FBAR – New Revision of TDF90-22.1 Form

Posted by Don W on May 18, 2011 under Expatriate Taxes, First Time Filing as an Expat, Foreign Bank Account Reporting (FBAR), Tax Matters in the News

The IRS has published a new revision to the annual reporting form for FBAR – Foreign Bank Account Report – Form TDF90-22.1, revised March 2011. 

The form warns not to use earlier versions of this form when reporting the existence of any NON-US bank or broker accounts in which the balance – or combined balances – exceeds US$10,000 for as much as a single day in the year (in this case, 2010).

If you have already reported for 2010 using the previous version of TDF90-22.1, I would think it reasonable that the US Treasury (to whom this form actually goes) would not have any problem about it at this writing (May 19th).  Except that they – via the IRS – have not been very reasonable in the administration of the program ever since they started ramping it up in 2009.   

Please know that this form is due no later than June 30, 2011 – and this means THEY MUST HAVE ARRIVED AT THE US TREASURY’S POST OFFICE BOX BY JUNE 30TH.  Draconian fines for being late or not filing at all.

There isn’t any good news when it comes to FBAR; it is a pain in the patoot burden to millions of US taxpayers who own or have signing authority over a non-US bank or brokerage account (and some foreign trusts) with draconian fines for non-c0mliance or incomplete compliance.

For more on this unfortunate topic, check out our webpage on FBAR and FATCA at: http://www.globaltaxhelp.com/fbar-new-enforcement.  You can also find the newly revised forms – short or long – of TDF90-22.1 PDF for download or printing.  Filing address is shown on the form.  Good luck.

FBAR Update – recent news

Posted by Don W on February 5, 2011 under First Time Filing as an Expat, Foreign Bank Account Reporting (FBAR), Foreign National Taxes, Tax Matters in the News

There are very few news or journal articles about the IRS’s FBAR (Foreign Bank Account Reporting) initiative – their Voluntary Disclosure Program (VDP),  a controversial and troubled program in which thousands of US taxpayers find themselves.

For the most recent newpaper article on the current status of the program see “Navigating the latest US Tax Maze” from Gulf News (based in UAE) which was published last week on January 29th.

One interesting recent article found on the Forbes website, “FBAR Penalty: One Court Pushes Back Against the IRS,” shows that – even when a taxpayer is hardly the model of good behavior – the penalty process is contentious.

Our website has more recent articles with additional information on both FBAR and the new FATCA (I’ll talk more about this one in future blogs!).  If you’re interested click on the “FBAR and FATCA” webpage on the site.

IRA Conversions to ROTH in 2010

Posted by Don W on December 14, 2010 under Estate Tax and Planning, Retirement tax planning, Tax Matters in the News

Back in 2006, President Bush signed a bill that liberalized rules for Roth IRA conversions.

Starting in 2010, taxpayers – including those with modified adjusted gross income of more than $100,000 – will be allowed to convert a traditional IRA to a Roth IRA – AND -recognize the income recognition (and the tax) on those 2010 conversions over the 2011 and 2012 tax years. This both delays, and spreads out the tax bite over the two years following the conversion year.

This 2-year tax rule applies to the tax year 2010 ONLY so if you wish to take advantage of it call your broker (or check your online broker’s site) for details. You have only two more weeks to act.

A thorough discussion of the how-to’s and should-you’s of Roth conversion in 2010 can be seen at: http://www.bankrate.com/finance/retirement/7-steps-to-a-2010-roth-ira-conversion-1.aspx. Upon reading this, you should be able to make an informed decision as to whether or not you should consider doing so.

My broker told me that the breakeven point for converting is about 8 1/2 years, so if this fits into your future retirement and longevity plans, consider doing so (but quickly!).

Estate Matters: A Paper Trail – and Why You Should Have One

Posted by Don W on April 22, 2010 under Estate Tax and Planning, Tax Matters in the News

Though we don’t like to think about it, it remains a fact that anything can happen to anyone, at any time – but through a handful of small actions, you can make things easier for your close family and friends:  by making your important documents easier to find in an emergency.

