Filing taxes "Married Filing Jointly", how should I deal with my UK bank account?

[NorthernKeys 0]

My wife (US Citizen) and I (UK Citizen, AOS pending) are currently looking at filing taxes as "Married Filing Jointly" for the first time. One thing in particular that's confusing us is how we should deal with my bank account in the UK.

 

At the moment, judging by the current exchange rate, the value of my bank account is a tiny bit over $10,000. Does this mean I will have to file the FBAR form to go with it?

 

Also, I earned a very small amount of interest in my bank account over the last year (less than £20), but I received no other income throughout the entire year. Does this also have to be reported, and if so, what would be the best way of doing it?

 

I already have a social security number, and have been in the country since last January, so I'm fairly certain I cover the residence requirement.

 

We're using TurboTax to go through this process, if that helps.

 

Thanks in advance!  

[Crazy Cat 41,845]

Thankfully, I have an outstanding CPA who always handles our taxes and FBAR.

 

The FBAR is not filed with your tax return, and it is not filed with the IRS.

https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

 

"

Who Must File the FBAR?

A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. The full line item instructions are located at FBAR Line Item Instructions."

 

 

Edited February 21, 2021 by Lucky Cat

[Wuozopo 4,293]

16 minutes ago, NorthernKeys said:

t the moment, judging by the current exchange rate, the value of my bank account is a tiny bit over $10,000. Does this mean I will have to file the FBAR form to go with it?

YES, your file FBAR and report the highest balance during 2020, not the current balance. It is not part of the tax return, but Turbo will remind you to submit it. It is an online submission of a report...Bank name,address, account number, and highest balance. It is not taxable money. 

 

19 minutes ago, NorthernKeys said:

Also, I earned a very small amount of interest in my bank account over the last year (less than £20), but I received no other income throughout the entire year. Does this also have to be reported, and if so, what would be the best way of doing it?

Report the interest where you report US interest— Schedule B and then Form 1040 Line 2b for the total of all interest. It is taxable.

 

28 minutes ago, NorthernKeys said:

We're using TurboTax to go through this process, if that helps.

That’s our favorite. 

[NorthernKeys 0]

53 minutes ago, Wuozopo said:

Report the interest where you report US interest— Schedule B and then Form 1040 Line 2b for the total of all interest. It is taxable.

Thanks for the info!  

 

I'm probably missing something super obvious, but how can I access this on TurboTax?

 

After typing in "Schedule B" to the search box and following the directions it mentions, it brings us to this page:

 

 

Neither of us have received anything related to 1099-INT or tax statements from brokers. The other interest info points below are irrelevant to our situation too, I believe. 

 

With the interest earned resulting from and being deposited into my UK bank account, where should this be counted? I haven't earned any interest from US accounts, or any other income at all for that matter.

[seekingthetruth 1,246]

13 minutes ago, NorthernKeys said:

Thanks for the info!  

 

I'm probably missing something super obvious, but how can I access this on TurboTax?

 

After typing in "Schedule B" to the search box and following the directions it mentions, it brings us to this page:

 

 

Neither of us have received anything related to 1099-INT or tax statements from brokers. The other interest info points below are irrelevant to our situation too, I believe. 

 

With the interest earned resulting from and being deposited into my UK bank account, where should this be counted? I haven't earned any interest from US accounts, or any other income at all for that matter.

You still have to report all interest, even if you don't get a 1099.

The benefits of filing jointly far outweigh the minor interest you need to report.

[NorthernKeys 0]

35 minutes ago, seekingthetruth said:

You still have to report all interest, even if you don't get a 1099.

The benefits of filing jointly far outweigh the minor interest you need to report.

How do we do that if we haven't received any relevant forms? Should we just carry on from the point we reached above entering what information we can?

[seekingthetruth 1,246]

5 minutes ago, NorthernKeys said:

How do we do that if we haven't received any relevant forms? Should we just carry on from the point we reached above entering what information we can?

For U.S. broker's, they are required to give you tax statements.  Most are not mailed these days, so you might have to dig online for it.  I just got my taxable interest from Fidelity last week.  Not sure about British brokers. 

 

For the interest, I'm not familiar with Turbo Tax, but it looks like if you continue on from the screenshot you posted, there will be a place to put it in.  Here is a screenshot of my 2019 schedule B.  I don't get a 1099 for Bank of Philippines, but my CPA puts it in.  I have no idea what software he uses but I am sure Turbo Tax has a way.

 

[Wuozopo 4,293]

1 hour ago, NorthernKeys said:

I'm probably missing something super obvious, but how can I access this on TurboTax?

 

After typing in "Schedule B" to the search box and following the directions it mentions, it brings us to this page:

Did you receive any interest income? Yes

You carry on and tell how much and from whom whether you have a statement like a 1099 INT or not. That’s an American form. You aren’t required to submit your proof of interest. Just claim it.

 

I have self employment income from a US business that just can’t get it together to issue a me a 1099 wage statement. I enter what he paid me based on my records and carry on claiming the income and paying taxes on it.

