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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Do I have to pay tax on money I wire to my US bank account?

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do I have to pay tax on money I wire into my US bank account?

Are you a US citizen living here in the US?

Is this money coming from overseas?

Customer: replied 7 years ago.

US resident.

Money coming being wired from a savings account in Japan to a checking account here in the U.S. well in excess of 10,000.

Actually, tax would never be due on money that you simply transferred from a foreign account to your US account. However, if the amount exceeds $100,000 in one year, you must then report receipt of that money by filing Form 3520 with the IRS. No tax is due with the form, but it is a filing requirement.

However, one other thing you should be aware of. If you are a US resident and you have foreign bank accounts where the yearly balance ever exceeds $10,000, you are required to file Form TDF 90-22.1 with the IRS each year to report the existence of these foreign accounts. Again, no tax is due with that form, but it is another reporting requirement.

Customer: replied 7 years ago.

Clearly the bank reports this to the IRS. Will they send me a 1099 that needs to be accounted for? If yes, is the form 3520 the document that "counteracts" this 1099 that the bank will send me?

If not, what other documentation do I need to show to the IRS when I file my taxes?

And I never filed a TDF 90-22.1. If I report this in the next tax return, will the IRS look back and "think" about charging back taxes for simple interest earned on that account all these years?

First, the bank will not report this transaction to the IRS. The only transactions which are reported to the IRS are CASH transactions which exceed $10,000. The reporting is not required for checks or wire transfers. The bank will not send you a 1099 form for receiving this money.

As far as the filing of the TDF form, it would be impossible for me or anyone else to say if the IRS would look back to prior years. When you report foreign accounts on the TDF form, you do not actually pay any tax on the money in those foreign accounts. Here again, it is simply a reporting requirement. It's all part of the IRS efforts to keep taxpayers honest and above board with their financial assets.

If you have been earning interest on those foreign accounts, then that interest should be included in the income that you report on your US tax return. You would be given credit for any foreign tax you had to pay on that same interest income.

The best thing for you to do if you have not filed this form in the past is to just start filing it from here on out and reporting any interest that you earn on those accounts on your tax return.

Normally just the filing of this form would not be enough to make the IRS automatically go back and check your previous years returns, but if you were ever to be audited for some reason, they may question it at that time.

Let me know if you have more questions. I am happy to help you with whatever I can.

Merlo and 2 other Tax Specialists are ready to help you