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Hi all,

I hope that someone will be able to help me out with my question. Does anyone know what reporting has to be done to the IRS concerning an offshore life-assurance savings plan (Zurich Vista). I have read that these need to be declared and there could be big tax implications. I have tried contacting the IRS in London but of course they are of little help. Does anyone know what I need to do?

Much thanks,
Zoli


:plane:
 

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All "financial accounts" must be reported annually to the Treasury Department (not actually the IRS, but they're related) on form TD F 90-22.1 You indicate on the bottom of Schedule B (Part III, question 7a and b) that you have an "interest" in a foreign account and then you file the TD F 90-22.1 form separately (i.e. you mail it directly to the Treasury Department - don't send it with your income taxes) according to the instructions for that form.

The treasury form is available on the IRS website, along with all the others, and once you start filing from overseas, they include a copy in the publication 54 filing pack that they send you each year.

If you get an annual statement of the earnings of your plan, you should include them in your income that you declare. You can offset any foreign taxes paid. Those life-assurance plans can be tricky since they work rather differently from what the Americans call "life insurance" and there isn't a real equivalent type of investment in the US. But better to declare it as a savings plan and get the taxes paid on it as they mount up than to let the IRS "discover" you have it and come after you for back taxes and penalties!
Cheers,
Bev
 

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Discussion Starter #3
All "financial accounts" must be reported annually to the Treasury Department (not actually the IRS, but they're related) on form TD F 90-22.1 You indicate on the bottom of Schedule B (Part III, question 7a and b) that you have an "interest" in a foreign account and then you file the TD F 90-22.1 form separately (i.e. you mail it directly to the Treasury Department - don't send it with your income taxes) according to the instructions for that form.

The treasury form is available on the IRS website, along with all the others, and once you start filing from overseas, they include a copy in the publication 54 filing pack that they send you each year.

If you get an annual statement of the earnings of your plan, you should include them in your income that you declare. You can offset any foreign taxes paid. Those life-assurance plans can be tricky since they work rather differently from what the Americans call "life insurance" and there isn't a real equivalent type of investment in the US. But better to declare it as a savings plan and get the taxes paid on it as they mount up than to let the IRS "discover" you have it and come after you for back taxes and penalties!
Cheers,
Bev


Thanks Bev for your quick and detailed report. I would like to ask you a follow-up question to see if you have an idea. I have had this account for 4 years now and am just learning about the need for reporting. Is there anything I can do for the non-disclosed years? Right now the account is still in the red, I would hate to add an addition tax penalty to a paper loss.

Thanks again
 

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Thanks Bev for your quick and detailed report. I would like to ask you a follow-up question to see if you have an idea. I have had this account for 4 years now and am just learning about the need for reporting. Is there anything I can do for the non-disclosed years? Right now the account is still in the red, I would hate to add an addition tax penalty to a paper loss.

Thanks again
If the account is still in the red, I wouldn't worry about it. Just report it this year on the Treasury form. If there's no income from it that you should have reported, they can't really assess a penalty (which would be a percentage of the income or of the tax due on the income).

I don't think there is anything on the Treasury form that requires you to divulge how long you've held the account. (Hope not, since I can't actually remember when I opened one of my foreign accounts.) If they've got questions, they'll come back to you.
Cheers,
Bev
 

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Discussion Starter #5
If the account is still in the red, I wouldn't worry about it. Just report it this year on the Treasury form. If there's no income from it that you should have reported, they can't really assess a penalty (which would be a percentage of the income or of the tax due on the income).

I don't think there is anything on the Treasury form that requires you to divulge how long you've held the account. (Hope not, since I can't actually remember when I opened one of my foreign accounts.) If they've got questions, they'll come back to you.
Cheers,
Bev

Again thanks Bev,

I think this clears up all the questions I have on this topic :)
 
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