Philippine bank requiring tax info

[Highmystic 234]

Hi all!  Just a question.

 

My  K1 wife of nearly 3 years got an email from one of her banks in the Philippines, and they said to comply with international laws,

she needs to submit a W-9 or a W-8BEN  form by the end of the month.  I assume it's a check for people in the US hiding money in foreign banks.

Her PH banks, one in PHP and one in Dollars.  She had these for a long time, long before we met.  Anyways, all of her income derived in US is from work, including payroll deductions, and a W-2.  We file jointly. 

 

Any ideas of what needs to be done?

 

Thanks people!

[Mike E 11,741]

She needs to submit the required docs.  
 

in addition if you you have colrlctingly more than $10,000 USD in foreign accounts you have to make an annual FBAR filing by April 15.  

[Chancy 6,243]

43 minutes ago, Highmystic said:

all of her income derived in US is from work, including payroll deductions, and a W-2.

 

If she has bank accounts in the Philippines, then not all of her income is from work.  Interest from bank accounts (including foreign accounts) is also considered as income that must be reported to IRS.  Hence the requirement for W-9 or W-8BEN.

 

[Highmystic 234]

1 hour ago, Chancy said:

 

If she has bank accounts in the Philippines, then not all of her income is from work.  Interest from bank accounts (including foreign accounts) is also considered as income that must be reported to IRS.  Hence the requirement for W-9 or W-8BEN.

 

Interest is very small.  But why does she need to submit a W-9 to her PH bank and not the IRS?  Normally a W-9 is issued FROM an Employer to someone who did work for them.  Since she did not work for the bank in the PH, I wonder why she has to submit a W-9 to the bank in PH.. I understand adding interest in our 1040. 

[Chancy 6,243]

20 minutes ago, Highmystic said:

Interest is very small.  But why does she need to submit a W-9 to her PH bank and not the IRS?  Normally a W-9 is issued FROM an Employer to someone who did work for them.  Since she did not work for the bank in the PH, I wonder why she has to submit a W-9 to the bank in PH.. I understand adding interest in our 1040. 

 

The bank requires W-9 or W-8BEN for FATCA reporting.  You did not mention your wife's bank, but this FAQ page from BPI may help to explain what banks need from account holders to comply with FATCA -- https://www.bpiexpressonline.com/p/1/1356/fatca-compliance

 

More details from the IRS on when W-9 should be used -- https://www.irs.gov/instructions/iw9

 

"Use Form W-9 to request the taxpayer identification number (TIN) of a U.S. person (including a resident alien) and to request certain certifications and claims for exemption.  [...]

A participating foreign financial institution (PFFI) should request Form W-9 from an account holder that is a U.S. person."

 

[Adventine 3,201]

@Highmystic If you don't mind, please update us after you send the W-9 to BPI, especially if they ask for additional documents or raise other issues. It would help others (like me) plan ahead, because I plan to retain my PH bank accounts even after relocating to the States. I already understand that I need to include my interest and investment income in my future US tax filings, but it helps to learn about others' PH-specific experiences.

[Highmystic 234]

1 hour ago, Adventine said:

@Highmystic If you don't mind, please update us after you send the W-9 to BPI, especially if they ask for additional documents or raise other issues. It would help others (like me) plan ahead, because I plan to retain my PH bank accounts even after relocating to the States. I already understand that I need to include my interest and investment income in my future US tax filings, but it helps to learn about others' PH-specific experiences.

Hi,  I'll keep that in mind.  I think her bank is HSBC,  or something like that.  I don't concern myself with her info in the PH if I don't need to.  We also found out about having to file a notice with taxes if she has any accumulated amounts of $10,000 USD in the PH.'s   It's all have to do with things like money laundering or hiding money to avoid taxes on it, but her money has been sitting there for years as savings.

[seekingthetruth 1,248]

1 hour ago, Adventine said:

@Highmystic If you don't mind, please update us after you send the W-9 to BPI, especially if they ask for additional documents or raise other issues. It would help others (like me) plan ahead, because I plan to retain my PH bank accounts even after relocating to the States. I already understand that I need to include my interest and investment income in my future US tax filings, but it helps to learn about others' PH-specific experiences.

We are still in the Philippines.  We file U.S. taxes together but our BPI accounts are separate.  My wife has an ITIN but BPI would not know anything about it and has never asked her to fill out a W9.

 

However, I include the interest on both of our BPI accounts on our U.S. tax return.  I also report the tax BPI deducts as foreign tax.

 

It is a piddling amount because interest rates are so low.  A few years ago we had over $100 in interest at BPI.  This year I have $22.40 and $3.67 PH tax deducted.  So I looked into it, and IRS says you have to report all interest, even if you don't get a 1099-INT and even if it is a small amount.  I thought maybe there was a rule that said under XXX amount does not have to be reported, but no, there is not.

 

I like to be honest on my taxes so I will my tax on the $22!  🙂 

Edited January 27, 2021 by seekingthetruth
Typo

[Chancy 6,243]

1 hour ago, Adventine said:

It would help others (like me) plan ahead, because I plan to retain my PH bank accounts even after relocating to the States. I already understand that I need to include my interest and investment income in my future US tax filings, but it helps to learn about others' PH-specific experiences.

