Like Tree35Likes

Seriously WTF is wrong with FBAR & FATCA

Closed Thread
Page 1 of 5 1 2 3 4 ... LastLast
  1. #1

    Join Date
    May 2020
    Posts
    227

    Angry Seriously WTF is wrong with FBAR & FATCA

    This is my first time knowing I have to file FBAR since coming back to Hong Kong almost two years ago and I have already encountered so many problems and questions that require me to hire a licensed CPA for consultation. And they are not cheap! I am broke af but I don't want the IRS come knocking on the door telling me I owe them anything or having to bear the consequence of getting penalize for not reporting my foreign assets correctly.

    This is just my two cents, seriously isn't the $10,000 USD threshold of all combined foreign financial accounts a little too low for FBAR!? And I haven't confirmed this but I think this threshold hasn't changed since the policy was first established? Shouldn't they at least factor in inflation?? I mean $10,000 USD in the 80s are certainly worth way more than the $10,000 USD today! Even as a low income worker here in HK I find this requirement just easily be met... I get it the IRS doesn't want anyone to evade U.S. taxes and probably also wants to level out the playing field for U.S firms so not everyone would just go invest in a foreign country where the investments there are not heavily taxed. But come on shouldn't they bump that threshold to at least $100,000 if their main concerns are the wealthy hiding money offshore!? Seriously do they think someone with the intention to evade tax would only have $10k in foreign assets? If they want to waste money investing someone who only has $10k offshore be my guest... but the chances are they don't have that resource and simply not cost effective.

    Since I am trying to be a good citizen and don't want to risk anything, I have to pay thousands of USD just to report FBAR for the years I have missed and amend my tax return. Many might wonder why don't I just do it myself and report it online, well it turns out my parents bought me multiple life insurances in Hong Kong when I was a kid that might be taxable and has cash value in the eyes of the IRS (still I have less than $40K in all my combined foreign financial accounts...). This is why I need an expert so I don't fall for any tax traps!

    Sorry for the venting, I just needed to let it out. Also, if anyone has knowledge or advice regarding my case feel free to leave a comment! xo

    Last edited by Taxmyass; 02-05-2020 at 10:31 AM.

  2. #2

    Join Date
    Mar 2020
    Posts
    136

    There are a lot of Americans who decide to renounce their American citizenship because it's just not worth the trouble.


  3. #3

    That's not so easy either and can be quite costly.

    https://nomadcapitalist.com/2018/06/...of-renouncing/

    spode and markranson like this.

  4. #4

    Join Date
    May 2020
    Posts
    227

    Yeah but I heard you have to pay up to 7 years of taxes even after you have renounced your American citizenship.

    I love my country tho, just happen that HK is where I have a better success career wise. And seriously F the IRS!


  5. #5

    Join Date
    Jul 2012
    Posts
    1,516

    That sucks. You have to file for previous tax years even if you didn't know? How many years do you have to go back?


  6. #6

    Join Date
    Aug 2006
    Posts
    334

    Well according to the IRS, if you live overseas the limits are much higher than $10k for reporting on FATCA https://www.irs.gov/businesses/corpo...r-us-taxpayers

    FBAR, however, still has the reporting requirement at $10k.
    https://www.irs.gov/businesses/small...-accounts-fbar

    For non-US people, FATCA is a broad law covering various reporting. It is often used as I did above, to relate specifically to filing form with the US Tax authority (IRS). FBAR predates FATCA, and requires US citizens, residents, etc., to file separate documentation forms with a different branch of the Treasury Department (the Financial Crimes Enforcement Network (FinCEN).

    From the OP posting, it sounds like they may have filed the tax paper work as needed, but failed to file the FBAR. Penalties for missing the FBAR, as I understand it, are much less severe than for FATCA. If only filing missing FBARs, then the IRS tax forms of past years do not need to be amended - separate filings, and separate issue.

    Penalties for not filing the FBAR, if required, are quite severe. "Civil monetary penalties are adjusted annually for inflation. For civil penalty assessment prior to Aug 1, 2016, if non-willful, up to $10,000; if willful, up to the greater of $100,000 or 50 percent of account balances; criminal penalties may also apply."

