about it:

FATCA Information for Individuals

My conclusion: You have nothing to worry about. File your FBAR at the appropriate time. Don't worry about FATCA unless you reach that 50k number. I transferred a similar amount as you in 2013 and there were no issues. I filed the FBAR and will have to do it again this year. 1 mil pesos, about 25 k USD is not a lot.

I'm not a tax pro so you should consult one if needed. If you read the IRS site carefully, it will probably come into focus for you, as it finally did for me!

Side note: Transfer your dollars early and then look for a good time and place to exchange them. With that much money, the exchange rate variances can be substantial. Did you know that it is even possible to have a reputable money changer come into your bank? Take out your dollars inside the bank, get your pesos from the money changer at a higher rate than the bank, right in the bank, then put the pesos back in your peso account. Safe for you as you never have to leave the bank. Of course it needs to be pre-arranged and approved by all parties. I have never done this but I know of people who do it on a regular basis.

Quote:
Originally Posted by Cebu Citizen View Post
I know I read somewhere in past Forum threads that the Philippine Banks will report local bank account balances to the United States Internal Revenue Service for all accounts listed in a US Citizens name when and if the account balances go above a certain amount.

My question is this...How often do the Banks report these balances to the IRS? Daily, Weekly, Monthly or Annually?

The reason for my question is I am preparing to make a substantial down payment, (about one million peso's), on a home and this initial property payment is above the amount where the Philippine Banks are required to report these bank balances for US citizens living in the Philippines. However, the money will only be in the bank for a week or two while my purchase documents, deed and other paperwork is being processed.

After I make this initial deposit payment for the home, my bank balance will be back below what needs to be reported to the IRS.

Will the local banks report to the IRS immediately, as soon as my balance goes above the set balance amount for reporting or do they report at the end of each year what my current balance is at that time?

Should I be concerned about this temporary increase in my bank balance? Or should I consider splitting the deposit payment between my account and my wife's account so that I do not go over this IRS required reporting limit?

My plan was to have my bank cut one single check for the total initial property payment but I could have two checks issued, one from my account and one from my wife's account. Or I could write one check from my account first...then transfer the money from my wife's account to my account and then write a second check from my account so that the entire payment is written from one account but in two separate checks, with the entire payment being in one name and from one source...thus avoiding having my account balance going over the set reporting limit and keeping Uncle Sam out of my personal bank account business.

Then again...maybe this is all unnecessary as the home I am buying will probably need to be reported to the IRS anyway and I am just avoiding the inevitable.

Any thoughts or suggestions?????
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Old 19th January 2015, 09:02 AM
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Thanks for the clarification DonandAbby.

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Old 19th January 2015, 11:09 AM
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If the money came from legitimate sources that you have already paid the necessary taxes on then you have nothing to worry about.

If it is money that the IRS does not know about or came from a loan then you might have to explain the amount.

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Old 19th January 2015, 11:29 AM
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Don has it. FATCA is the law requiring the foreign banks to report balances to the IRS. The FBAR is where you report yourself to the Treasury department.

I had to file an FBAR (technically a FinCen Form 114) in 2014 for calendar year 2013 when I sold some land in the Philippines in 2013.
The real estate agent deposited the proceeds in my BDO account which took my balance over the $10k limit, so I had to do the FBAR.

It was actually not that hard; I think it took me 20 minutes or so and I got an email from the Treasury Department saying they had received it.
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Old 19th January 2015, 02:54 PM
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All of my monies are government direct deposits into a US Bank and then I transfer the amounts over to my Philippine bank account as I need the funds. I receive both a Social Security Disability Check as well as a VA Disability for military service connected injuries. Since the government is issuing both checks to me, they already know what I get and when.

When is the required time frame to file the FBAR? Both of my checks are non-taxable.

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