Beijing to back United States over new FATCA law against tax evasion

[Randy W]

Beijing to back United States over new Fatca law against tax evasion

 

 

Mainland China has been included on a list of jurisdictions co-operating with the United States on a new law to halt tax evasion.

 

It removes the threat of blacklisting or penalties that had been hanging over Chinese financial institutions. The inclusion will also benefit institutions in Hong Kong, the US and elsewhere with subsidiaries in mainland China.

 

The Foreign Account Tax Compliance Act (Fatca) is a US law that requires financial institutions around the world to provide information on US taxpayers to the US government. The Treasury Department said on its website that Beijing had reached an "in substance" intergovernmental agreement Model 1 (IGA 1) with the US.

The move will enable Beijing to obtain information on mainland Chinese taxpayers in the US, which will help in its fight against tax evasion and corruption.

 

 

 

Eric Boes, an international tax consultant at the trust company Amicorp, said: "I can imagine Beijing will want information on Chinese taxpayers abroad. A possible reason is that the government wants information on corrupt Chinese officials."

 

The US authorities will impose a 30 per cent withholding tax on US-related income going through financial institutions that do not comply with Fatca.

 

Richard Weisman, senior US tax partner with Baker & McKenzie, an international law firm, said that although Beijing had not signed an IGA, the US Treasury Department and US Internal Revenue Service (IRS) had said financial institutions in a jurisdiction with an "in substance" IGA would be treated as having an agreement until the end of this year.

 

"It is very important that China is deemed to have signed an IGA," he said. "With China deemed to have an IGA, withholding tax and many other obligations will not apply to financial institutions in China."

 

Kinsley agreed that the announcement of the mainland's in-principle IGA should alleviate the risk of a withholding tax, as most financial institutions on the mainland would have until December 22 to register with the IRS and they would be deemed "Fatca compliant" before then.

 

 

 

The Form TD F 90-221 has been required of those "US Persons" with accounts in China with balances exceeding $10,000 at any point during a reporting year. The new agreement will make it possible for the IRS to check up on your balances.

 

Foreign Bank Accounts - Report of Foreign Bank and Financial Accounts (FBAR)

If you or your spouse have a foreign bank account which has exceeded a total value of $10,000, this should have been reported to the IRS using a Form TD F 90-221 for the year(s) during which the event occurred, on or before June 30th. Your spouse's bank accounts may fall under this umbrella even if he/she is living in China (if you are filing married filing jointly).

Stiff penalties may apply, ranging up to 50% of the account value for each year it was not reported. The IRS has had "voluntary disclosure" programs where you can donate some of your overseas account money to the IRS. If you do not owe any tax money on the undisclosed accounts, my advice is to MAKE CERTAIN of what you're doing before you donate ANY money to their coffers. In other words, these programs and penalties (and the FBAR report itself) are supposed to apply to actual tax cheats - not people who simply have unreported non-taxable money outside the US tax system.

In addition, Scedule B says:

 

 

Use Schedule B if any of the following applies.
. . .
• You had a financial interest in, or signature authority (or other authority that is comparable to signature authority) over, a financial account in a foreign country or you received a distribution from, or were a grantor of, or transferor to, a foreign trust. Part III of the schedule has questions about foreign accounts and trusts.
If you checked the “Yes” box on line 7a, file Form TD F 90-22.1 by June 30, 2011, with the Department of the Treasury at the address shown on that form. Do not attach it to your tax return.
CAUTION
If you are required to file Form TD F 90-22.1 but do not do so, you may have to pay a penalty of up to $10,000 (more in some cases).

 

 

Who Must File an FBAR

United States persons are required to file an FBAR if:

1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.

United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.

[Randy W]

The new FBAR, as of Sept., 2013 - for those who hold foreign bank accounts which have exceeded $10,000 at any point in the reporting year.

 

Report of Foreign Bank and Financial Accounts (FBAR)

Current FBAR Guidance FinCEN introduces new forms

On September 30, 2013, FinCEN posted a notice on their website announcing the current FBAR form, FinCEN Report 114, Report of Foreign Bank and Financial Accounts. FinCEN Report 114 supersedes the previous years’ form TD F 90-22.1 and is only available online through the BSA E-Filing System website. The e-filing system allows the filer to enter the calendar year reported, including past years, on the online FinCEN Report 114.