 

Where do you presently live? If you have no US income and still live abroad, why are you filing a joint return? If either of you have UK income, you must report it on the US return.

Edited February 22, 2021 by Wuozopo

[NorthernKeys 0]

15 minutes ago, Wuozopo said:

You carry on and tell how much and from whom whether you have a statement like a 1099 INT or not. That’s an American form. You aren’t required to submit your proof of interest. Just claim it.

That's good to know. We were thinking we'd need a proper form in order to do this. I'm used to everything else requiring proof or evidence, so that makes it easier that this seems to not require that. Thanks!

 

17 minutes ago, Wuozopo said:

Where do you presently live? If you have no US income and still live abroad, why are you filing a joint return? If either of you have UK income, you must report it on the US return.

I'm currently living in the US and have been doing since last January. Other than that little amount of interest in my UK account, I haven't had any income in either country. Since I've been here that long, have a social security number, and we're married, we're assuming it's ok for us to file jointly.

[Wuozopo 4,293]

23 minutes ago, NorthernKeys said:

That's good to know. We were thinking we'd need a proper form in order to do this. I'm used to everything else requiring proof or evidence, so that makes it easier that this seems to not require that. Thanks!

 

I'm currently living in the US and have been doing since last January. Other than that little amount of interest in my UK account, I haven't had any income in either country. Since I've been here that long, have a social security number, and we're married, we're assuming it's ok for us to file jointly.

A lot of IRS can be more of an honor system. Like reporting your interest. They don’t know about it because your bank isn’t reporting to the IRS.  American banks tell the IRS what they paid you and give you the same info on a 1099-INT. If you didn’t report that, the IRS computer would flag you.

 

Yes, certainly you may file together. Your share of the standard deduction will reduce her taxable income. You should be able to pick up the stimulus payments for 2020. You spouse may have gotten hers early. 
 

Another note: I do the FBAR every year but forget it in between, I believe somewhere in that online filing it will ask if the account(s) you are reporting paid you any interest. If so, did you report it on your tax return? And you did and can say Yes.  

[seekingthetruth 1,246]

On 2/22/2021 at 11:43 AM, Wuozopo said:

A lot of IRS can be more of an honor system. Like reporting your interest. They don’t know about it because your bank isn’t reporting to the IRS.  American banks tell the IRS what they paid you and give you the same info on a 1099-INT. If you didn’t report that, the IRS computer would flag you.

I think a lot more foreign banks have bowed down to the IRS and are reporting interest paid to Americans back to the IRS.  When FATCA was introduced, the U.S. threatened countries with penalties if they did not comply with the new rules.

 

Here is the Philippines, I bank at BPI and they made me fill out a W?? (forget the number).  I don't get a 1099 but I report the interest.  I assume they report back to the IRS through automated means.

[Wuozopo 4,293]

43 minutes ago, seekingthetruth said:

I think a lot more foreign banks have bowed down to the IRS and are reporting interest paid to Americans back to the IRS.  When FATCA was introduced, the U.S. threatened countries with penalties if they did not comply with the new rules.

 

Here is the Philippines, I bank at BPI and they made me fill out a W?? (forget the number).  I don't get a 1099 but I report the interest.  I assume they report back to the IRS through automated means.

 
Yes, I agree that following FATCA there has been increasing compliance with foreign banks. However I’m sure there’s a lot of people who perhaps don’t disclose to their bank that they live in the US. They bank online and let the interest roll back into their account.

 

 

Edited February 23, 2021 by Wuozopo

[Wuozopo 4,293]

@seekingthetruth

 

Forgot to add—

The first year of FATCA when the whole thing was rather vague, my wife bumped up the IRS hierarchy until she got a older experience guy in the Tax Law department. They had a 30+ minute off the record type conversation. He said the point was to catch the super rich hiding mega money in offshore accounts. He said the chances of the IRS bothering with a person earning chump change interest were pretty slim. They don’t have the personnel to chase down small time tax filers. 

[seekingthetruth 1,246]

35 minutes ago, Wuozopo said:

@seekingthetruth

 

Forgot to add—

The first year of FATCA when the whole thing was rather vague, my wife bumped up the IRS hierarchy until she got a older experience guy in the Tax Law department. They had a 30+ minute off the record type conversation. He said the point was to catch the super rich hiding mega money in offshore accounts. He said the chances of the IRS bothering with a person earning chump change interest were pretty slim. They don’t have the personnel to chase down small time tax filers. 

Yes, I always tell people who are worried about filing FBAR, not to worry.  They don't care about small fry.  If you report that you have 1 mil in overseas accounts, surely that will grab their attention.

[INF 96]

On 2/21/2021 at 6:21 PM, Lucky Cat said:

Thankfully, I have an outstanding CPA who always handles our taxes and FBAR.

 

The FBAR is not filed with your tax return, and it is not filed with the IRS.

https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

 

"

Who Must File the FBAR?

A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. The full line item instructions are located at FBAR Line Item Instructions."

 

 

Hi there! Is it possible to get the name of your CPA? I am looking for someone who specializes in cross border taxes!