# Canadian currently completing the US Streamlined



## FBGM93

Hi all,

First post here but I've done some due dilligence in terms of looking around for exactly what I need, I'm just hoping I can receive some clarity on a few points (hopefully without wasting anyone's time.) I saw a great post by BBCWatcher that broke down very easily what needed to be done. 

As this is my first time filing taxes at all (just graduated university) let alone my US ones, please give me the benefit of the doubt .



BBCWatcher said:


> (a) File FinCEN Form 114[/url] for 2014, 2013, 2012, 2011, 2010, and 2009. Explain why you're filing late. Problem solved.
> 
> (b) File FinCEN Form 114 for 2015 before it is due (June 30, 2016).
> 
> (c) File IRS Form 4868 to get an automatic extension to file your 2015 tax return.
> 
> (d) File 2012, 2013, and 2014 tax returns via the IRS's overseas Streamlined Program. Prepare those tax returns yourself, preferably using free or low cost tax preparation software. (There's a thread at the top of this forum explaining this year's offerings. H&R Block free edition is looking pretty good this year.) The Streamlined Program works. It's perfectly fine. You are the _textbook_ case for "non-willful."
> 
> (e) If you're under age 26 and male then visit Selective Service and register.
> 
> (f) Refer again to Step 1.
> 
> Welcome back to the club.


1) I've just completed my FinCen 114 for 2009-2015 so I believe am good on that account. I believe the next step is to file for a Certification of US Person Residing Outside US (14653 form) but unfortunately the link that the IRS provides does not work, it says I need the latest version of Adobe Reader, which I specifically downloaded to no avail. Can the 2014 form still apply?

2) After completing my FinCen 114s as well as the 14653 form from my understanding all that is left is to complete 1040 Forms for 2012-2015. As my situation is pretty simple (recent graduate, working FT job, earning interest through an RRSP) would the 2555 form seem like the only other supplementary form I would need to complete?

Thank you so much for the help....I really appreciate it. Please let me know if there's any questions I can answer to help. Really just trying to get through this!


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## BBCWatcher

FBGM93 said:


> I believe the next step is to file for a Certification of US Person Residing Outside US (14653 form) but unfortunately the link that the IRS provides does not work, it says I need the latest version of Adobe Reader, which I specifically downloaded to no avail. Can the 2014 form still apply?


Form 14653 isn't revised every year. The August, 2014, edition is current at this writing.



> As my situation is pretty simple (recent graduate, working FT job, earning interest through an RRSP) would the 2555 form seem like the only other supplementary form I would need to complete?


IRS Form 2555 (or 2555-EZ), the Foreign Earned Income Exclusion, is optional, but it's a common approach. You'll probably also have IRS Form 1040 Schedule B and (almost certainly) Form 8965. You might have Form 1116 (at least for your passive category income, although it might be optional even then), Schedule D, Form 8938, and/or Form 6251 -- those are all fairly common.

It's best if you let your favorite tax preparation software do the heavy lifting.


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## Stargazer

Depending on your income and rrsp balance, I would think yiud have:

1040
2555
Schedule B (tick boxes at bottom, yes rrsp is a foreign trust)
8891 (for the years it was required to report the rrsp and interest deferred). It is now assumed deferred by treaty and the form discontinued. Don't pay interest on it.
8938, only if you have a lot of assets, the software will tell you


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## Stargazer

Schedule B will say if you have a foreign trust you may have to file form 3520. This is not true for an RRSP. 8891 was the alternate form and now you don't have to do any form. Just tick the box and write RRSP next to it.

But if you are doing years back, do 8891 up until it is discontinued and on your first one, tick the box saying you want to defer the tax


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## Stargazer

Sorry i just looked it up. 8891 is discontinued and isn't required now or for past filings. Don't list the interest on schedule b, it is considered tax deferred by treaty. Just list the highest balance in FinCen. But list basic bank account interest on schedule B


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## FBGM93

Amazing! Thank you everyone for all the quick and valuable advice. I will take a look now.