 

 

 

Repeating

 

the current FBAR form, FinCEN Report 114, Report of Foreign Bank and Financial Accounts. FinCEN Report 114 supersedes the previous years’ form TD F 90-22.1 and is only available online through the BSA E-Filing System website.

 

[Randy W]

. . . and this, also from the IRS. In addition to filing the FBAR, Form 8938 must be attached to the tax return of certain individuals with a threshold amount of $50,000 to $75,000

 

FATCA Information for Individuals

• U.S. citizens, U.S. individual residents, and a very limited number of nonresident individuals who own certain foreign financial accounts or other offshore assets (specified foreign financial assets) must report those assets

• Use Form 8938 to report these assets

• Attach Form 8938 to the annual income tax return (usually Form 1040)

• Taxpayers with a total value of specified foreign financial assets below a certain threshold do not have to file Form 8938

• If the total value is at or below $50,000 at the end of the tax year, there is no reporting requirement for the year, unless the total value was more than $75,000 at any time during the tax year

• The threshold is higher for individuals who live outside the United States

• Thresholds are different for married and single taxpayers

• Taxpayers who do not have to file an income tax return for the tax year do not have to file Form 8938, regardless of the value of their specified foreign financial assets.

• Penalties apply for failure to file accurately

Alert: The reporting requirement for Form 8938 is separate from the reporting requirement for the FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (formerly TD F 90-22.1). An individual may have to file both forms and separate penalties may apply for failure to file each form. See the Comparison of filing requirements for further information.

 

[dan1984]

I think I'm clear on all these rules as they stand now, but as we talked about briefly last week I believe it was, this all just freaks me out, I always think there is something I'm missing or something I'm doing wrong.

Just want to keep my slate clean so I don't have any problems, or I miss something and come a few years from now when going the DCF route it comes back to bite me.

[Randy W]

I think I'm clear on all these rules as they stand now, but as we talked about briefly last week I believe it was, this all just freaks me out, I always think there is something I'm missing or something I'm doing wrong.

Just want to keep my slate clean so I don't have any problems, or I miss something and come a few years from now when going the DCF route it comes back to bite me.

 

 

As far as filing for an Affidavit of Support, just make sure that you you report on the Affidavit is the SAME as what you reported to the IRS. In other words, if you are reporting a $25,000 income to the Consulate, and you DIDN"T file a tax return for that year, that may just raise a few red (DENIAL) flags at the consulate.

 

It's the responsibility of the IRS to weed out tax fraud, NOT that of the consulate. Regardless of what you told the IRS, be sure that what you tell the consulate is consistent with that. File amended returns if you need to.

 

The consulate is concerned with your INCOME, not so much your taxes. Just don't report income to them that you FAILED to report to the IRS if it's above the minimum level BEFORE applying the Foreign Earned Income Exclusion.

 

As for the reporting, just be aware of the two thresholds for foreign accounts - one at $10,000 for the FBAR, the other at $50,000 for the FATCA. If your resources are above these amounts, I would check to make sure you are satisfying what they require. But even there (in my own, non-legally-binding opinion), none of us is likely to incur a penalty for non-compliance. I also don't think this has any potential to derail anyone's visa application.

 

Those kind of worries are what drive people to hire professionals, but I really don't think you'll do any better than to be aware of the requirements yourself, and NOT rely on someone else's interpretation.

[dan1984]

 

I think I'm clear on all these rules as they stand now, but as we talked about briefly last week I believe it was, this all just freaks me out, I always think there is something I'm missing or something I'm doing wrong.

Just want to keep my slate clean so I don't have any problems, or I miss something and come a few years from now when going the DCF route it comes back to bite me.

 

 

As far as filing for an Affidavit of Support, just make sure that you you report on the Affidavit is the SAME as what you reported to the IRS. In other words, if you are reporting a $25,000 income to the Consulate, and you DIDN"T file a tax return for that year, that may just raise a few red (DENIAL) flags at the consulate.

 

It's the responsibility of the IRS to weed out tax fraud, NOT that of the consulate. Regardless of what you told the IRS, be sure that what you tell the consulate is consistent with that. File amended returns if you need to.

