taxes/UK pensions

[Crissie 0]

evening all,

It's my understanding that if you have foreign assets back in the UK over $10,000 you have to report them to the IRS or face a hefty fine. I have an old pension in the UK slightly over this amount (which I'd desperately like to get rid of, it's more hassle than anything!). I have no problem reporting this, but does anyone know if it can impact your tax liability in the US? I didn't withdraw any money from it last year nor am I able to given my age. I'm consulting a tax expert on this, but I was wondering if anyone here had first hand experience.

Honestly, if anyone knows how to make this pension go away I'd really appreciate it. Given that I never plan to live in the UK again, I have no intention of ever collecting it. I'd happily donate it to charity or transfer it to a relative in the UK if that's possible.

[Nich-Nick 3,354]

I have a little experience as we file two forms each year.

Search the IRS website for FBAR which is a report of foreign bank accounts with combined balances over $10k. It is not part of the tax return and is mailed separately to the US Treasury by June 30(?). No tax. A report. What bank? How much?

Then search FATCA. It is part of the tax return and has a fine. It is a report. No tax. It is for assets exceeding $100,000. Pensions are listed as reportable on FATCA. Your pension doesn't exceed $100k. If you have other foreign assets then read the details.

Those are figures for married couples. Threshold is half for single filers I believe. Forgot so look it up if you get single.

When you start collecting your pension monthly, it is taxable on the same terms as receiving a US pension. It is income for the year.

[lost_at_sea 995]

Oh. This is useful. I've been wondering whether I need to report my UK bank accounts (totalling more than $10k but much less than 100 ). Sounds like I just need to submit the FBAR around the time we also do our tax return.

But if I'm reading you right, pensions aren't FBAR (not that I have a clue what's in mine, but certainly not $100k! I wish.)... So that's good to know.

Gosh. Seems so much more complicated here.

Thanks, Nich-Nick.

[Nich-Nick 3,354]

No, pensions are not mentioned in FBAR.

FATCA is newish and a pain in the #######. First year required was tax year 2011 with very little explanation of details. And there was much debate and speculation by the "experts". I always go to the source for Info so rang up IRS- Tax Law Dept. The answer I got from a man who sounded older and experienced was "we are not equipped to answer questions on form 8938. The IRS suggests you see a tax accountant." I said, " what do you mean you can't help? You wrote the tax law. You HAVE to help". Then he laughed and said that was exactly what he told his boss when the boss said that was the robot answer they were supposed to use. Then we had a very long conversation...maybe 30+ minutes.

So that first year, TurboTax had a problem e-Filing a return with that form with certain field entries. I even spoke to high level tech support there. In the end, I just skipped FATCA hoping the IRS would give clearer direction by 2012. Not really but TurboTax, had worked out their coding errors so I filed the form that year. I haven't looked at 2013 yet. The form was not available. I have been waiting on it. Got an email Thursday.

Dear TurboTax Customer,

We just wanted to let you know your tax forms are ready. Below we have listed all the forms you asked us to e-mail you about -- forms you may have worked on since then won't be listed. You can return to TurboTax to finish your taxes anytime.

These forms are now ready.

Form 8938

[Crissie 0]

Apparently there's a $100,000 fine if you don't disclose your accounts now

[Kiwinyc 62]

No, pensions are not mentioned in FBAR.

FATCA is newish and a pain in the #######. First year required was tax year 2011 with very little explanation of details. And there was much debate and speculation by the "experts". I always go to the source for Info so rang up IRS- Tax Law Dept. The answer I got from a man who sounded older and experienced was "we are not equipped to answer questions on form 8938. The IRS suggests you see a tax accountant." I said, " what do you mean you can't help? You wrote the tax law. You HAVE to help". Then he laughed and said that was exactly what he told his boss when the boss said that was the robot answer they were supposed to use. Then we had a very long conversation...maybe 30+ minutes.

So that first year, TurboTax had a problem e-Filing a return with that form with certain field entries. I even spoke to high level tech support there. In the end, I just skipped FATCA hoping the IRS would give clearer direction by 2012. Not really but TurboTax, had worked out their coding errors so I filed the form that year. I haven't looked at 2013 yet. The form was not available. I have been waiting on it. Got an email Thursday.

Alrighty I apologise if my queries are addressed elsewhere in the forums, but the only other detailed information I can find is from 2010.

I entered as a K1 last Oct, 2013, married in Nov 2013, and am currently waiting for AOS (NOA1 was received 31 Dec)

- Does my US husband file separately or jointly for the 2013 tax year - or does he have the option of either, choosing whichever has the better outcome? I had no UK income aside from Child Support from my ex-husband for the entire tax year.

- Do I have to file FBAR and / or FATCA - I have pensions in two other countries that probably total over $10k each but i don't know the actual current values AND i have bank accounts in the UK and NZ with significantly more than $100k containing the funds of my UK house sale and inheritance which I will be transferring over to the US in the next couple of months to buy a house here (after they've finished building it!)

- When am I considered a Permanent Resident, or a Resident for Tax purposes - is it from when I entered the US on Oct on the K1 or is it from the date I'm approved for Permanent Residence?

- Do I have to declare myself as a Resident for Tax purposes at all while I remain in this 'waiting for AOS' limbo state?

- I do have a SS number, in my maiden name from previous years working in the U.S. on a couple of H1 visa's

I guess I'm just trying to understand that if we choose NOT to be included in my husbands return, the IRS will not know about me and can I just do nothing and not bother with any reporting for the 2013 tax year, as my status in the country from Oct-Dec 31 was entirely as a K1 and I was ineligible to do anything - work, get a drivers license, etc. and was not earning any taxable income from any sources.

The IRS site states: 'Taxpayers who do not have to file an income tax return for the tax year do not have to file Form 8938, regardless of the value of their specified foreign financial asset'

Do I have to file a return for 2013? If I'm included in my husbands return and file jointly with him, does this mean I automatically have to complete and submit FBAR / FATCA as well?

Or, can I ignore filing these things until next year and actually have completed a full year of living here and have Permanent Residence status (which I assume will happen sometime this year)

Thanks for your thoughts, knowledge or experience on this.

Edited March 8, 2014 by Kiwinyc