A follow-up question though- when you talk about tax preparation software doing the majority of the work, will it know based on how I enter in the rest of my returns what other forms to provide or will by just doing it regularly is the software very intuitive and able to populate the rest of my forms? I've heard very frequently that for ex-pats the process is very user-unfriendly so I am curious.

Thanks again.


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## Stargazer

FBGM93 said:


> Amazing! Thank you everyone for all the quick and valuable advice. I will take a look now.
> 
> A follow-up question though- when you talk about tax preparation software doing the majority of the work, will it know based on how I enter in the rest of my returns what other forms to provide or will by just doing it regularly is the software very intuitive and able to populate the rest of my forms? I've heard very frequently that for ex-pats the process is very user-unfriendly so I am curious.
> 
> Thanks again.


It is pretty good. I don't know that it has form 3520 but you probably won't need it. Why don't you try, see what it does and report back to us?


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## FBGM93

Will do! Thanks again for the help.


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## FBGM93

Hi all,

I've walked through my 2015 tax return through the H&R block free program and had a few follow-up questions. Hoping someone can provide help!

1) Is it okay to do my 2015 Tax Return before I submit the previous 3 year's tax returns? I thought this method should be okay because I plan on doing the 2015 return online to hit the deadline whereas the previous 3 years are all done through mail and I assume will be a much longer process.

2) I've completed all my taxes and taken a look at the final file and on my Schedule B it asks if I have any foreign accounts (H&R Block has me saying yes) and if yes, do I need to file a FinCen 114? It has it auto-populated as no which I assume is because I am under $10,000 in assets... but I have sent my FinCen 114s for the last 6 years off. Is that okay? 

3) As I've just graduated from university with some rather large tuition fees as I went through the process they offered me a refund of $1,000 as per the American Opportunity Credit. Does this make sense? I mean I don't make any US income so I'm not sure how I feel about taking this money and if I incorrectly take it I'd hate to be on the IRS' radar. I feel that all my information done on tuition but I'm not entirely sure if my school qualifies (it says a school must qualify if it runs student air programs from the US Department of Education and as it is a Canadian school it specifically has a US student loan aid section of it's website which states "The University of Western Ontario participates in the US government Title IV program known as the William D. Ford Federal Direct Loan Program.") 

This strikes me as it qualifying for the program- do you think it makes sense to take the money?

Thank you so much for your help


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## Bevdeforges

1) Actually, it's a good idea to go ahead and file the 2015 return so that you get it in "on time" and then you can deal with the back filings. Depending on your age and situation, you may even consider just filing 2015 and then moving forward with things. Any penalties for late filing are based on the amount of tax owed, and if you owe nothing, then there is no penalty. (Also check the filing thresholds - as a student you may not have earned enough to have to file as a single. $10,300 is the threshold for 2015 and there are plenty of students who don't hit that.)

2) If your "overseas" assets (i.e. outside the US) are under $10,000 you don't need to file an FBAR (FinCEN) - but there's no penalty for having filed when you didn't have to.

3) I will leave this one to others to advise you on. There are a couple of "refundable" credits like this. Granted, filing only to receive a refund like this will earn you some attention from the IRS - but if you're eligible, it's free money. So up to you whether or not you claim it.
Cheers,
Bev


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## BBCWatcher

3) If you qualify, claim it! You can check the U.S. Department of Education's list of qualifying institutions, but it sure sounds like that university qualifies.


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## FBGM93

Just sent off everything today! I thought I may as well file my streamlined foreign procedure because I assumed I would get the 1k on every year prior to this one, I was correct in that the math added up to that. It will be interesting to see if I actually get that 1k. 

Regardless, thanks everyone for all the help in getting me here! It was much appreciated.


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## BBCWatcher

Well done. You beat the deadline to claim refundable tax credits (or any other tax refunds) for tax year 2012.


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## Lulu78

BBCWatcher said:


> Form 14653 isn't revised every year. The August, 2014, edition is current at this writing.
> 
> 
> BBC watcher; I have just posted a question pertaining to this in my original thread. I think (unless I've completely gotten myself confused) form 14653 has actually been updated recently and the IRS are requesting more information? I am currently trying to figure out what is the best way to complete this form to prove non-wilful?