 

The consulate is concerned with your INCOME, not so much your taxes. Just don't report income to them that you FAILED to report to the IRS if it's above the minimum level BEFORE applying the Foreign Earned Income Exclusion.

 

As for the reporting, just be aware of the two thresholds for foreign accounts - one at $10,000 for the FBAR, the other at $50,000 for the FATCA. If your resources are above these amounts, I would check to make sure you are satisfying what they require. But even there (in my own, non-legally-binding opinion), none of us is likely to incur a penalty for non-compliance. I also don't think this has any potential to derail anyone's visa application.

 

Those kind of worries are what drive people to hire professionals, but I really don't think you'll do any better than to be aware of the requirements yourself, and NOT rely on someone else's interpretation.

 

 

Thanks Randy, totally agree. Like you said, I'm abreast of the requirements and am on the straight and narrow, so I should be good, and no reason to hire professional help.

 

As for paying taxes, absolutely, always get that done on time and in an accurate manner, so no worries on that front.

 

As for the two thresholds - one at $10,000 for the FBAR, the other at $50,000 for the FATCA - definitely clear on these as well. For those like us who are currently living abroad, it appears as if our threshold for FATCA is higher (even though this does not concern my financial situation at all, haha, hopefully someday):

 

http://www.irs.gov/Businesses/Corporations/Summary-of-FATCA-Reporting-for-U.S.-Taxpayers

 

"""Reporting Thresholds

Reporting thresholds vary based on whether you file a joint income tax return or live abroad. If you are single or file separately from your spouse, you must submit a Form 8938 if you have more than $200,000 of specified foreign financial assets at the end of the year and you live abroad; or more than $50,000, if you live in the United States. If you file jointly with your spouse, these thresholds double. You are considered to live abroad if you are a U.S. citizen whose tax home is in a foreign country and you have been present in a foreign country or countries for at least 330 days out of a consecutive 12-month period.

Taxpayers living abroad. You must file a Form 8938 if you must file an income tax return and:

• You are married filing a joint income tax return and the total value of your specified foreign financial assets is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year. These thresholds apply even if only one spouse resides abroad. Married individuals who file a joint income tax return for the tax year will file a single Form 8938 that reports all of the specified foreign financial assets in which either spouse has an interest.
• You are not a married person filing a joint income tax return and the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year.""""

[Randy W]

Yes, I think that the Form 8938 thresholds may hit some U.S. residents whose spouses still have accounts above that amount.

 

Me, I keep my money in the U.S., and just download enough for "beer money" every couple of months, unless I want to buy a car or a parking space (the two things I've had to go over the $10,000 FBAR limit for).

 

I don't think I'll need to be filing either report for awhile, but I'll keep an eye on the FBAR threshold.

 

As far as changes in the future, just keep your eyes and ears open - you should be able to hear what you need to know.

 

There's a section in the 1040 Instructions about Foreign-Source Income, which points you to both of these forms, and mentions that you need to report distributions from foreign pension plans.

 

Foreign accounts and trusts. You must complete Part III of Schedule B if you:

 

• Had a foreign account, or
• Received a distribution from, or were a grantor of, or a transferor to, a foreign trust.

If you had foreign financial assets in 2013, you may have to file Form 8938. See Form 8938 and its instructions.

 

 

 

and I believe that Part III of Schedule B will refer you to the FBAR requirements.

[dan1984]

Yes, I think that the Form 8938 thresholds may hit some U.S. residents whose spouses still have accounts above that amount.

 

Me, I keep my money in the U.S., and just download enough for "beer money" every couple of months, unless I want to buy a car or a parking space (the two things I've had to go over the $10,000 FBAR limit for).

 

I don't think I'll need to be filing either report for awhile, but I'll keep an eye on the FBAR threshold.

 

As far as changes in the future, just keep your eyes and ears open - you should be able to hear what you need to know.

 

There's a section in the 1040 Instructions about Foreign-Source Income, which points you to both of these forms, and mentions that you need to report distributions from foreign pension plans.

 

Foreign accounts and trusts. You must complete Part III of Schedule B if you:

 

• Had a foreign account, or
• Received a distribution from, or were a grantor of, or a transferor to, a foreign trust.

If you had foreign financial assets in 2013, you may have to file Form 8938. See Form 8938 and its instructions.

