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Reporting taxes to US - bloody hell!

  1. #1

    Join Date
    Oct 2012
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    Reporting taxes to US - bloody hell!

    Well, well, well, the time has now come that I finally have to catch up on a chore I've neglected for several years now. This is embarrassing.

    I left the US, where I was unfortunately born, when I was quite young to go study abroad. I never reported this to the IRS because I went from being a student to being a student and had no income. I eventually started working part-time in this European country where I was studying (to fund my studies), and I reported my taxes in that country, but never made more than 7000 euros/year. I finished my studies, moved to another EU country, where I was basically unemployed for most of 2 years. I worked briefly, again not making more than 5000-6000 euros/year. My work has always been as a part-time teacher, so my pay has been incredibly irregular, from different sources, and a bloody pain in the neck to sort out for taxes. I never reported these things to the US, because again it was so little and so irregular.

    Well now I'm in HK, and have had some regular work over about the past 2 years, and I just haven't gotten around to telling the IRS about this, because again it's not very much. But thanks to the brilliant new policies that scream freedom from the rooftops, it seems I will now need to get in touch with the IRS if I'd like to keep what little money I have in HK! To make matters even more confusing, I've now become a full time student again (hah!).

    So, can anyone tell me in a very simple nutshell what form I need to submit to the US to make them happy so I can proceed to fill in this W9 form so that dear 'ol Hang Seng bank doesn't get in trouble with the feds?


  2. #2

    Join Date
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    US citizen are required to file a 1040 tax return every year IF they make over $10,000 USD and are single (2013 limit, other years vary).

    Do I Need to File a Tax Return?-Federal Filing Requirements

    Now, just because you have to file doesn't mean you actually owe any money. If you meet one of two tests (hint: you probably do) you get a exclusion of ~$95,000 USD. That means your first $95k of money is not taxed. BUT to get this exclusion, you have to file a tax return. If you don't file a tax return, you don't get the exclusion.

    Looking back through your records, if you have a few years of back filings that need to be completed, you can just fill out the forms and send them in. The consulate is very familiar with people who "left the USA young" and didn't realize they have an obligation to file. If you don't owe any back taxes, it's really just a paperwork shuffle.

    HOWEVER...

    There are two OTHER requirements that you have to comply with:

    FBAR
    FATCA

    FBAR has been around for several decades. If, at any time during the year, you have > $10,000 USD in a foreign bank account(s), then you have to file a disclosure / money laundering form. You'll have to go back through your records and add up all the foreign bank accounts you hold (checking, savings, etc) and see if, when added all together, you had > $10k.

    If so, and you haven't been filing, then you need to consult with a professional. The fines for failure to file can be steep (though relatively rare for low-income non-residents).

    The new policy is FATCA, and this applies if you have >$50-$250k USD in the bank (a complicated scale). This just took effect but I don't think you'll be required to file for this. Your bank, however, will tell the US government about this so if it is a requirement that you file FATCA, the US will know thanks to your bank.

    The US consulate maintains list of accountants in Hong Kong with experience in these matters:

    Taxes in the United States | Consulate General of the United States Hong Kong & Macau


  3. #3

    Join Date
    Oct 2012
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    4,195
    Quote Originally Posted by penguinsix
    US citizen are required to file a 1040 tax return every year IF they make over $10,000 USD and are single (2013 limit, other years vary).

    Do I Need to File a Tax Return?-Federal Filing Requirements

    Now, just because you have to file doesn't mean you actually owe any money. If you meet one of two tests (hint: you probably do) you get a exclusion of ~$95,000 USD. That means your first $95k of money is not taxed. BUT to get this exclusion, you have to file a tax return. If you don't file a tax return, you don't get the exclusion.

    Looking back through your records, if you have a few years of back filings that need to be completed, you can just fill out the forms and send them in. The consulate is very familiar with people who "left the USA young" and didn't realize they have an obligation to file. If you don't owe any back taxes, it's really just a paperwork shuffle.

    HOWEVER...