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## BBCWatcher

I answered your questions in the other thread.

Yes, the IRS updates forms from time to time, and (as far as I know) the IRS doesn't post to this forum when they update their forms. Of course you should obtain the latest form editions from the IRS directly (irs.gov) whenever you need to fill them out, just before you need to fill them out.


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## Lulu78

BBCWatcher said:


> I answered your questions in the other thread.
> 
> Yes, the IRS updates forms from time to time, and (as far as I know) the IRS doesn't post to this forum when they update their forms. Of course you should obtain the latest form editions from the IRS directly (irs.gov) whenever you need to fill them out, just before you need to fill them out.


BBC watcher, thanks for your reply in the other thread. You are certainly very positive in your approach and I can only hope the IRS share your positivity when reviewing my 14653 certification and "delinquent" FBARs 

The reason I commented about the updated form because I am not sure if this update signals any changes to the SFOC (I guess I will find out when I take my giant leap of faith and put myself back on their radar). 

Also, clearly the IRS require more information than is being currently provided by expats and this is why the form has been updated (including this whole "narrative statement of fact with favourable and unfavourable information).

So I just wanted to flag this update form to anyone reading either thread to pay particular attention to it.
I also am interested to hear from anyone who completed the form or is completing it and how they plan to address it.


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## iota2014

Lulu78 said:


> Also, clearly the IRS require more information than is being currently provided by expats and this is why the form has been updated (including this whole "narrative statement of fact with favourable and unfavourable information).


They want explicit detail because they hope to be able to identify contradictory or implausible elements to help them build a case against you, should you happen to fit their "high risk" criteria and also have enough cash to be worth pursuing. 



> I also am interested to hear from anyone who completed the form or is completing it and how they plan to address it.


I thought of going Streamlined. It seemed at first that I had little choice. When I looked at that creepy certification form, I changed my mind. Not being guilty of anything at all, and not having a "high-risk" profile/income, I decided to just send in the forms in the normal way without any self-abasement trimmings. If my balances had been higher I might have decided differently.


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## Lulu78

iota2014 said:


> that creepy certification form.


LoL, that's the best description for form 14653

Yeah, I keep going back and forth between the Streamline or just sending my taxes in! We do have a couple hundred Ks in our mortgage offset account (which I a told has to be reported like a saving accounts even though it is offsetting a lot of mortgage debt!)! So the FBAR penalties do scare me!


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## iota2014

The penalty threats for the FBAR are just weird. 

It's really not the "wilful" penalties that are so scary. To apply a "wilful" penalty, the IRS has to build a convincing case showing that the person knew about the obligation to file FBARs and deliberately didn't file. Most of us just didn’t know, so we're really not at risk for "wilful" penalties. That makes all that certification nonsense irrelevant, for most of us - it just gives the IRS yet another penalty of perjury jurat to file away in the attic for a rainy day.

The "non-wilful" penalties, on the other hand, can in theory be slapped on simply for late-filing. No proof of wrongdoing required. And the maximums are set high enough to wreck the victim's life. It's chilling, to say the least, that this is considered just by the USA.

In practice, as long as the person has no US assets/income, it would be pretty difficult to collect such unjustified sums from an innocent person living in another country. I decided my rights under the justice system in my own country would protect me, if push came to shove. Iin reality, I suspect push is never likely to come to shove, if there's no evidence of wrongdoing. There certainly don't seem to be any reports of massive "non-wilful" penalties being applied. But as usual with the IRS, there's no certainty.

If you're planning to renounce, you might want to consider doing that first, before deciding whether to go Streamlined or not. You get a different perspective once you've renounced, or so I found.


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## iota2014

Regarding the offset mortgage - if it's joint with your husband and he's not a USC, can't you just put down 50%? I read that somewhere - don't know if it's correct or not.


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## BBCWatcher

You're thinking of possible income treatment in a Married Filing Separately (or Head of Household, if qualified) filing when your spouse is a non-resident alien. That's different from the account balance reporting requirements in FinCEN Form 114 and IRS Form 8938, which is always 100% of the highest balance.