 

 

 

and I believe that Part III of Schedule B will refer you to the FBAR requirements.

 

:victory:

[dan1984]

Yes, I think that the Form 8938 thresholds may hit some U.S. residents whose spouses still have accounts above that amount.

 

Me, I keep my money in the U.S., and just download enough for "beer money" every couple of months, unless I want to buy a car or a parking space (the two things I've had to go over the $10,000 FBAR limit for).

 

I don't think I'll need to be filing either report for awhile, but I'll keep an eye on the FBAR threshold.

 

As far as changes in the future, just keep your eyes and ears open - you should be able to hear what you need to know.

 

There's a section in the 1040 Instructions about Foreign-Source Income, which points you to both of these forms, and mentions that you need to report distributions from foreign pension plans.

 

Foreign accounts and trusts. You must complete Part III of Schedule B if you:

 

• Had a foreign account, or
• Received a distribution from, or were a grantor of, or a transferor to, a foreign trust.

If you had foreign financial assets in 2013, you may have to file Form 8938. See Form 8938 and its instructions.

 

 

 

and I believe that Part III of Schedule B will refer you to the FBAR requirements.

 

In reading through the ongoing "IRS Publications for 2014" thread, I thought back to this thread about FATCA regulations.

 

This is a really really stupid question, but for this point:

 

"2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported."

 

Does calendar year mean January 1 through December 31??

 

So basically if at any time from January 1, 2014 through December 31, 2014 my accounts in China totaled over $10,000, by June 30, 2015 I have to report this??

 

I'm pretty sure this is the case, just want to make sure. Thanks!

[Randy W]

 

Yes, I think that the Form 8938 thresholds may hit some U.S. residents whose spouses still have accounts above that amount.

 

Me, I keep my money in the U.S., and just download enough for "beer money" every couple of months, unless I want to buy a car or a parking space (the two things I've had to go over the $10,000 FBAR limit for).

 

I don't think I'll need to be filing either report for awhile, but I'll keep an eye on the FBAR threshold.

 

As far as changes in the future, just keep your eyes and ears open - you should be able to hear what you need to know.

 

There's a section in the 1040 Instructions about Foreign-Source Income, which points you to both of these forms, and mentions that you need to report distributions from foreign pension plans.

 

Foreign accounts and trusts. You must complete Part III of Schedule B if you:

 

• Had a foreign account, or
• Received a distribution from, or were a grantor of, or a transferor to, a foreign trust.

If you had foreign financial assets in 2013, you may have to file Form 8938. See Form 8938 and its instructions.

 

 

 

and I believe that Part III of Schedule B will refer you to the FBAR requirements.

 

In reading through the ongoing "IRS Publications for 2014" thread, I thought back to this thread about FATCA regulations.

 

This is a really really stupid question, but for this point:

 

"2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported."

 

Does calendar year mean January 1 through December 31??

 

So basically if at any time from January 1, 2014 through December 31, 2014 my accounts in China totaled over $10,000, by June 30, 2015 I have to report this??

 

I'm pretty sure this is the case, just want to make sure. Thanks!

 

 

 

Yes - calendar year is Jan 1 through Dec 31. If your balance was $10001 or more on ANY date during the year, you are required to report this.

 

yes, it's due on June 30, and must be filed electronically - http://candleforlove.com/forums/topic/46983-beijing-to-back-united-states-over-new-fatca-law-against-tax-evasion/?p=616235

[Randy W]

By the way, CCB does this, and I expect (but don't know) that others would also - you can print out a day-by-day ledger of deposits, withdrawals, and daily balances for the entire year at an ATM-like machine inside the bank.

[dan1984]

 

 

Yes, I think that the Form 8938 thresholds may hit some U.S. residents whose spouses still have accounts above that amount.

 

Me, I keep my money in the U.S., and just download enough for "beer money" every couple of months, unless I want to buy a car or a parking space (the two things I've had to go over the $10,000 FBAR limit for).

 

I don't think I'll need to be filing either report for awhile, but I'll keep an eye on the FBAR threshold.

 

As far as changes in the future, just keep your eyes and ears open - you should be able to hear what you need to know.

 

There's a section in the 1040 Instructions about Foreign-Source Income, which points you to both of these forms, and mentions that you need to report distributions from foreign pension plans.