 

Same -- I plan to retain at least 1 PH bank account after I move.  Other things you might want to look into if they apply to you would be FBAR and PH-based funds.  I really should have divested from my PH funds back in Jan 2020 but I didn't consider the impact of COVID seriously enough back then.  Sigh.

 

[seekingthetruth 1,248]

2 minutes ago, Chancy said:

Same -- I plan to retain at least 1 PH bank account after I move. 

My wife and I were just discussing this a few minutes ago and don't think we need to keep a PH bank account.  Why will you keep it?  If we need to give someone money, we will just use a money transfer service.

 

In PH or the U.S., you always have to be careful about inactive accounts.  Many banks in both places will ding you with service charges if you don't have activity for X months.

[Adventine 3,201]

21 minutes ago, Chancy said:

 

Same -- I plan to retain at least 1 PH bank account after I move.  Other things you might want to look into if they apply to you would be FBAR and PH-based funds.  I really should have divested from my PH funds back in Jan 2020 but I didn't consider the impact of COVID seriously enough back then.  Sigh.

 

Yes, FBAR and US taxation on my PH domiciled funds will apply to me.

 

Right now, it seems much more favorable to redeem my PH stocks and bonds, convert to USD, transfer the USD to a US bank account, then invest in US-domiciled funds. But that requires careful timing on several levels: 1) divesting my PH investments at favorable values, 2) a good exchange rate and 3) timing of my visa and flight. If one of the three do not work out, I would rather keep my PH stocks and bonds where they are, and just get a good tax advisor / CPA firm to help with filing US taxes.

 

17 minutes ago, seekingthetruth said:

My wife and I were just discussing this a few minutes ago and don't think we need to keep a PH bank account.  Why will you keep it?  If we need to give someone money, we will just use a money transfer service.

 

In PH or the U.S., you always have to be careful about inactive accounts.  Many banks in both places will ding you with service charges if you don't have activity for X months.

 

Because I'm fond of my PH accounts, lovingly tended and carefully managed

 

But on a serious note, right now it's more convenient to retain them as they are. At the rate my K1 process is going, I have more than a year to make a final decision.

[Chancy 6,243]

46 minutes ago, Highmystic said:

We also found out about having to file a notice with taxes if she has any accumulated amounts of $10,000 USD in the PH.'s   It's all have to do with things like money laundering or hiding money to avoid taxes on it, but her money has been sitting there for years as savings.

 

That would be FBAR.  It's actually a requirement of the US Treasury, not IRS.  Filing is now done online, not with the tax return -- https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

 

[Chancy 6,243]

52 minutes ago, seekingthetruth said:

We file U.S. taxes together but our BPI accounts are separate.  My wife has an ITIN but BPI would not know anything about it and has never asked her to fill out a W9.

 

BPI actually has a requirement to disclose US tax resident status as part of an account holder's information update every 2 years.  Obviously, they're not very good at enforcing this requirement.  But if your wife ever needs to update her BPI signature cards, she will be asked to fill out that US tax resident declaration form.  I've had to fill out that form at BPI (and BDO as well) sometime within the past 2 years.

 

49 minutes ago, seekingthetruth said:

My wife and I were just discussing this a few minutes ago and don't think we need to keep a PH bank account.  Why will you keep it?  If we need to give someone money, we will just use a money transfer service.

 

Because there are household bills that I will continue paying even after I move.  And I've given up on my family here remembering to always pay bills on time despite the money being available.  BPI's online banking makes this very convenient for me, so there's not much incentive for me to stop using their services.

 

[seekingthetruth 1,248]

4 minutes ago, Chancy said:

BPI actually has a requirement to disclose US tax resident status as part of an account holder's information update every 2 years.  Obviously, they're not very good at enforcing this requirement.  But if your wife ever needs to update her BPI signature cards, she will be asked to fill out that US tax resident declaration form.  I've had to fill out that form at BPI (and BDO as well) sometime within the past 2 years.

I don't think we will bother to make any changes unless our plans change, and we need to keep an account.......

5 minutes ago, Chancy said:

 

BPI actually has a requirement to disclose US tax resident status as part of an account holder's information update every 2 years.  Obviously, they're not very good at enforcing this requirement.  But if your wife ever needs to update her BPI signature cards, she will be asked to fill out that US tax resident declaration form.  I've had to fill out that form at BPI (and BDO as well) sometime within the past 2 years.

 

 

Because there are household bills that I will continue paying even after I move.  And I've given up on my family here remembering to always pay bills on time despite the money being available.  BPI's online banking makes this very convenient for me, so there's not much incentive for me to stop using their services.

 

And one change in plans is if we can't sell our house, and have to rent it.  In that case, I would keep a BPI account.

[seekingthetruth 1,248]

32 minutes ago, Chancy said:

 

That would be FBAR.  It's actually a requirement of the US Treasury, not IRS.  Filing is now done online, not with the tax return -- https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

 

Unfortunately, due to Covid and the difficulty of going to the bank with the kids, we let my kids BPI accounts go over 10k, and I had to file 2020 FBAR for them, as well as me.