More than 10,000 in foreign bank accounts

[US2UK 33]

Hi all,

 

I moved from the UK to the US in March this year with the K1 visa (filed for AOS in may but still waiting on EAD, travel and green card).

 

I have read that US citizens are required to declare foreign bank accounts totalling over 10,000. I have a few questions:

- does this apply to me for the financial year 2020

- if it applies, does it include my pension account in the UK? 

- to avoid having to declare each year, I would rather just move my monies to the US (I have UK ISA, and regular saving accounts). If I do this by dec 31 2020, will I be able to avoid having to declaring bank accounts for the financial year 2021

 

Thanks!

 

 

[Veronikac 15]

Based on my knowledge, you need to always disclose that you have a foreign bank account if you are a US resident for tax purposes (also any foreign income or bank interest). You need to fill 1040, schedule B that you have a foreign account. The $10,000 limit is connected to the FinCEN form 114. If you had any point of the year (even only one day) at your account $10,000 or more, you need to fill this form. This mean that moving your money before the end of 2020 (if the money will be gone from your account before the end of the year) should mean that you do not need to fill the FinCEN 114 form. Also keep in mind that if you have more accounts in UK, you need to sum all of them together to determine if you reached the $10,000 limit (one account $4,000 and second account $6,000 = you still need to fill the FinCEN form).

Hope that this will help. I think that it will be good to verify this information with some professional. 

[Veronikac 15]

I think that you should read this to determine firs if you are resident or nonresident alien :https://www.irs.gov/individuals/international-taxpayers/determining-alien-tax-status

[HRQX 4,145]

2 hours ago, US2UK said:

- does this apply to me for the financial year 2020

Yes, because you are a resident alien for tax purposes (see above link) since you meet the substantial presence test. You entered the US on March 15 which means at the end of 2020 it would be 291 days. So, 291 days current year + 1/3 * 0 days first year before the current year + 1/6 * 0 days second year before the current year = 291. 291 is greater than 183, so you meet the substantial presence test. https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Edited December 3, 2020 by HRQX

[US2UK 33]

2 hours ago, Veronikac said:

Based on my knowledge, you need to always disclose that you have a foreign bank account if you are a US resident for tax purposes (also any foreign income or bank interest). You need to fill 1040, schedule B that you have a foreign account. The $10,000 limit is connected to the FinCEN form 114. If you had any point of the year (even only one day) at your account $10,000 or more, you need to fill this form. This mean that moving your money before the end of 2020 (if the money will be gone from your account before the end of the year) should mean that you do not need to fill the FinCEN 114 form. Also keep in mind that if you have more accounts in UK, you need to sum all of them together to determine if you reached the $10,000 limit (one account $4,000 and second account $6,000 = you still need to fill the FinCEN form).

Hope that this will help. I think that it will be good to verify this information with some professional. 

 

2 hours ago, Veronikac said:

I think that you should read this to determine firs if you are resident or nonresident alien :https://www.irs.gov/individuals/international-taxpayers/determining-alien-tax-status

 

57 minutes ago, HRQX said:

Yes, because you are a resident alien for tax purposes (see above link) since you meet the substantial presence test. You entered the US on March 15 which means at the end of 2020 it would be 291 days. So, 291 days current year + 1/3 * 0 days first year before the current year + 1/6 * 0 days second year before the current year = 291. 291 is greater than 183, so you meet the substantial presence test. https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

thanks all. This is very helpful info and looks like I will have to declare

 

Do you know if this a do it yourself form, or if I need to hire an accountant? I was quoted $2k just to report the bank accounts which seems excessive. Especially as it seems I’ll need to do this for life even if I move everything except my U.K. pension. 
 

furthermore, I won’t be taxed on this will I? I mean of course interest will be taxable, but the US gov’t won’t want to tax the entire amount as if it’s brand new money? 

[Veronikac 15]

I do not have a personal experience with the FinCEN form since I never had $10,000 on my foreign account. But I remember that one of my colleague was filling that form by himself without professional help. Maybe you can find some information online and some tax places are also offering free answers and consultations. 

Sorry but I have no idea how the taxes work regarding the UK pension. 

I also agree that you will need to report your account on 2020 tax return but I am not sure how it will be with 2021 tax return if you will move the money from your UK account before the end of this year.

[Wuozopo 4,293]

On 12/3/2020 at 11:37 AM, US2UK said:

Hi all,

 

I moved from the UK to the US in March this year with the K1 visa (filed for AOS in may but still waiting on EAD, travel and green card).

 

I have read that US citizens are required to declare foreign bank accounts totalling over 10,000. I have a few questions:

- does this apply to me for the financial year 2020

- if it applies, does it include my pension account in the UK? 

- to avoid having to declare each year, I would rather just move my monies to the US (I have UK ISA, and regular saving accounts). If I do this by dec 31 2020, will I be able to avoid having to declaring bank accounts for the financial year 2021

 

Thanks!

 

 

 Yes you file FBAR  this year. Moving your money before the end of the year doesn’t help because yo had a foreign bank account during 2020. It would only help for 2021. Yes to pension too. It’s done online and isn’t that hard once you wade through it one time. I save a copy to remember what I did the year before. 
On your tax return you only report any interest or dividends paid to you from those accounts during the year as taxable income. The FBAR is not a tax issue, it’s just a report and separate from tax filing. Name of bank, address, acct number, highest balance during the year is about all it asks. 

[Wuozopo 4,293]

On 12/3/2020 at 2:58 PM, US2UK said:

Do you know if this a do it yourself form, or if I need to hire an accountant?

Do it yourself.