US Tax Question, FBar, life insurance, MPF

[livreamour]

I have HK ID and I am a US citizen. I opened my HK bank account and HK life insurance by HKID.
I came back HK three years ago and work here since. I filed last three year tax return. But I never filed FBAR because account is less than 10,000 USD. But for this year, if including MPF account, the sum is over 10,000 USD.

1) Is MPF account consider as "foreign financial accounts" that need to be included into the summation of the reporting threshold ?
(if not including MPF, my sum is still lower 10,000 USD, than I do not need to report)

2) For life insurance, do I need to file 720? Do I need to report life insurance at FBAR?

3) Do I need to report MPF account to FBAR?

4) Currently I don't receive any FATCA letter, do I need to contact the bank?

[MandM!]

Are you a HK permanent resident? Does your bank record classify you as a US or non-US person? For those with HK permanent residence and classified as a non-US person with the bank, these records are private and non-accessible by the US.

You are required to file FBAR if your TOTAL balances exceed US$10,000 at any time during the year. FATCA is required if over US $50,000 in foreign assets.

[livreamour]

Are you a HK permanent resident?

Yes

Does your bank record classify you as a US or non-US person?

I don't know, but I never receive a FATCA letter. Is my responsibility to let the bank know I am a US person?

You are required to file FBAR if your TOTAL balances exceed US$10,000 at any time during the year. FATCA is required if over US $50,000 in foreign assets.

So do I need to report life insurance (term based) and MPF (as retirement plan) to FBAR?

[penguinsix]

Hi

First, don't ever assume Hong Kong banks will keep your information private. Never. The Hong Kong Monetary Authority has already signed a data sharing agreement with the USA and the amount of information that is shared, while slightly limited now, will likely increase in the future. If the US finds out later that you willfully failed to file you'll get slaughtered with fines.

FATCA filing limits vary by your location and filing status. If you are single and in the USA, the limit is $50,000. If you are living abroad, as it appears you are doing, the limit is actually quite a bit higher. You'll need to check the specifics for you situation.

Life insurance policies held overseas are a complicated thing. It depends a bit on what type of life insurance policy you have and the amount of the cash surrender value. Take a look here:

https://www.irsmedic.com/blog/2013/0...insurance.html

I have seen websites telling you that you have to report MPF but I don't have any direct first-hand knowledge of it. I think because MPF is privately-managed (i.e. not managed by the government like the US Social Security system) it is considered a reportable account but others may know better.

I will say this--if in doubt, report. The penalties are severe and it is not that complicated of a form (there are no tax implications in FBAR as it is a money laundering form, not a tax form).

[Morrison]

Just ask IRS rep office in beijing, very nice people

[MandM!]

I don't know, but I never receive a FATCA letter. Is my responsibility to let the bank know I am a US person?

Nowadays when anyone (locals, foreigners, US citizens, non-US people, etc.) opens a bank/mortgage account in HK, they will have to certify on a US IRS form whether they are a US or non-US person.

Banks have a certain threshold of compliance they must meet, and hence they have been mailing like crazy the new privacy policy to be signed by everyone. In theory if this is ignored, you will still be under the old privacy policy, but I'm sure there will be some clause in the future that information is shared. Once this privacy policy and certification of US-status is signed, then information can/will be shared with the US. If you do not sign it, then the bank red flags your account and blocks you from opening any new accounts with them.

It's just another PITA step that the US puts the world through and its people. It's mainly meant for money laundering but also for identifying where US-people's money is. Probably one day will open up channels for crooks to sue people who live overseas who don't receive proper notice (via US newspaper) then later levy funds in the overseas bank account. I read an article the other day about people stealing houses through the court system!!

You will not receive a FATCA letter, this is something that you have to do on your own. It can be done online.

So do I need to report life insurance (term based) and MPF (as retirement plan) to FBAR?

If there is a cash component then likely yes you need to file it. But it isn't clear cut unfortunately.

[penguinsix]

It's just another PITA step that the US puts the world through and its people. It's mainly meant for money laundering but also for identifying where US-people's money is. Probably one day will open up channels for crooks to sue people who live overseas who don't receive proper notice (via US newspaper) then later levy funds in the overseas bank account. I read an article the other day about people stealing houses through the court system!!

The frightening thing is that as annoying as FATCA and US taxation is, the concept is already being considered a model for other nations to enact tax and financial sharing between countries. The EU is well on its way to developing there own version of FATCA and has already taken steps to transfer data within the Union, and even China has taken a look at FATCA as a possible model help find corruption and tax evasion.

In short, get ready for a lot more of this from many different countries...

https://en.wikipedia.org/wiki/Common_Reporting_Standard

[MandM!]

The main problem in my eyes is not just the time that is wasted, but that if there is an error, it costs money and takes years to rectify. Then in the end there is no compensation for being wronged. That's the problem.

[jonastainine]

So MPF also is included in FBAR requirements. Good to know.

[mochajave]

If you're US citizen (even if you're also HK permanent citizen), you are considered US person and need to do FATCA & FBAR.

I'm in similar boat and is trying to sort out all these...

I'm going to file the back-tax and start reporting all these going forward. My biggest problem is I haven't been keeping all my statements from HSBC & Hang Seng in the past years. I don't know how on earth can I gather all the info to file the back-tax... Anyone has any experience to share how the best to go about this?