US citizens Report of Foreign Bank and Financial Accounts

[cpnhowdy]

I just recently read that all US citizens are required to fill out form 90-22.1 if we have any foriegn bank accounts. Ive been here for almost 9 years and this was the first I had heard about that.

Anyone else heard of this and are doing it?

From taxes.about.com
"You must fill out Treasury Department Form 90-22.1 every year if you own, or have an interest in, any foreign bank accounts. I'll tell you what you need to know in order to fill out TD F 90-22.1 accurately and confidently.

Reporting Foreign Bank Accounts
You must report accounts you hold in foreign banks and other financial institutions if your total balance is $10,000 or greater.

The $10,000 threshold is for your aggregate account balances. In other words, your total across all your foreign accounts.

If you earn dividends or interest in these accounts, that income is reported on Form 1040 Schedule B, and you would check the box in Part III Line 7a and indicate the country or countries where you have accounts. Additionally, any foreign taxes paid on your interest and dividends may qualify for the Foreign Tax Credit on Form 1116. "

[cutyourhair]

Never heard about it.
But it doesn't count for me since I am way too poor anyway!

[keitai_help]

I just recently read that all US citizens are required to fill out form 90-22.1 if we have any foriegn bank accounts. Ive been here for almost 9 years and this was the first I had heard about that.

Anyone else heard of this and are doing it?

It's partially true. The law specifically states that you need to fill out that form for the U.S. Treasury if you have 10K USD or greater, not just if you have a non-US account. If you have a non-US account with less than 10K, there's no law stating that you need to declare it.

Additionally, consider that there are many tax havens in the world which won't reveal to your Gov't that you have an account there or your balance. If you have an account there and you're smart about not letting your Gov't know about it, then it's irrelevant whether or not you declare the money, since they'll never know you have it (Hong Kong accounts are a good example).

P.S. - No I never filled out that form, and never will. The more you tell your Govt's about your personal business, the more they'll use it against you. Good thing that a number of countries still respect a thing called privacy!

[homesweethome]

Good thing that a number of countries still respect a thing called privacy!

Any hints on which countries some of these might be?

[Plats]

It's one reason I send most of my money home, or keep it in my wife's name -- I don't want to fill out another form.

On the interest side -- I asked the IRS man who used to visit the consulate here how to report bank interest since banks don't give yearly statements like in the US, and he said, "Don't worry about it. It's so little anyway."

[keitai_help]

Any hints on which countries some of these might be?

LOL :-)

Hong Kong, Switzerland (note for Switzerland: if you're a US or EU Citizen, there are certain tricky aspects to this; but in summary you can still keep your privacy/anonymity, but they will take taxes out of your interest and send it to your country's tax agency. There are ways around it of course, but that's another topic), Panama, Singapore, Luxembourg... these are just a few that I know of off the top of my head, that are well known for financial privacy/asset protection... there are others of course out there though.

Hong Kong works beautifully for me. Thanks to the Internet, I don't have to physically ever go back there either, since HSBC HK has excellent Internet banking.

[edelman]

It's one reason I send most of my money home, or keep it in my wife's name -- I don't want to fill out another form.

Plats, you seem pretty intent on being in compliance with US law (unlike some people in this forum who brag about non-compliance and even tend to encourage it). Thus, I have one commnet about "keep it my wife's name." If you put your money in your wife's name, then 2 possible things are happening:
(1) you're making a gift to your wife, which is subject to an annual limit (which I would guess you are not surpassing),
or
(2) you are just putting your money in your wife's name without making a gift, and thus she is your nominee, and to the best of my knowledge, you don't get out of the TDF90-22.1 filing requirement merely by putting funds in an account owned by a nominee. You would still have a financial interest in the bank account that is in your wife's name.

If it's your intent to make a gift, you ought to document it as such at the time you make the gift. And then, there might be marital property consequences, like perhaps it becomes her separate property no matter what.

[Plats]

You are quite astute. I thought no one would catch that.

I really should file that TDF90-22.1, but I can’t imagine sending account names and numbers through the mail, bank fraud here being as serious as it is in the US.

As far as the accounts concerned, I don’t see how I can gift my wife money that is jointly owned, but in any case it is below the limit and I do intend for it to be hers forever. Saying I don’t have an interest in the accounts would be a stretch.

[R.Akashi]

Howdy howdy !

Obviously, you have 9 years of back taxes to pay. A few years ago I had a client in the same situation. The IRS officer at the embassy gave me 15 years of tax returns to fill in for my client(he was too scared to go himself in case they arrested him on the spot-plus they weighed a ton)At the time there was an amnesty and he said as long as there are no major discrepancies, there will only be a small penalty to pay.

