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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 10163
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Tax Question: US citizen living 20 yrs in Japan. Husband is

Customer Question

Tax Question: US citizen living 20 yrs in Japan. Husband is Japanese. Married file separately (he doesn't file as no green card or citizenship in US). I file 1040 and 2555-EZ for tax treaty exemption every year. Make only about 8-10K annually. I also filed FBAR last year and for previous years (didn't know until last year that I needed to report this). This year I am confused. I plan to file 1040 and 2555ez. I have access to three bank accounts though I only have complete access to my personal account (in my own name)..meaning I an withdraw all money anytime I like. As for my husbands bank accounts, I can get up to 2000 without his "approval" (per day) but for access to all of it all at once I cannot get it, or over that amount without his approval by person or with his picture ID. Of course my signature is on file there and if he dies I will eventually get access to it. I have less than 10,000 USD in my personal account. He has over that in the other bank accounts. QUESTIONS: For FBAR what bank accounts do I need to disclose to them? Also what forms do I additionally need to fill in for US tax reporting? SCHEDULE B (1040) and what about Form 8938? I have no investments in Japan. Only bank accounts. I make so little can believe I have to do all this! Thanks.
Submitted: 6 months ago.
Category: Finance
Expert:  Lane replied 6 months ago.

Hi Karen,

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So sorry, but depending on the retirements for both 8398 and FBAR you MAY have to report SOME of your husband's accounts.

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For the 8398, for taxpayers living outside the US: Unmarried taxpayer (or married filing separately): accounts whose total value of assets was more than $200,000 on the last day of the tax year, OR more than $300,000 at any time during the year would need to be reported.

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BUT, only if any income, gains, losses, deductions, credits, gross proceeds, or distributions from holding or disposing of the account or asset are or would be required to be reported, included, or otherwise reflected on your income tax return.

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Because you file separately, if you are not a joint owner, (but rather only have this restricted signing ability) you would not be required to report... IF required to report based on the value thresholds at all.

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For the FBAR, however, the account value thresholds are much lower.

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You must report if aggregate value of financial accounts exceeds $10,000 at any time during the calendar year. This is a cumulative balance, meaning that if you have a combined account balance of $12,000 at any one time (but divided between 2 accounts), both accounts would have to be reported.

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From what you've said you DO have what IRS calls signature authority on the accounts - meaning that would have to report.

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IRS defines this as the following:

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"Signature authority: you have authority to control the disposition of the assets in the account by direct communication with the financial institution maintaining the account."

Expert:  Lane replied 6 months ago.

Here's an excellent overview of the requirements in tabular form:

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

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I hope this has helped.

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Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")

I know it takes an extra step, but JustAnswer won’t credit us for the work until you rate.

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Thank you!

Lane

I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, on three continents,since 1986.

Customer: replied 6 months ago.
I spent time trying to figure out the TYPO of RETIREMENTS rather than REQUIREMENTS.Form 8398: This is what I understood: I am Married filed separately, I personally do not have more than $200,000 (bank account) on the last day of the tax year, nor did I have more than $300,000 at any time during the year. I have restricted signing ability over my husbands bank accounts. Even if I combine his accounts balances to mine I do not have over the 200,000 or the 3000,000 amount. From this I gather from you that I do not have to fill out the 8938 form and submit it. Is this correct?Schedule B: Also I asked if I have to report the Schedule B form Part III, do I? It seems I do?FBAR: Also, in terms of FBAR, it seems I have to report my personal bank account as well as my husbands bank accounts since I have what IRS calls "signing authority" and when our combined bank accounts total, any time during 2015, over $12,000. Combined accounts would put us over that amount during 2015. So I have to report all those bank accounts (his and mine) with FBAR, is this correct?Thank you.

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