FBAR on foreign pensions

[QueenOfBlades 224]

Do you have to file FBAR on foreign pensions? I've read numerous things on the net about it and there are so many answers that make more questions than answer my questions.

I have a pension in the UK that I've been paying into since 2008 so it won't be worth a huge amount but still, a decent sum. It has always been done directly through my employer and I will be freezing it when I leave the UK.

Will I have to report this through FBAR?

[Nich-Nick 3,354]

Do you have to file FBAR on foreign pensions? I've read numerous things on the net about it and there are so many answers that make more questions than answer my questions.

I have a pension in the UK that I've been paying into since 2008 so it won't be worth a huge amount but still, a decent sum. It has always been done directly through my employer and I will be freezing it when I leave the UK.

Will I have to report this through FBAR?

FBAR is for foreign accounts where you have more than $10,000 at anytime during the year. We have done FBAR every year to report a UK bank account.

The IRS says-- http://www.irs.gov/pub/irs-pdf/f90221.pdf

Financial Account. A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).

I don't read pension in that list and we don't report the pension on FBAR. Other's may interpret it differently because it's vague.

FATCA is the newer (additional) thing to file. It has a $100,000 threshold (for married tax filers). It does specifically mention foreign pensions. Tax accountants even debate it and give different answers. I called the IRS last year (for 2011 tax filing) and got bumped up to a specialist in the Tax Law department. He could not answer my question.

But if you don't have $10k or $100k during the tax year, you do neither form.

[QueenOfBlades 224]

FBAR is for foreign accounts where you have more than $10,000 at anytime during the year. We have done FBAR every year to report a UK bank account.

The IRS says-- http://www.irs.gov/pub/irs-pdf/f90221.pdf

Financial Account. A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).

I don't read pension in that list and we don't report the pension on FBAR. Other's may interpret it differently because it's vague.

FATCA is the newer (additional) thing to file. It has a $100,000 threshold (for married tax filers). It does specifically mention foreign pensions. Tax accountants even debate it and give different answers. I called the IRS last year (for 2011 tax filing) and got bumped up to a specialist in the Tax Law department. He could not answer my question.

But if you don't have $10k or $100k during the tax year, you do neither form.

It's so confusing. My fiance's family knows someone who is an official tax person who does their taxes for them so we'll definitely enquire with her, it's just so worrying as apparently it can even lead to criminal penalties if you do it wrong. I'm not sure if it will be over $10,000 but it is highly possible.

Yes I'd read that some people say they've even reported UK bank accounts with nothing in them just to be on the safe side. Someone mentioned FBAR in the other topic and when I looked it up on the IRS website, it says this under "exceptions to the filing requirement" -

"Participants in and beneficiaries of tax-qualified retirement plans;"

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-%28FBAR%29

So, given that I'll be paying US tax on my pension when I hit retirement age (which will be ages away, 42 years, not sure if that matters), does that mean I am exempt from filing both given that with that FATCA thing, me and my fiance jointly won't have more than $100,000 in it?

US tax law is so complicated, in the UK they just work it out through my employer and I never even look at it..... O.O *Head ache*

Also - a stupid question perhaps - I can't even file any of this, FBAR, FATCA or tax returns until I am legal permanent resident anyway, yes?

Edited June 30, 2013 by QueenOfBlades

[Nich-Nick 3,354]

Nobody agrees on it, even the "experts", so I can't advise. I personally don't fear the IRS because they are looking for the fatcats that hide millions in offshore accounts to avoid taxation. I don't worry that they are going to look at my husbands piddly pension fund and throw him in jail.

Beware all tax accountants don't know that much about it. When I was trying to learn, I happened to be serving on jury duty with a tax accountant and had an opportunity to chat during court breaks. She had never even heard of it.

My problem is we can not get a dollar amount of the pension value. It's not sitting in a separate pot with his name on it. Maybe yours is. Then it's easy...over the threshold, report it. They aren't taxing the pension money sitting in the UK. They just don't want you hiding it from them. It's a report so it doesn't change things to list a dollar amount on FBAR for a pension. I choose to report only the account at the Co-op Bank which I can easily get the balance for.

For FATCA, if you can't find out the dollar amount, it says to report it as zero. Kinda weird. I'm pretty certain the valued when paid out could be well over the threshold because it's over 30 years worth of contribution. So I filled out FATCA, named two pension funds, as well as state pension and use zero as the amount. Now they know we are not hiding the existence of a pension. I don't care if they know that. Some people don't want to tell their business so wrestle with how they can get around reporting. I doubt you put away $100,000 in five years, so FATCA is probably a non-issue for you.

Your taxes.

1) If you are married by Dec 31, 2013-- you and your spouse can file a joint 2013 tax return, whether you have a greencard or not.

2) If you haven't worked in the US during 2013, you do not have to file, but your husband (if married in 2013) has to file as Married Filing Separately.

#1 is almost always the best choice for paying less tax. Some people have reasons why they think #2 is better for their specific income or personal situation. Either way is correct.