Wherever you are in the world, If you come from the US and A(niiiiiice) you are still required to report all assets . Even though some of you are below the current threshold (I think appx 86K) to get that exemption of paying , you still need to file.

The worst thing you can do is stash your money in an offshore bank account, and think the taxman aint gonna see it. Those days are long gone folks....Banks and tax authorities are speaking to each other on a regular basis.
Points to consider. . If its 50 bucks interest, then sure, not a problem, but more significant amounts do get red flagged...and what happens when you need to bring the cash back into the country, or if you pop your clogs.

And as Plats says, saying you have no personal interest would be a stretch. Same as the UK, if you have a joint account,and you have no will and last testament in place and something happens, its down to the surviving partner to prove that 1/2 was hers, which can be pretty hard if you're bringing up 2 kids and she has no monthly payslip of her own to show the tax man...

At the end of the day, you're best declaring it all. You can sleep well at night and never have to worry about it biting you in the arse 20 years later...

If you want tax free income, take out life insurance..The only true tax free product for US citizens. Variable or Universal, depending on your age..
Or if you want tax deferral, then look at some form of 529 or annuity plan. I've said it before, Uncle Sam is very generous and the US and A can be one of the best tax havens in the world...

Love and peace all...
Robert Akashi

[keitai_help]

The worst thing you can do is stash your money in an offshore bank account, and think the taxman aint gonna see it. Those days are long gone folks....Banks and tax authorities are speaking to each other on a regular basis.
Points to consider. . If its 50 bucks interest, then sure, not a problem, but more significant amounts do get red flagged...and what happens when you need to bring the cash back into the country, or if you pop your clogs.

Hello Robert,

I'm sorry to inform you, but you're very much misled in your beliefs... there will never exist a world in which every country will cooperate with every other country; such things would be the tax man's wet dream come true, but it ain't gonna happen.. and I'm willing to put my money where my mouth is too.

There are plenty of asset/financial haven countries which do not violate clients' privacy (with the sole exceptions of drug money or terrorism-linked money); so your statement of "those days are long gone" is completely misleading. If what you said were true, there would suddenly be a huge decrease in billionaires & millionaires in the world - which isn't the case at all :-)

Of course the IRS & other tax agencies would LOVE for you to believe what Mr. R. Akashi here is saying, because that would discourage you from even attempting at protecting your assets.. additionally, it would mean many CPA's would start losing clients.. so it goes against their own interest to say the truth on the matter.

Thank you for your insight R. Akashi, but you're not fooling anyone, trust me on that :-)

[R.Akashi]

Wow, Keitai...

What can I say.Normally I wouldn`t rise to the challenge but what the heck...

Maybe you should have told the 7000 people who were fined for not declaring their offshore bank accounts to the UK taxman a few months back. Under new legislation, any OECD member country can now go to any other member country`s banks and ask for a list of clients from their country. Go to www.oecd.org for a list of member countries.

In the above case, the UK taxman went to Barclays offshore and asked for a list of all the UK passport holders with accounts and cross referenced them with those names residing in the UK...Expect more banks to be asked to name and shame

On a personal level, Japan has just signed new income tax treaties with 54 countries which basically states the free flow of information between member states and in some cases, information will be provided voluntarily. Before, a country needed a solid reason to get information and that was only provided if they believed money laundering, tax fraud or terrorism was involved. Now any info is handed on a silver platter. If you really really want, I can add the OECD webpage where you can read about the above paragraph.

What tax havens are you talking about?. Whilst the likes of Switzerland Jersey/Guernsey and Lux currently aren`t disclosing names, they are still taking a withholding tax. So you`re none the better off in that case. Except for the headache of bringing it back into the country. But come 2012, they are expected to fall in line with the rest of Europe and disclose the names the same as everyone else..
Unless you`re talking about the likes of Belize, Trinidad, Lesotho etc, in which case the only thing you need to worry about is whether your money is still there tomorrow..

If you`re talking about Bermuda, GC, Bahamas, ok I don`t know enough about their laws. But if the US can easily go to these European countries and get that information, then why not those countries closer to home? Do you remember that uproar last year when the NY times released info on the CIA (or was it FBI) being able to track virtually any bank transaction made.Without going into conspiracy theories, I`m sure that technology is/will be used to track down not just the terrorists in the very near future. Any country that is blacklisted for not sharing information is probably being scrutinised on a daily basis.