 

Foreign accounts and trusts. You must complete Part III of Schedule B if you:

 

• Had a foreign account, or
• Received a distribution from, or were a grantor of, or a transferor to, a foreign trust.

If you had foreign financial assets in 2013, you may have to file Form 8938. See Form 8938 and its instructions.

 

 

 

and I believe that Part III of Schedule B will refer you to the FBAR requirements.

 

In reading through the ongoing "IRS Publications for 2014" thread, I thought back to this thread about FATCA regulations.

 

This is a really really stupid question, but for this point:

 

"2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported."

 

Does calendar year mean January 1 through December 31??

 

So basically if at any time from January 1, 2014 through December 31, 2014 my accounts in China totaled over $10,000, by June 30, 2015 I have to report this??

 

I'm pretty sure this is the case, just want to make sure. Thanks!

 

 

 

Yes - calendar year is Jan 1 through Dec 31. If your balance was $10001 or more on ANY date during the year, you are required to report this.

 

yes, it's due on June 30, and must be filed electronically - http://candleforlove.com/forums/topic/46983-beijing-to-back-united-states-over-new-fatca-law-against-tax-evasion/?p=616235

 

 

 

Thanks Randy, got it! This is what I assumed, and thanks for confirming it.

 

Also, yes, I have accounts with 3 banks here, and at all of them I can print out my account activity - the trick is picking the right time in which there is paper in the ATM printer :sweating_buckets:

[Randy W]

 

The new FBAR, as of Sept., 2013 - for those who hold foreign bank accounts which have exceeded $10,000 at any point in the reporting year.

 

Report of Foreign Bank and Financial Accounts (FBAR)

Current FBAR Guidance FinCEN introduces new forms

On September 30, 2013, FinCEN posted a notice on their website announcing the current FBAR form, FinCEN Report 114, Report of Foreign Bank and Financial Accounts. FinCEN Report 114 supersedes the previous years’ form TD F 90-22.1 and is only available online through the BSA E-Filing System website. The e-filing system allows the filer to enter the calendar year reported, including past years, on the online FinCEN Report 114.

 

 

 

Repeating

 

the current FBAR form, FinCEN Report 114, Report of Foreign Bank and Financial Accounts. FinCEN Report 114 supersedes the previous years’ form TD F 90-22.1 and is only available online through the BSA E-Filing System website.

 

 

 

 

Individuals Filing the Report of Foreign Bank and Financial Accounts (FBAR)

 

 

Just to bring this to your attention, the FBAR is due tomorrow (June 30). If you or your spouse has an account in a Chinese bank which had a balance over $10,000USD at ANY time during 2015, you are probably required by law to file one if he/she has been filing US taxes or included on your tax return.

 

Me? I ALWAYS wait until the last minute to procrastinate when it comes to tax matters,

Edited June 29, 2016 by Randy W (see edit history)

[dan1984]

Also, it's not just 1 bank account that is over $10,000, it's the total amount of all your foreign bank accounts put together.

[Randy W]

See NEW deadline for FBAR April 15 - Does anyone know about FBAR?

 

 

 

Chinese money floods into Hong Kong property, as Beijing set to check taxpayers’ foreign financial accounts

From July 1, China’s top tax authority will start requiring details of any financial assets held in China

 

From that date, China’s top tax authority will start being able to take action against its own residents hiding assets overseas, including bank savings, securities, insurance products and trust funds, but not property.

That’s the date the country falls in line with the Common Reporting Standards, or CRS – a Foreign Account Tax Compliance Act (FATCA)-type regime developed in response to a G20 request, aimed at combating cross-border tax evasion and protecting the integrity of the international tax system. The Chinese government pledged to join in with CRS in 2014.

Details on financial assets held by foreign individuals within mainland China will also start being collected.

 

The agreement means information will be exchanged with tax authorities in 100 countries and regions from next year, including Hong Kong.

 

The city has been considered a tax haven for many mainland investors, as there is no capital gains tax levied here. But now they are being forced to convert those financial investments into property, prior to the July deadline to avoid declaring any financial assets held abroad, to the Chinese authorities.

 

Insiders say the new law could have a huge impact on Chinese high-net-worth individuals, many of whom have regularly moved their assets overseas into financial products and funds.