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## iota2014

Thanks for the correction, BBCWatcher. I don't know much about offset mortgages but if the money is there to cover mortgage payments, is there any way to show the debt when filing FBARs? If they owe $x on the mortgage and have $y savings offsetting the debt, shouldn't the balance reported on the FBAR/8938 reflect both x and y?


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## Lulu78

iota2014 said:


> If you're planning to renounce, you might want to consider doing that first, before deciding whether to go Streamlined or not. You get a different perspective once you've renounced, or so I found.


iota2014, do you mean you renounced and then got your tax affairs in order? 

If I understood correctly, isn't that a risky exit out of the US tax system? I am actually planning to gift what little assets I have (half of our family home) to my non US husband before renouncing. So in the unlikely event that there are any tax complications when I exit.

I know I am being a bit paranoid about all of this, but I think a touch of paranoia when the IRS are involved is justified!


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## iota2014

Lulu78 said:


> iota2014, do you mean you renounced and then got your tax affairs in order?
> 
> If I understood correctly, isn't that a risky exit out of the US tax system? I am actually planning to gift what little assets I have (half of our family home) to my non US husband before renouncing. So in the unlikely event that there are any tax complications when I exit.
> 
> I know I am being a bit paranoid about all of this, but I think a touch of paranoia when the IRS are involved is justified!


Absolutely, paranoia is not only justified but necessary!

Renunciation doesn't change your existing situation with the IRS. You still have to clear up your tax status if you want to exit "cleanly" (which I did). Where you're dealing with the prior years, when you _were_ a US citizen, renouncing doesn't change anything. 

During the year after your year of renunciation, you file for the year of renunciation as a US citizen up to the day you renounced, and for the remainder of the year you're only taxable on US income.

Plus, as you say, you have to file Form 8854. Have a good hard look at what you're _required_ to include in your net worth. Gift tax rules apply (see http://www.unclefed.com/Tax-Bulls/1997/Not97-19.pdf). You can use that "guidance" to work out how much you need to give away, and how to do it legitimately. If it turns out you can't give away enough to get down below $2 million, then yes, you may need to wait a few years before you renounce.


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## iota2014

Lulu78 - here's a link to an item from Phil Hodgen's "expatriation" blog which might be of interest. Usual caveats apply of course.

HodgenLaw PC - International Tax


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## BBCWatcher

iota2014 said:


> I don't know much about offset mortgages but if the money is there to cover mortgage payments, is there any way to show the debt when filing FBARs?


Why? Is this a mortgage on a heroin processing facility or a terrorist training camp?


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## iota2014

BBCWatcher said:


> Why? Is this a mortgage on a heroin processing facility or a terrorist training camp?


Scuse me?


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## BBCWatcher

Lulu78 said:


> I am actually planning to gift what little assets I have (half of our family home) to my non US husband before renouncing.


Why? You at least have some extra paperwork if you do that: IRS Form 709. That automatically makes things more complicated, right off the bat. If the _net effect_ is beneficial, OK, but is it?


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## BBCWatcher

iota2014 said:


> Scuse me?


Well, you're asking a question about hiding, obscuring, obfuscating, or otherwise trying to report something other than reality on a financial disclosure form with no tax implications. So I'm asking why you're trying to find a way to _act_ guilty of something?

....Haven't you figured this stuff out by now?  People who have something to hide don't like these reports. But people who don't have something to hide file truthful reports. That's why the reports exist. That's their magic.


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## iota2014

BBCWatcher said:


> Well, you're asking a question about hiding, obscuring, obfuscating, or otherwise trying to report something other than reality on a financial disclosure form with no tax implications. So I'm asking why you're trying to find a way to _act_ guilty of something?


No, I was asking if there's any way to reflect the negative amount as well as the positive amount. That, in my book, would be reflecting reality.



> ....Haven't you figured this stuff out by now?  People who have something to hide don't like these reports. But people who don't have something to hide file truthful reports. That's why the reports exist. That's their magic.


Why do you feel it necessary to be so snotty?