Even here in Japan now, anything over 1000 USD sent through the bank is tagged. Believe me, typing from personal experience, the tax man has easy access to that information.
So don`t tell him you`re sending it back home, when he can easily see its going to your account in the isle of man.

Protecting your assets is not a crime. You can legally avoid/reduce/defer your tax liabilities. This is exactly what these billionaires and millionaires are doing.

However, not declaring is tax evasion and it will come and bite you in the arse one day...Most countries will fine you and you may do some time..The US will fine you a quadrillion dollars and send you to jail for 100,000 years, but you`ll be out in 15 with good time...

As before, if its a few bucks, it`s not worth the hassle, but when serious money is involved, the tax man will come calling...

I`ve been in the business of advising banks and people on their assets and how to legally protect those assets for 25 years. I used to think the same, keep it offshore and no one will be the wiser. But a lot has changed in the last 10 years, and its a brave/foolish man who is willing to take that gamble in this day and age. Save your money KH, I know what I`m talking about.TRUST me on that....!

Love and Peace

Robert Akashi.

[keitai_help]

Robert,

I respectfully disagree with some of your "facts". Although what you said about the OECD countries sharing information is true, what you failed to mention was that there are 30 countries on that list - I followed the link you gave me. 30 countries, out of about 200. So, you kind of made my rebuttal to you too easy. 30 countries sharing information with each other, but what about the other 170? Hmm....

As far as which ones I was referring to, well I can name a few just off the top of my head, but obviously there are more, but to make it easy for you - Hong Kong, Singapore, Switzerland (for now, and yes I know about the tax thing there - but did you know it only applies for personal accounts? It doesn't apply for companies, trusts, foundations and the like. Hint hint ;-) ), Panama.. and I've heard something about Dubai, though I'm not sure if Dubai has signed on to any information-sharing agreements or not.

So there you go, that's an easy short list. If you can point out someone who got busted for having an account in Singapore, HK, Panama etc. where the Governments of those countries gave up the "list" as you say, please provide the link/proof to the news article - I'd love to read it.

I know Japan isn't a tax haven, in fact I never mentioned anything about keeping money in Japan. I don't like Japanese banks anyway.

As far as your comment about it takes a "foolish/brave man"... well Mr. Robert, you're calling a lot of people fools with that statement, but I'm afraid the joke is on you. Most people with a lot of money are VERY careful with what they do with their money, especially if the money was self-made (I speak from personal experience, but also from other people I know).

So you may have been spooked into thinking that the Big Brother can find anyone at anytime anywhere, it's not quite the case... and I know it will never be the case. Because where there's a will, there's a way.. and there are always countries willing to fill in the gap. It always will be that way, whether or not you want to accept that fact is irrelevant.

If you claim your profession is this very topic, I'm worried about whether or not you've been completely honest with your clients. Just in a couple posts, I've pointed out inaccuracies and omitted facts from your posts.. and, I don't have 25 years experience in advising people, though I should probably consider it in the future.

I'm not debating the morality of filing, not filing, evading, and the like. That's a pointless argument, because there is no right or wrong when it comes to certain things - just different opinions.

I'm debating some of the blanket statements you've made in regards to countries protecting your name. Robert, I've pointed out just a few right here.. and I'd be extremely shocked if you didn't know about them, if you claim your profession is advising clients on financial matters.

Have a nice day, and remember... keep your money where it's safe :-)

[R.Akashi]

Dear KH,

at least we agree on some things.....

There are actually about 50 that are included in the passing of information. Out of the 200 or so you mentioned, there are only 5 I would consider stable enough to put my cash, and MAYBE free from prying eyes...Russia, South Africa, China, HK and Sing; the last 2 said NO to the passing of information in October. Since then, billions have been flowing into those 2 countries and its a making a mockery of the EUTD. What do you think the other 48 countries are gonna do about it?

I'm 100% for HNW clients to set up trusts/ offshore companies, foundations etc..It legally protects their assets and defers or reduces their tax liabilities.(but dependant on where you reside-some structures aren't recognised by certain countries).Additionally, If you visit UBS's website, as well as other's, you will see they have a disclosure stating that while any taxation only affects interest bearing accounts, they are not responsible for any expansion which may come to include asset management trust/companies/ foundations etc. But it ain't gonna happen overnight.

My original message was in reply to the message that its best to chuck all your money in an offshore account and keep quiet about it....Thats what I am disputing. Its not sound advice. You will still have a tax liability when you come to access those funds,even if in some bespoke structure. Whether it be Income CGT or IHT.

