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Seriously WTF is wrong with FBAR & FATCA

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  1. #41

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    My accountant has quoted US$1,250-$1,500 to prepare and file Form 3520 re receipt of a gift from a non US person. The form looks quite straightforward so I’m not sure why the fee is so high for one form. Have any of you filed this form yourself?


  2. #42

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    Quote Originally Posted by PWY yan:
    My accountant has quoted US$1,250-$1,500 to prepare and file Form 3520 re receipt of a gift from a non US person. The form looks quite straightforward so I’m not sure why the fee is so high for one form. Have any of you filed this form yourself?
    Are you positive that you need to file 3520? Is it late? I would be very careful with 3520 form because I have heard too many stories of the IRS handing out penalties related to 3520/A like confettis starting with 10k. I have also heard of cases where they penalize ppl for hundred of thousand dollars even in the millions depending on the case.

    BTW how do people report MPF? Do you report employer contribution as other income on form 2555? If so what do you write it as? Pension? Mandatory provident fund (pretty hesitant on this because I’m afraid when the IRS sees the name “Fund” they will automatically treat it as a PFIC)? Or Employer’s contribution to non-qualified plan? What about gains and losses each year? I went to two CPAs and they both told me report them only when I take out the MPF which makes sense because I can’t take MPF out unless I’m retiring or leave HK permanently. But then I see some people on this forum says KPMG reports gains and losses every year... which one is correct?

  3. #43

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    Thanks for your advice. It is not late but I Will have my accountant handle it. He tells me I need to file it.
    not sure about MPF I will take a look


  4. #44

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    Quote Originally Posted by PWY yan:
    Thanks for your advice. It is not late but I Will have my accountant handle it. He tells me I need to file it.
    not sure about MPF I will take a look
    Yeah don't quote me on this but as i rmb if the gift is worth more than 100,000 USD from a foreign person or if its more than 16,000 USD from a corporation you need to file 3520. Better to have an accountant to do it for you just to be safe, but I agree 1500 seems a bit excessive. Have you gotten any better quotations from another CPA? Perhaps the CPAs from the States are cheaper

  5. #45

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    Quote Originally Posted by Taxmyass:
    BTW how do people report MPF? Do you report employer contribution as other income on form 2555? If so what do you write it as? Pension? Mandatory provident fund (pretty hesitant on this because I’m afraid when the IRS sees the name “Fund” they will automatically treat it as a PFIC)? Or Employer’s contribution to non-qualified plan? What about gains and losses each year? I went to two CPAs and they both told me report them only when I take out the MPF which makes sense because I can’t take MPF out unless I’m retiring or leave HK permanently. But then I see some people on this forum says KPMG reports gains and losses every year... which one is correct?
    As I've said before, generally when I ask two different people about how to correctly report MPF contributions and/or gains and losses I get two different answers. If a CPA you're willing to pay is willing to stand by a return they prepare for you in case you get audited, that might be enough assurance for you.

    I put the highest balance on my MPF on the FBAR FinCEN 114 form each year (submitted electronically to the Treasury Department at https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

    I report my employee and employer contributions as income within form 2555 and such, and I might be doing the wrong thing in relation to unrealized gains and losses, so I'd say trust a CPA that will sign to protect you against an audit over anything anyone else tells you. I'm personally not willing to pay a CPA. I just use TurboTax and try my best.

    Good luck trying to figure out the correct way to do everything related to the US' convuluted tax system.

  6. #46

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    Quote Originally Posted by loganhair:
    As I've said before, generally when I ask two different people about how to correctly report MPF contributions and/or gains and losses I get two different answers. If a CPA you're willing to pay is willing to stand by a return they prepare for you in case you get audited, that might be enough assurance for you.

    I put the highest balance on my MPF on the FBAR FinCEN 114 form each year (submitted electronically to the Treasury Department at https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

    I report my employee and employer contributions as income within form 2555 and such, and I might be doing the wrong thing in relation to unrealized gains and losses, so I'd say trust a CPA that will sign to protect you against an audit over anything anyone else tells you. I'm personally not willing to pay a CPA. I just use TurboTax and try my best.

    Good luck trying to figure out the correct way to do everything related to the US' convuluted tax system.
    Hi Longhair! Thanks for the reply. I just wanted to ask you more on the MPF as I have decided to file my own taxes. I know anything anyone says here doesn't protect me if the IRS decided to audit me, but I figure even with a CPA signing over it doesn't mean I am invincible since I have to counter sign at the end (Plus they are hella expensive 25,000HKD!! for amending my return and FBAR!) So my question is when you report your employee and employer contributions as income on 2555, does that mean the employer contribution portion is also included in the FEIE and don't need to pay taxes on? As for the gains and losses what is your approach?

  7. #47

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    My name is Logan, but anyway I'll send you a private message, and I'll answer further US tax strategy questions that way, but again I'm no expert or a CPA. I'm just a US Citizen that has struggled his way through his own expat taxes for a few years.


  8. #48

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    The US tax forms are ridiculously complicated. I tried to check how MPF was dealt with in my 2018 return but I read have no idea.

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  9. #49

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    Mmmm I was just reading the FATCA bilateral agreement between the U.S. and HK. In Annex II it says

    II. Funds that Qualify as Exempt Beneficial Owners. The following Entities shall be treated as Non-Reporting HKSAR Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code.

    3.
    Participation by employers, employees, and self-employed persons is mandatoryunder the laws of the HKSAR and, in the case of employees, they must first beenrolled in a pension or retirement scheme by employers, or the pension scheme isestablished voluntarily by an HKSAR employer and is approved and registered bythe Mandatory Provident Fund Schemes Authority (MPFA); and
    4.
    a) The fund is generally exempt from tax in the HKSAR on investment incomeunder the laws of the HKSAR due to its status as a retirement or pension plan;
    b) The fund receives at least 50 percent of its total contributions (other than transfersof assets from other plans described in paragraphs A through E of this section orfrom retirement and pension accounts described in subparagraph A(1) of sectionV of this Annex II) from the participating/sponsoring employers;

    c) Distributions or withdrawals from the fund are allowed only upon the occurrenceof specified events related to retirement, disability, or death (except rolloverdistributions to other retirement funds described in paragraphs A through E ofthis section or retirement and pension accounts described in subparagraph A(1) ofsection V of this Annex II), or penalties apply to distributions or withdrawalsmade before such specified events; or

    d) Contributions (other than certain permitted make-up contributions) by employeesor self-employed persons to the fund are limited by reference to earned income ofthe employees or self-employed persons or may not exceed $50,000 annually,applying the rules set forth in Annex I for account aggregation and currencytranslation.

    So does that mean MPF account is not reported to the IRS?


  10. #50

    I found this document online but can’t confirm it’s source, that MPF if exempt from FATCA reporting.

    https://www.fstb.gov.hk/fsb/info/doc/fatca-faq_e.pdf

    Taxmyass likes this.

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