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## ForeignBody

iota2014 said:


> Thanks for the correction, BBCWatcher. I don't know much about offset mortgages but if the money is there to cover mortgage payments, is there any way to show the debt when filing FBARs? If they owe $x on the mortgage and have $y savings offsetting the debt, shouldn't the balance reported on the FBAR/8938 reflect both x and y?


Just report the highest savings balance during the year, converted to US$ as at December 31, using the Treasury Exchange rate.

You are over thinking this. The fact that it is there for mortgage payments (or anything else) is irrelevant. You are just reporting the facts. There are no tax implications.


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## BBCWatcher

iota2014 said:


> No, I was asking if there's any way to reflect the negative amount as well as the positive amount. That, in my book, would be reflecting reality.


IRS Form 8938 and FinCEN Form 114 don't ask such questions. They don't ask for your bank statements or for details about your deposits and withdrawals.

You're implicitly assuming the highest balance for the year has to be explained. Why does it have to be explained? If the IRS or the U.S. Treasury would like an explanation, they'll be in touch.

If I'm "snotty" it's only because I don't react well to somebody who _might_ be suggesting that somebody else do something very, very dumb, like attempt to "shade the truth" on a financial disclosure form, signed under penalty of perjury. Those forms are tests of truthfulness, and that's all they are -- it's the entire game. That's quite important to understand. So if you've got a mortgage offset account FINE!!!! Shout about it from the rooftops on these forms. Unless it's a mortgage on a heroin processing center, terrorist training camp, child sex trafficking den, or something else of that sort, in which case you have bigger problems than these forms.


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## iota2014

BBCWatcher said:


> IRS Form 8938 and FinCEN Form 114 don't ask such questions. They don't ask for your bank statements or for details about your deposits and withdrawals.
> 
> You're implicitly assuming the highest balance for the year has to be explained. Why does it have to be explained? If the IRS or the U.S. Treasury would like an explanation, they'll be in touch.


It does make a difference. It makes it seem the person has more money than they actually do - which could lead the IRS to decide it might be worthwhile trying to squeeze out a nice penalty.



> If I'm "snotty" it's only because I don't react well to somebody who _might_ be suggesting that somebody else do something very, very dumb, like attempt to "shade the truth" on a financial disclosure form, signed under penalty of perjury.


You're not always snotty. Much of the time - probably even most of the time - you're very helpful, and certainly very knowledgeable. Then for some reason you suddenly seem to lose the plot and start slinging accusations.



> Those forms are tests of truthfulness, and that's all they are -- it's the entire game.


IRS gotchas. Yes, we're all aware of that.



> That's quite important to understand. So if you've got a mortgage offset account FINE!!!! Shout about it from the rooftops on these forms. Unless it's a mortgage on a heroin processing center, terrorist training camp, child sex trafficking den, or something else of that sort, in which case you have bigger problems than these forms.


See what I mean? Suddenly you start going on about child sex trafficking etc, which frankly just comes across as irrational.

Anyway, you've answered the question I've asked, so thanks for the information.


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## iota2014

ForeignBody said:


> Just report the highest savings balance during the year, converted to US$ as at December 31, using the Treasury Exchange rate.
> 
> You are over thinking this. The fact that it is there for mortgage payments (or anything else) is irrelevant. You are just reporting the facts. There are no tax implications.


Thanks for your reply. I may well have been misunderstanding how an offset mortgage account works. I was thinking that just reporting the credit part, without being able to report the debt, makes it seem the accountholder has more money than they do. But if there's no way to report the debt, it seems that's that.


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## ForeignBody

iota2014 said:


> It does make a difference. It makes it seem the person has more money than they actually do - which could lead the IRS to decide it might be worthwhile trying to squeeze out a nice penalty.


They are not asking how much money you have. They are asking what are the maximum amounts you have had in any/every account during the year.

For example, if I had $12k in one account and moved $6k of it to another account I report $18k in total, but I have only ever had $12k.


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## iota2014

ForeignBody said:


> They are not asking how much money you have. They are asking what are the maximum amounts you have had in any/every account during the year.
> 
> For example, if I had $12k in one account and moved $6k of it to another account I report $18k in total, but I have only ever had $12k.


True. As you say, I was overthinking.