If you're commanding a good salary, living here in Japan and sending money overseas, then you're tagged. If you're paid partly overseas, that portion may be okay for the time being. I cant give you any websites, and I certainly wouldnt sleep well with my money in Panama, but in my case, I did send money to my offshore company via Switzerland many years back, making sure I kept any amount under the banks radars. I was also fortunate enough to be able to use different names and you know what? 6 years later, the tax man comes knocking on my door and wants to know what's been happening to all this money I have sent offshore. He had a list of every transaction I had ever done since coming here in 1991. To Investment companies, banks, he had all my CC payments, the works. Some of the information could have only come from the UK or Switzerland. Thankfully, everything I told them was solid and documented. The only problem is now, if I bring anything back into Japan, they will tax me on it, as income, which sadly is higher than the CGT. As much as I want to buy the new Jaguar, I can't, coz he'll want to know where the cash came from...

Apart from keeping it under the bed, please give me an example where the money has been 'institutionalised' and will not eventually be taxable? Any cash realised will have a tax liability in one form or other. You said you keep your money in HK;internet banking makes everything convenient. Fantastic, but what happens tomorrow if HK says they will start sharing the information? You're gonna shift it elsewhere, correct? And on and on and on..... Should you die,(heaven forbid!) depending on nationality, your wife may get it all tax free. The tax man doesn't care because all that does is delay the inevitable. The siblings will be taxed at full rate. But as soon as she brings it into Japan or the US, she's gonna get clobbered.

As you say, there are currently lots of countries willing to fill the gap.And where theres a will theres a way.But whats the point of having it if you cant enjoy it in your home country...The countries that remain in terms of client confidentiality are shrinking, and those that will not disclose or withhold tax are being watched with a magnifying glass..

In this day and age, anyone who holds a US passport and hides his cash in offshore bank accounts(structures not included-as you are taxed) and thinks he will not be eventually caught is a very brave or foolish man.Even I'm frightened by the IRS and I'm British...!!. Get caught trying to bring in 50K, they'll fine you 250K and they'll lock you up for a year or 2 for good measure.

At the end of the day,anyone with 500K should consider some form of tax deferred product rather than hide it. Those with less, is it really worth risking everything for a couple of thousand bucks..

Love and peace all.
Robert Akashi

[keitai_help]

Robert,

I totally agree with this last post of yours.

We're on the same page with setting up legal structures to avoid taxes (foundations and the like). In fact, I am looking into setting one up in the near future. I'm looking at either Panama, or Switzerland/Luxembourg. Not sure yet.

About bringing money into the country. Well, I agree that money is looked at if you bring it in large amounts. For example, if I try to bring in 25M Yen to Japan so I can pay for a new Ferrari at some dealer near Hiroo, someone is going to notice the 25M Yen and ask me questions about it - I agree that it would be foolish to do such a thing, if you weren't properly set up with the trust or whatnot.

However in small amounts, it's still very easy to bring in money to any country - thanks to ATMs. When I was on vacation in Europe last summer, I was able to pull out 2,000 Euros a day from ATMs. 1,000 Euros per transaction was the most I was able to do in one shot, but 2,000 per day (My HK bank's daily limit). No one 'taxed' or 'saw' that money. (don't mention anything about security cameras at the ATM, since wearing my sunglasses as I usually do, plus a ball cap, renders those cameras useless!).

So for small amounts, I'd say it's very easy to pull out money anywhere in the world.. I've never had a problem through the ATM.

But I agree that if you don't have a way to be able to spend the 'big' money - to buy your Jaguars, and your house - then there is no point in stashing it somewhere.

All I'm saying about the 'stashing', is that it's a good way, in my opinion, to protect your money temporarily, while you're in between getting a legal structure set up for yourself. That's the status I'm in right now. Now you might say - "Well, why don't you just keep it in a Japan/US/UK acct. then in the meanwhile?" Well that's because, a) the money isn't safe (the IRS or whoever can just go into the acct. and take it, if they accuse you of tax evasion. Been there, done that - got my money back after 5 months [+ interest], but I didn't like the experience. So I took all my money out and started banking offshore), b) any 'new' money you put in there, is taxed/taxable.

As far as where the money comes from - I'm talking about making money 'offshore' and depositing it 'offshore' - that's what I do. I don't have a job in Japan, not anymore. I trade in the forex market, all the money I make is offshore, and I get paid offshore. So the money can 'grow safely' in that account, until I'm ready to do my trust or whatever...

As far as HK - I seriously doubt they'll "give in" to the powers that be. If they do however, yes you're right - billions will start being wired overnight to the next safe place.