Business 360: Get to grips with the issues affecting world business Blog Archive - Tax Tips for U.S. Taxpayers Abroad «

October 4, 2009

Posted: 2101 GMT

Forgive me for gearing this blog to a selected group of people, but if you are anything like me (which I am convinced most of you are), you procrastinate doing your taxes until days before the filing deadline.

Many Americans I know are befuddled by the new and seemingly urgent demands of the U.S. Internal Revenue Service to declare all foreign accounts. They must do so by October 15. Sure, filing the TDF 90-22.1 form isn't a new requirement. However, because of the crackdown on tax evaders by governments worldwide, including the United States, the IRS is tightening its rules on offshore accounts.

Here is a little quiz that I hope is helpful:

1) Is this you?

a) An American expatriate

b) A U.S. green card holder living overseas

c) A foreigner residing in the U.S.

(If the answer is YES to any of the above, keep reading.)

2) Do you have any account with the following in a country outside of the U.S.?

a) Banks

b) Brokerages

c) Mutual funds

d) Unit trusts

e) Pre-paid credit cards

f) Business account where you sign the checks (even if the account is not in your name)

g) Any other financial account

(If the answer is YES, keep going...)

3) Look at all your account statements and find the highest balance for the calendar year for every account. Add up the balances from all the accounts for a grand total. How much do you get?

a) More than US$10,000

b) Less than US$10,000

(If you chose A, this blog is for you.)

So what now? The IRS wants you to declare all your accounts. You need to write on the form the most money you had in every account to the dollar. (No more ranges.) And you have to file for past years, too. Evan Blanco, partner with Deloitte in Hong Kong, told me filers should make a good faith effort to "go back over the past six years and look at any accounts that they had anything to do with."

The penalty? A hefty fine or, if it is deemed you willfully hid money, prison time.

So better get cracking.

Posted by: CNN Asia Business Editor, Eunice Yoon
Filed under: Biz Clinic

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William

October 5th, 2009 1406 GMT

I've heard that "Life Assurance" investments that allow clients to actually invest in different mutual funds are exempt from this issue as the client technically does not own the investments. I'm an expat and have an investment like this in the Isle of Man. Anyone know where I fit in??

David

October 5th, 2009 2007 GMT

I answered "A" to all three questions. I was under the impression that the declaration of foreign accounts had to be made by June 30 even if you file by October 15. I filled out the TDF form this year (my accountant used to do it but since I file in October it is just easier for me to do it myself in June). The form itself is no big deal.

US Taxpayer

October 6th, 2009 231 GMT

My US tax accountant advised me on a similar situation with the same opinion as yours, with the caveat you do need to read the fine print on the policy and ensure that it is indeed a life insurance policy.

I have also enquired about the chance of getting audited, and in their 15 years of preparing taxes, only one of their clients was audited, and only because of an irate ex-wife reported them.

Larry in Korea

October 27th, 2009 1042 GMT

"The IRS wants you to declare all your accounts" from Tax Tips for U.S. Taxpayers Abroad, CNN, October 4, 2009

I'm currently overseas in Korea. When I called the IRS last night and asked about the requirement, I was told that it's a Treasury reporting requirement, not an IRS requirement.

The tax specialist that I spoke to said that the IRS posted Treasury's form to their web page as a courstesy.

A tax law official I also spoke to at IRS said that the form is for reporting purposes not for tax purposes.

Next reporting period is 30 June 2009. This is the regular reporting date. October 15 was an extension.

To report account balances more than $10,000 prior to 2008, you will need to obtain earlier versions of the TDF 90-22.1 because the most recent Treasury form is for reporting 2008 account balances.

How far to go back? Could not get a definitive answer.

"Many Americans I know are befuddled by the new and seemingly urgent demands of the U.S. Internal Revenue Service to declare all foreign accounts. "

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