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## Lulu78

BBCWatcher said:


> Why? You at least have some extra paperwork if you do that: IRS Form 709. That automatically makes things more complicated, right off the bat. If the _net effect_ is beneficial, OK, but is it?


BBC;

Yes, although there is a mortgage on the property, if we were to sell it, it would make a large capital gain (properties have nearly doubled in prices over here recently), and the current trend is that they double every six years or so. We would be exempt from CGT here on our family home, but we would have to pay it to the US. Hence, regardless if I renounce or not, it is a good idea (I think), that I transfer the property to my non-US husband. Along with that transfer, the offset account would go in his name, so going forward I may not have to file FBARs, if I just keep one account in our joint names. Hence simplifying my reporting requirements going forward as well as reducing my liabilities if I was to renounce one day!


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## Lulu78

iota2014 said:


> It does make a difference. It makes it seem the person has more money than they actually do - which could lead the IRS to decide it might be worthwhile trying to squeeze out a nice penalty..


Precisely! Thank you iota2014

BBC, Unfortunately, I do not share your positive outlook when the IRS are involved! So the reason behind me asking all those questions, finding out as much ask I can, so I can go in with my eyes open, knowing all my risks and liabilities. Taking all the precautions or the advantages offered by the (stupid)system to reduce those risks and liabilities. 

I only want to tell the IRS what is required, nothing more or less, and I certainly don't want them to get any ideas that I have more money than I actually do and them thinking it's worth their while pursuing me, or slapping me with a non-wilful 10K penalty for not filing my FBARs on an account that is really hundreds of thousands in debt and not positive at all!


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## maz57

BBCWatcher said:


> People who have something to hide don't like these reports.


Actually, its the people who don't have something to hide that don't like these reports. People who do have something to hide (i.e. criminals) don't have an opinion because they don't file them.


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## BBCWatcher

OK, many people don't like these reports. But criminals don't like these reports either because violations are easy to prosecute when/if the time comes.


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## maz57

Its been said before but I'll repeat it for some of the newcomers to the forum: 

The only FBAR that is of any real value to the US government is the FBAR that is NOT filed. It is easy to prove an FBAR has not been filed, whereas it takes an expensive investigation to determine if tax evasion has occurred. That's why any discussions of the exact information reported on the form are somewhat moot. FBAR is all about the reporting; a filed FBAR doesn't necessarily reflect financial reality. The information reported on an FBAR has no bearing on any actual tax which might or might not be owing.

That's the beauty of FBAR; file years of perfect tax returns but forget one of those Form 114s and they can fine the crap out of you. They don't call the US "Form Nation" for nothing!


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## iota2014

maz57 said:


> Its been said before but I'll repeat it for some of the newcomers to the forum:
> 
> The only FBAR that is of any real value to the US government is the FBAR that is NOT filed. It is easy to prove an FBAR has not been filed, whereas it takes an expensive investigation to determine if tax evasion has occurred. That's why any discussions of the exact information reported on the form are somewhat moot. FBAR is all about the reporting; a filed FBAR doesn't necessarily reflect financial reality. The information reported on an FBAR has no bearing on any actual tax which might or might not be owing.


The aggregated balance reported on an FBAR clearly does influence the path through the system, if only to determine what level of penalty can be applied.

But I think the offset mortgage issue was actually about FATCA forms, not FBARs. It's all got a little confused. What I was thinking when I asked the question, was whether there might be a way of reporting negative amounts as well as positive amounts. And I've since come across a 2015 TIGTA audit which identifies that very problem:



> TIGTA also identified some limitations with the processing of paper Forms 8938. Specifically:
> 
> · Transcribed data are not validated to ensure accuracy.
> 
> · Data on Form 8938 continuation statements (used to report additional foreign accounts or other foreign assets) are not transcribed.
> 
> · Losses reported by taxpayers cannot be input as negative amounts.
> 
> If these issues are not properly addressed, it could limit management’s ability to make informed decisions and achieve the IRS’s compliance objectives related to the FATCA.


https://www.treasury.gov/tigta/auditreports/2015reports/201530085fr.html


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