Four years ago, my brother keeled over (a cardiac event, it was called) and over the course of the next three days, while he was unconscious, it was left to the neighbors to search through his home to find any Health Care Directives, Power of Attorney papers and – if worse came to worst – a will.  The closest neighbor reported to me by phone that all such documents were eventually found, but in three different rooms throughout the house.  It made them frantic.

To avoid such a scenario in your own life, consider taking a bit of time to assemble a paper trail – and share it with at least a few close, trusted neighbors, friends or relatives.  Make it easier for them to help you.

A recent article in the New York Times provides a practical approach to putting together your own paper trail.  It may come in handy some day!


Posted by Don W on March 17, 2010 under Expatriate Taxes, Foreign Bank Account Reporting (FBAR), Tax Matters in the News

The IRS has made yet another change to what’s known as FBAR– they have “temporarily suspended the requirement to file a Report of Foreign Bank and Financial Accounts for the 2009 and earlier calendar years, for people who are not U.S. citizens, residents or domestic entities”.

Announcement 2010-16 (PDF) temporarily suspends the requirement to file Form
TD F 90-22.1, also known as the FBAR, as the IRS tries to clear up the definition of “United States person.” In addition, the IRS issued Notice 2010-23 (PDF), which provides FBAR filing relief for some persons with signature authority and who own commingled funds.

. . . After receiving a significant number of public comments, the Treasury Department published proposed FBAR regulations to provide taxpayers with guidance on who is required to file FBARs due on June 30, 2010, and how to answer FBAR-related 2009 federal income tax return questions.

The IRS and the Treasury Department now believe it is appropriate to provide the following administrative relief: The requirement to file an FBAR due on June 30, 2010, is suspended for persons who are not U.S. citizens, U.S. residents, or domestic entities. Additionally, all persons may rely on the definition of “United States person” found in the July 2000 version of the FBAR instructions to determine if they have an FBAR filing obligation for the 2009 and earlier calendar years. The definition of “United States person” there is: (1) a citizen or resident of the United States, (2) a domestic partnership, (3) a domestic corporation, or (4) a domestic estate or trust.

This substitution of the definition of “United States person” applies only with respect to FBARs for the 2009 calendar year and to earlier calendar years.

All other requirements of the 2008 version of the FBAR form and instructions, as modified by Notice 2010-23, remain in effect until changed by subsequent guidance issued by the Treasury Department, including the IRS.

– excerpted from WebCPA – Feb 26, 2010

Haiti Relief Donations Qualify for Immediate Tax Relief

Posted by Don W on January 29, 2010 under Tax Matters in the News

People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season, according to the Internal Revenue Service.

Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card.

Source: Washington State CPA Society newsletter – January, 2010

Watch Out, Grandma!

Posted by Don W on December 22, 2009 under Estate Tax and Planning, Tax Matters in the News

Happy New Year 2010 – watch out, Grandma!

Not long ago, Senator Charles Grassley, (R-Iowa) – the same senator who tried to kill the expat’s foreign earned income exclusion a few years back – criticized healthcare legislation because he didn’t want “Grandma to face a death panel”.

But it could happen – for an entirely different reason:  Last Wednesday, at a meeting of the Estate Planning Council of Seattle, the speaker – a Virginia attorney well-up-to-date with legislative affairs – reported that Congress has yet to act to prevent the federal estate tax rate from going down to ZERO, effective 1 Jan 2010.  That’s 10 DAYS from today as I write this.

For years, among tax and legal professionals, this possibility has been somewhat cynically known as the “throw Grandma from the Train” year – because the law that authorized the 2010 zero tax – for one year only – also authorized reverting to the 2002 estate tax law which re-imposes such a tax starting January 1, 2011.

The Estate Planning Council speaker forecast Congress’s odds of changing this law in the next 10 days as no better than 10%.  Most everyone assumed that someday – before NOW – Congress would modify the law in plenty of time to avoid this outcome.  Watch out, Grandma; and good luck!