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This situation is a bit complicated. I have become a next of…

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This situation is a...

This situation is a bit complicated. I have become a next of kin for someone who Is out of the country and is receiving a large check from the Central Bank if Aisa for a large engineering job he did in Dubai. The check has to be delivered by an agent since it is such a large amount. He says that even though the check has been put in my name and account will be opened that will have his name on it as well as mine but I will be the one who has the ability to access the money. He is telling me I will not have any type of tax issue with this because of the way the account will be set up using legal documents the agent will bring with him.

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

I just want to try and find out if that could be possible?

Submitted: 4 months ago.Category: Tax
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12/3/2017
Tax Professional: emc011075, Tax adviser replied 4 months ago
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,589
Experience: IRS licensed Enrolled Agent and tax instructor
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Hi. My name is ***** ***** I will be happy to help you.

It does not matter how the account is set up or what is deposited into that account. For income tax purposes, a deposit is not taxable income.

But if the account is located outside the US and you have a legal access to it (your name is ***** ***** account) you may need to FBAR (foreign bank account reporting) with the department of state.

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Customer reply replied 4 months ago
The account the money is coming from is located outside the US? It was in his name but is being changed to mine so I can cash the check when it arrives here. Would you be able to tell me how to go about checking in FBAR?
Tax Professional: emc011075, Tax adviser replied 4 months ago

You will file the FBAR when you file your tax return next year. Many professional tax preparation softwares (used by accountants and tax professionals) have the capability to file FBAR online. You can also file it yourself here: https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

But you have to wait until the end of the 2017 to file for 2017.

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Tax Professional: emc011075, Tax adviser replied 4 months ago

Any questions? Is there anything else I can help you with today?

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Customer reply replied 4 months ago
If that deposit is made and I withdraw some money to pay myself, that would be considered income: correct?
Tax Professional: emc011075, Tax adviser replied 4 months ago

No. You have not earned that money. It may be considered a loan (if you plan to repay it) or a gift if you plan to keep it but it is not taxable income.

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Tax Professional: emc011075, Tax adviser replied 4 months ago

Make sense? The IRS does not tax what you own (your asset like money in your bank, house, car), the IRS taxes what you earn (receive from working, running a business or investing).

If you decide to withdraw more than 100K and keep it (a gift) you may need to report a foreign gift. Even though the money are in your bank account under your name, they still belong to somebody else unless the person decide to gift you some of the it.

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