    There are two OTHER requirements that you have to comply with:

    FBAR
    FATCA

    FBAR has been around for several decades. If, at any time during the year, you have > $10,000 USD in a foreign bank account(s), then you have to file a disclosure / money laundering form. You'll have to go back through your records and add up all the foreign bank accounts you hold (checking, savings, etc) and see if, when added all together, you had > $10k.

    If so, and you haven't been filing, then you need to consult with a professional. The fines for failure to file can be steep (though relatively rare for low-income non-residents).

    The new policy is FATCA, and this applies if you have >$50-$250k USD in the bank (a complicated scale). This just took effect but I don't think you'll be required to file for this. Your bank, however, will tell the US government about this so if it is a requirement that you file FATCA, the US will know thanks to your bank.

    The US consulate maintains list of accountants in Hong Kong with experience in these matters:

    Taxes in the United States | Consulate General of the United States Hong Kong & Macau
    penguinsix -- this post was very, very helpful - thank you! Just a few questions...

    1. FBAR - Is this amount that requires you to report it >$10k, regardless if you're married or single? For most of my time abroad I've been single, but now I'm married. I've generally always had less than $10k. I read on this website that you can't report this late, but I think I will need to report it for the last year or two (not exactly sure off the top of my head -- there was only a brief period where I would have had more than 10k). I guess, too, that for the time when I had 10k, I will need to report ALL bank accounts, too, including one old account in another country from years ago?

    2. Is it generally ok to file the 1040-EZ version?

    3. My MPF contributions are a bit of a headache, as at different institutions I didn't always make enough to have 5% deducted. So I can't just take my overall annual income and take off 5% for the MPF (and I can't just "add" 5% to calculate what my overall income was...). Should I report my total income on the 1040 or can I just report the number I reported to the HK Taxes?

    4. Are YOU an accountant? You seem very knowledgeable. I did try contacting some of the tax accountants listed on the US Consulate website, but I found they were generally a bit of a pain to explain what I'd have to do and roughly how much it would cost. I did eventually get in touch with one that was straight forward, but it's still like $350usd/hour for their service -- ouch! If anyone knows someone who just does a bit of freelance work for taxes, and does so more inexpensively, please let me know! I guess I'm ok with paying $350 total, but I worry that they might need to do hours of work and it'd quickly add up.

  4. #4

    Join Date
    Jan 2012
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    I've lived abroad for the last 6 years and have used turbotax each year while abroad until this year where i switched over to HR Block as I think it was a bit less buggy now that I have gotten married as well (married filing separately). You could check that out. Don't sweat the small numbers, you probably wouldn't get picked for an audit ;-)

    Elegiaque likes this.

  5. #5

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    Quote Originally Posted by Dankleness
    I've lived abroad for the last 6 years and have used turbotax each year while abroad until this year where i switched over to HR Block as I think it was a bit less buggy now that I have gotten married as well (married filing separately). You could check that out. Don't sweat the small numbers, you probably wouldn't get picked for an audit ;-)
    Any ballpark idea about how much their service costs?

    Ah, never mind, I see $250-350. I wonder how much extra they charge for the FBAR form.
    Last edited by Elegiaque; 19-11-2014 at 06:07 PM. Reason: Did the search myself...

  6. #6

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    FBAR is an unfortunate acronym.


  7. #7

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    Quote Originally Posted by Elegiaque
    Any ballpark idea about how much their service costs?

    Ah, never mind, I see $250-350. I wonder how much extra they charge for the FBAR form.
    You must mean HKD then? Surely that's not what I have paid in USD. What State are you from? You might have to file state taxes, but you can file as a non resident I'm sure.

    I thought FBAR was free? BSA E-Filing System - No Registration Filing FBAR

  8. #8

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    I'm pretty sure that's USD. All the accountants I have spoken with in HK also charge a minimum of around $350USD. It's not cheap!

    FBAR is "free" to file.... but if I want H&R Block's help with it they charge an additional fee.

    Claire -- my imagination is failing me then.


  9. #9

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    Claire -- my imagination is failing me then. [/QUOTE]

    Fubar

    Claire ex-ax likes this.

  10. #10

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    https://turbotax.intuit.com/personal-taxes/

    check this out man, definitely cheaper than 350 USD... you don't need to have turbotax or HR block to help with FBAR, you can do it separately...

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