[QueenOfBlades 224]

Nobody agrees on it, even the "experts", so I can't advise. I personally don't fear the IRS because they are looking for the fatcats that hide millions in offshore accounts to avoid taxation. I don't worry that they are going to look at my husbands piddly pension fund and throw him in jail.

Beware all tax accountants don't know that much about it. When I was trying to learn, I happened to be serving on jury duty with a tax accountant and had an opportunity to chat during court breaks. She had never even heard of it.

My problem is we can not get a dollar amount of the pension value. It's not sitting in a separate pot with his name on it. Maybe yours is. Then it's easy...over the threshold, report it. They aren't taxing the pension money sitting in the UK. They just don't want you hiding it from them. It's a report so it doesn't change things to list a dollar amount on FBAR for a pension. I choose to report only the account at the Co-op Bank which I can easily get the balance for.

For FATCA, if you can't find out the dollar amount, it says to report it as zero. Kinda weird. I'm pretty certain the valued when paid out could be well over the threshold because it's over 30 years worth of contribution. So I filled out FATCA, named two pension funds, as well as state pension and use zero as the amount. Now they know we are not hiding the existence of a pension. I don't care if they know that. Some people don't want to tell their business so wrestle with how they can get around reporting. I doubt you put away $100,000 in five years, so FATCA is probably a non-issue for you.

Your taxes.

1) If you are married by Dec 31, 2013-- you and your spouse can file a joint 2013 tax return, whether you have a greencard or not.

2) If you haven't worked in the US during 2013, you do not have to file, but your husband (if married in 2013) has to file as Married Filing Separately.

#1 is almost always the best choice for paying less tax. Some people have reasons why they think #2 is better for their specific income or personal situation. Either way is correct.

What a nightmare! We are looking at most likely marrying in Jan 2014. We'll be returning to the US hopefully end of November, marrying early Jan. So does that mean when next years tax returns come round, I'll be put on it jointly with him before my GC and send in the FBAR before June 30th just telling them I have a foreign bank account with nothing in it and a foreign pension? Do you have to file the FBAR every year with identical information? We had planned to do joint tax returns and joint everything anyway to help establish bona-fide marriage with ROC down the road. Not even sure if either of us will have a job or income at that point anyway.

If we haven't made any income for 2013 and have no need to file tax return, would you recommend me sending off FBAR anyway even though I won't have legal status in the US, or shall I just send it off in 2015?

Edited June 30, 2013 by QueenOfBlades

[Nich-Nick 3,354]

What a nightmare! We are looking at most likely marrying in Jan 2014. We'll be returning to the US hopefully end of November, marrying early Jan. So does that mean when next years tax returns come round, I'll be put on it jointly with him before my GC and send in the FBAR before June 30th just telling them I have a foreign bank account with nothing in it and a foreign pension? Do you have to file the FBAR every year with identical information? We had planned to do joint tax returns and joint everything anyway to help establish bona-fide marriage with ROC down the road. Not even sure if either of us will have a job or income at that point anyway.

If we haven't made any income for 2013 and have no need to file tax return, would you recommend me sending off FBAR anyway even though I won't have legal status in the US, or shall I just send it off in 2015?

It's not a nightmare.

2013 ends Dec 31. If you are not married to a USC by that day, then no tax return or inclusion on the 2013 tax return for you. The US goes by calendar year. Marry in January 2014, and your first filing is for 2014 tax year, due by April 15, 2015 and FBAR June 2015 only if you keep a UK bank account over $10,000.

If your fiancé was working in the US, then it would usually be a tax break to marry before the end of the year because he would get to have the additional exemptions of a second person deducting from his taxable income. Sounds like you are both unemployed so he doesn't have any income to be taxed on anyway. No advantage to reducing nothing. That's why I said every tax situation is different.

FBAR-- will you have over $10,000 in a UK bank account anytime during the year 2014?

If yes, report the highest balance.

If no, don't do FBAR

Why would anybody do FBAR if they had zero money in a foreign account for the entire year.

Your question "Do you have to file the FBAR every year with identical information?"

The info will change with your balances, so being identical would be unlikely

--First year, you might have $50,000 to report in a UK bank.

--Second year $22,000 was higested balance but you ended the year with $5000. Report $22,000.

--Third year you have $5,000 in the UK bank account. No FBAR. Below $10,000 for that whole calendar year.

If you had 3 bank accounts all below $10,000, but added together they were $10,100, you report all 3.

Three bank accounts that added together make $9,999, then no report.

Edited June 30, 2013 by Nich-Nick

[QueenOfBlades 224]

It's not a nightmare.

2013 ends Dec 31. If you are not married to a USC by that day, then no tax return or inclusion on the 2013 tax return for you. The US goes by calendar year. Marry in January 2014, and your first filing is for 2014 tax year, due by April 15, 2015 and FBAR June 2015 only if you keep a UK bank account over $10,000.

If your fiancé was working in the US, then it would usually be a tax break to marry before the end of the year because he would get to have the additional exemptions of a second person deducting from his taxable income. Sounds like you are both unemployed so he doesn't have any income to be taxed on anyway. No advantage to reducing nothing. That's why I said every tax situation is different.

FBAR-- will you have over $10,000 in a UK bank account anytime during the year 2014?

