Have a Tax Question? Ask a Tax Expert
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If you are US citizen or US resident for tax purposes - you need to report all your worldwide income on your tax return.
If you have earnings in your foreign retirement account - these earnings are taxable in the US even if they are deferred in a foreign country.
So be sure that you report all earnings in your foreign accounts on your US tax returns.
In additional you should report a foreign account by
(1) completing boxes 7a and 7b on Form 1040 Schedule B - http://www.irs.gov/pub/irs-pdf/f1040sb.pdf .
(2) you are a subject of FBAR reporting if a foreign account value is above $10,000. The form to use is TD F 90-22.1 - this form is mailed separately. There is no tax associated with these reporting.
If you was required and did not file FBAR forms in previous years - you might want to that now. As long as you correctly reported all your income - most likely - there will not be any penalties.
You need to file form 8938 - ONLY if your amount is more than $50,000 www.irs.gov/pub/irs-pdf/f8938.pdf - that form is attached to your tax return.
The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.
That is a new form starting 2011.
Based on your information - you do not need to file that form.
Let me know if you need any help or clarification.
Thanks for the answer I am aware of all the above. I am a little confused about the word earnings. The pension value stopped when I left my employment. It has not grown since I left and will not grow (government pension). Thus there was no income earned.
The amount in one pension is 26000, roughly $43000 (current 1.66 to 1 exchange rate ). My pension. It will be taxed when it can be taken out at 65.
The other is 23000, roughly $38000 (same exchange rate and conditions. Wife's pension.
It will be taxed when it is given to me by the country of origin at 65.
Thus no income or earnings were earned since I left my country of origin. Does that mean it is taxable on something I have not received.
Finally the account has 73000, roughly $119000 (same exchange rate. My Form 1040EZ did not come with Form 8938 otherwise I would have been aware of it prior to today, and would have filed it.
Thus I presume I am in violation of FBAR x 2 (2009,2010) and failing to file Form 8938 before April 17th 2012.
I will be blunt I presumed income meant income, not asset evaluation. Hence why I did not know it was to be down. Will this be a reasonable excuse, or will I definitely be fined. I guess that was my main concern. It seems I am going to be penalized over something, and for monies not even earned here, and before I got here, because of an IRS thing, which does not exist in any other country.
Absolutely not - if you have no rights to receive these pension and there is no earnings in this account - you do not need to report any income.
Thus I presume I am in violation of FBAR x 2 (2009,2010) and failing to file Form 8938 before April 17th 2012
If you do not have signature authority other these account - and may not request the distribution - you are not required to file either form.
You need to be clear - you defer distributions by choice or you have no choice and funds in these accounts are fully under government control.
If the later - you do not report these accounts.
It seems I am going to be penalized over something, and for monies not even earned here, and before I got here, because of an IRS thing, which does not exist in any other country.
If you did not hide assets, did not have unreported income - and willing to step forward disclosing assets as soon as you learned it is required - I do not see any reason for the IRS to penalize you and I feel you are overreacting.
No need to amend your past tax returns if only changes are FBAR reporting.
FBAR form is send separately.
You may amend your 2012 tax return - adding from 8938 as long as you determine it is required - and explain on the form 1040X the reason of amending.
So far - I do not see any reason to worry - as long as there is no any additional tax liability - you are OK.