    My accountant was 1 week late filing the right form relating to my owning a condo, and I received the USD10k penalty notice form the IRS. My accountant was able to argue unintentionally, no money owed, first year of filing, and IRS agreed to suspend (not cancel) the penalty. It’s been hanging over me for about 4 years now.

    The OP is wise to engage a CPA with knowledge for this. Might be cheaper to engage one in the USA rather thanin HK but safer than doing it yourself when you find you are in violation of any TReasury Dept / IRS requirements - they are quite frightening and can screw you up completely.

    As the IRS says "If you have a financial interest in or signatory authority over an offshore financial account, you must report the account on an FBAR (Form 114 (formerly TD F 90-22.1)), regardless of your obligation to file Form 8938. Certain foreign financial accounts are reported on both Form 8938 and the FBAR. However, the information required by the forms is not identical in all cases. Different rules, key definitions (for example, “financial account”), and reporting requirements apply to Form 8938 and FBAR reporting.” Did you catch that - even definitions of hat consttutes a “financial account” are different between the two mandatory reporting avenues!

    If you are careful and attentive, it is all fairly straightforward. I try to err on the side of overreporting even if an account or life insurance policy or other financial instrument does not need to be reported on one track or the other. If you are catching up on missed years, better to engage a professional.

    Remember - I am not a lawyer, not an accountant - do not rely on my advice without confirmation from an authority. I am nothing but a US citizen who has wrangled and strangled their way through this morass for many years now.

    Morrison, shri and LoganH like this.

  7. #7

    Join Date
    Oct 2012
    Posts
    6,531

    @spode

    TReasury Dept / IRS requirements - they are quite frightening and can screw you up completely.
    Can you explain how if you're living abroad and don't have any intentions of living in the US again?

    I'm a bit like the OP (or was rather). It's a bit tiresome to keep up with all the reporting you need to do living abroad, and it doesn't help that the US tax year is not synchronized with the HK tax year. I've always wondered if I have messed something up or forgotten something (obviously, all within petty amounts), what is the worse that could happen? I don't have much faith in the US bureaucracy machine to track me down and figure out any mistakes... But maybe it's just my lack of faith that means I should be concerned!

    If someone has a recommendation for a local accountant that can help with these kinds of matters, I'd be curious to know.

  8. #8

    Join Date
    Aug 2006
    Posts
    334
    Quote Originally Posted by Elegiaque:
    @spode
    Can you explain how if you're living abroad and don't have any intentions of living in the US again?
    It can be argued either way in that case. Many people who never plan to live in the US again, still may plan to visit. At which point you may be detained and stay in custody until resolved. Even a flight change in US territory (not just the 50 states) might involve a check and a detention if there is a flag on your ID. Most poeple would not have to worry about extradition, hopefully, unless a lot of money is involved. And avoid US investment vehicles, stocks, etc. And make sure if you are ever deported from somewhere that you won’t be forcibly sent back to your home country (citizenship elsewhere?) - the deporting country may just want to get rid of you, but the receiving USA will certainly check their records on you.

    -Just some quick thoughts.
    Last edited by spode; 03-05-2020 at 03:28 PM. Reason: typo

  9. #9

    Join Date
    Oct 2012
    Posts
    6,531
    Quote Originally Posted by spode:
    It can be argued either way in that case. Many people who never plan to live in the US again, still may plan to visit. At which point you may be detained and stay in custody until resolved. Even a flight change in US territory (not just the 50 states) might involve a check and a detention if there is a flag on your ID. Most poeple would not have to worry about extradition, hopefully, unless a lot of money is involved. And avoid US investment vehicles, stocks, etc. And make sure if you are ever deported from somewhere that you won’t be forcibly sent back to your home country (citizenship elsewhere?) - the deporting country may just want to get rid of you, but the receiving USA will certainly check their records on you.

    -Just some quick thoughts.
    Do you have any proof that the IRS can put a "flag on your ID"? Is there even a mechanism?

  10. #10

    Join Date
    May 2020
    Posts
    227

    I think that would just be the worst case scenario. Im betting even if you owe millions of dollars to the US gov they won’t detain you unless there are political reasons involved

    spode likes this.

Closed Thread
Page 1 of 5 1 2 3 4 ... LastLast