If yes, report the highest balance.

If no, don't do FBAR

Why would anybody do FBAR if they had zero money in a foreign account for the entire year.

Your question "Do you have to file the FBAR every year with identical information?"

The info will change with your balances, so being identical would be unlikely

--First year, you might have $50,000 to report in a UK bank.

--Second year $22,000 was higested balance but you ended the year with $5000. Report $22,000.

--Third year you have $5,000 in the UK bank account. No FBAR. Below $10,000 for that whole calendar year.

If you had 3 bank accounts all below $10,000, but added together they were $10,100, you report all 3.

Three bank accounts that added together make $9,999, then no report.

Alright, so I won't report my bank accounts with nothing in. For the FATCA which you mentioned you report 3 pensions on, that means, every year I should report that to the IRS so they are aware of it and put the dollar amount as 0, as I will never know the exact dollar amount of its worth - correct?

[Nich-Nick 3,354]

Alright, so I won't report my bank accounts with nothing in. For the FATCA which you mentioned you report 3 pensions on, that means, every year I should report that to the IRS so they are aware of it and put the dollar amount as 0, as I will never know the exact dollar amount of its worth - correct?

Every year the tax laws change so what is correct now could also change by next year. We learn new rules every year. Or you can pay somebody to do your taxes who studied the new rules. There is no way you have contributions of $100,000 so why are you worrying about FATCA? You contributed since 2008. He contributed since late 1970s. Big difference. I think you can take this off your worry list.

[QueenOfBlades 224]

Every year the tax laws change so what is correct now could also change by next year. We learn new rules every year. Or you can pay somebody to do your taxes who studied the new rules. There is no way you have contributions of $100,000 so why are you worrying about FATCA? You contributed since 2008. He contributed since late 1970s. Big difference. I think you can take this off your worry list.

Thanks Nick, some guy responded in the other topic and has confused me a bit again but I'm just gonna find out properly about my pension first, consult with a tax specialist in the US when the time comes and e-mail the IRS on their FBAR enquiries thing to double check, as from what you said I won't need to file anything until 2015 anyway.

[Nich-Nick 3,354]

Thanks Nick, some guy responded in the other topic and has confused me a bit again but I'm just gonna find out properly about my pension first, consult with a tax specialist in the US when the time comes and e-mail the IRS on their FBAR enquiries thing to double check, as from what you said I won't need to file anything until 2015 anyway.

I saw it. I thought he said pretty much what I said, but with bigger words.

[christeen 966]

Holy #######! We file the FBAR each year but do not file the FACTA (honestly this is the first heard about it) it does not come up in the turbo tax stuff (the FBAR does)... I guess I have to look into this one now as we have an account with more than 100k ! Darn it all!!!

[Merrytooth 5,748]

How to file FACTA if 2012 tax return had already been filed?

[Owen_London 65]

Holy #######! We file the FBAR each year but do not file the FACTA (honestly this is the first heard about it) it does not come up in the turbo tax stuff (the FBAR does)... I guess I have to look into this one now as we have an account with more than 100k ! Darn it all!!!

I don't have TurboTax, but are you sure it's not just listed as the 8938 form?

How to file FACTA if 2012 tax return had already been filed?

File a revision, I would assume?

Also, to both of you, beware - it's called FATCA, not FACTA.

[QueenOfBlades 224]

Another quick question - I'm sure I've seen it before in the past few days but I've browsed this topic and a quick google search and can't find it - If I did have a state pension, would I have to record that on FATCA or FBAR? And does anyone know if I did have a state pension, if I was married to a US citizen and I was entitled to/claimed a UK state pension, would he be entitled to anything if anything happened to me? Trying to sort it all out in my own head with what we wanna do, and trying to work out if it'll be worth continiung with voluntary NI contributions as we are both still young but I don't know if it'd be worth it if he'd get nothing if I passed.

Edited July 2, 2013 by QueenOfBlades

[Owen_London 65]

Another quick question - I'm sure I've seen it before in the past few days but I've browsed this topic and a quick google search and can't find it - If I did have a state pension, would I have to record that on FATCA or FBAR? And does anyone know if I did have a state pension, if I was married to a US citizen and I was entitled to/claimed a UK state pension, would he be entitled to anything if anything happened to me? Trying to sort it all out in my own head with what we wanna do, and trying to work out if it'll be worth continiung with voluntary NI contributions as we are both still young but I don't know if it'd be worth it if he'd get nothing if I passed.

I just spent half an hour investigating. It looks like as long as you're entitled to make Class 2 NI voluntary contributions, then you really should, as they are currently 2-70 UKP per week. You can make class 2 contributions if you paid NI for at least 3 years in the UK, and were either employed, self-employed or claiming unemployment benefit immediately before leaving.

The rules are changing, for instance possibly rising to require 35 years of NI contributions, up from 30 years, but it will probably still be worthwhile.

You are entitled to claim both UK and US state pensions, providing you qualify for both.

As for the tax reporting requirements for the FATCA and FBAR, you won't have to do that until you actually get paid the state pension. By then the rules will probably have completely changed anyway.