# Miscellaneous questions US overseas filing



## americandude

Hello,

As an expat declaring Gross Salary, what are the reasons/requirements/rules to send or not send a salary statement as an attachment?

Is it standard practice to send tax returns and FBAR forms registered, requiring the IRS to sign and confirm receipt?

I have yet to e-file. I suppose this is a legitimate alternative with few barriers?

Finally, I would like to know the best way to establish a tax basis. I understand that there needs to be some way to prove that taxes have already been paid on, for example, money deposited into a retirement account so that its not taxes a second time when withdrawn at retirement. The same is true for interest earned in that retirement account. So, the tax basis could simply chart income/interest earned over the years that has already been subjected to US tax?

Does the retirement account employer match have to be declared as earned income? So, if I earn 100'000 and employer match is 5'000, that means I have to declare a Gross Salary of 105'000? And how are these separate forms of income detailed on the 1040 ? Or is that best described on the tax basis chart?

So, if I declare 105'000 and my FEIE is 100'000, that means i am subject to tax on the employer match?

Thanks for your help!!


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## Bevdeforges

I've moved your post over to the Expat Tax section. Let's take your questions one by one:



americandude said:


> Hello,
> 
> As an expat declaring Gross Salary, what are the reasons/requirements/rules to send or not send a salary statement as an attachment?


The only attachment you should send in regarding salary (i.e. line 7) is a standard US issued W-2 statement. Do NOT send in anything else, but do keep a record of how you calculated the amount you posted on line 7.

In many countries, there are deductions from gross salary in arriving at "taxable income" - often social insurances. The US does NOT accept your country's version of "taxable income." If there are deductions already taken, you should gross your income back up.



> Is it standard practice to send tax returns and FBAR forms registered, requiring the IRS to sign and confirm receipt?


There are many opinions on this. The IRS doesn't actually sign return receipts (they do something else - not sure what), so one school of thought says that this is a waste of the extra money. Others like the security of having a record that the filings were mailed. If you owe nothing in taxes for the year, it seems a bit extreme, but it's your stamp.



> I have yet to e-file. I suppose this is a legitimate alternative with few barriers?


Legitimate, but it can be tricky finding an e-filer that will handle your e-filing. (There is another discussion here on the forum about e-filing for overseas filers.)



> Finally, I would like to know the best way to establish a tax basis. I understand that there needs to be some way to prove that taxes have already been paid on, for example, money deposited into a retirement account so that its not taxes a second time when withdrawn at retirement. The same is true for interest earned in that retirement account. So, the tax basis could simply chart income/interest earned over the years that has already been subjected to US tax?


This only applies on a US acknowledged IRA or 401K account. And there, the account holder reports all the relevant information directly to the IRS. If you are talking about an overseas retirement account, it may be subject to special reporting requirements (that fall under the FATCA legislation you'll see so many expats griping about).



> Does the retirement account employer match have to be declared as earned income? So, if I earn 100'000 and employer match is 5'000, that means I have to declare a Gross Salary of 105'000? And how are these separate forms of income detailed on the 1040 ? Or is that best described on the tax basis chart?


If you're talking about a US based IRA or other tax deferred account, you have nothing to do or to report until and unless you start making withdrawals from the fund. 



> So, if I declare 105'000 and my FEIE is 100'000, that means i am subject to tax on the employer match?
> 
> Thanks for your help!!


Again, not if you're talking about a US based IRA or 401K or something similar. However, if you are an expat and making use of the FEIE (Foreign Earned Income Exclusion), you aren't allowed to make ANY contributions to a US tax-deferred retirement fund except to the extent of your taxable US income (i.e. income over and above the FEIE).
Cheers,
Bev


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## americandude

Thanks very much for these helpful answers.

I live in Switzerland and my employer provides me with a salary statement, essentially the Swiss equivalent to the the W-2. But, of course, it is NOT the W-2. So, do I need to fill out a W-2 form that I can download from the IRS site?

Also, I was referring to a Swiss retirement account. I want to establish a tax basis to prove that contributions to the account and interest made in the account have already been declared. I assume this establishes a "tax basis" which should be sufficient as proof to avoid be taxed again when withdrawing at retirement. Sounds reasonable, no? I will of course take a close look at FATCA requirements.

I was referring to employer matching in the Swiss retirement account, because I wasn't aware that it possibly needs to be declared. So I ask again, should I add and declare the employee match to my Gross Income? I am not contributing to any US tax-deferred retirement, only Swiss.

Thanks again!


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## Bevdeforges

americandude said:


> Thanks very much for these helpful answers.
> 
> I live in Switzerland and my employer provides me with a salary statement, essentially the Swiss equivalent to the the W-2. But, of course, it is NOT the W-2. So, do I need to fill out a W-2 form that I can download from the IRS site?


No, don't fill out a W-2 form. If you are attempting to e-file, you may need to find something called a "FEC record" - Foreign Employer Compensation record - which is how the system distinguishes between a US based W-2 and foreign income that cannot be matched up within the W-2 system. But if you're filing "manually" just report your gross salary on line 7 of the 1040. (Just remember to add back any deductions for "taxable" income in Switzerland. Many countries allow you to deduct social insurances - but the US doesn't.)



> Also, I was referring to a Swiss retirement account. I want to establish a tax basis to prove that contributions to the account and interest made in the account have already been declared. I assume this establishes a "tax basis" which should be sufficient as proof to avoid be taxed again when withdrawing at retirement. Sounds reasonable, no? I will of course take a close look at FATCA requirements.
> 
> I was referring to employer matching in the Swiss retirement account, because I wasn't aware that it possibly needs to be declared. So I ask again, should I add and declare the employee match to my Gross Income? I am not contributing to any US tax-deferred retirement, only Swiss.


This is a toughie, as the US doesn't recognize foreign retirement funds, even if they work almost identically to the US IRA and 401K. I would take a good, hard look at the IRS publications on retirement funds and pensions, like Publ 575 or 939. Those explain the calculations for how withdrawals from the funds are supposed to be taxed and should give you an idea what you'll need to do the calculation.

In theory, at least, you should pay income tax to Switzerland on withdrawals from those funds, with the corresponding tax credit against any tax obligation for them to the US. But, the "tax deferred" nature of the fund can complicate the calculation. 

Example going the other way - when someone withdraws, say, $20,000 from a US based IRA in retirement, the $20,000 is taxed in full by the US as income (because of the tax deferral feature of the program). However, in the country in which the retiree is living, the withdrawal may be considered a transfer of capital (and thus not even reportable as income), or a sort of annuity payment (only partially income, and then based on the annuitant's age and basis in the fund).
Cheers,
Bev


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## americandude

*Fatca*

Hi,

Getting ready to find out if I meet the FATCA threshhold. Would the Swiss Pillar 2 retirement account need to be included ? If so, could you please provide a reference link to an official page specifically stating that requirement?

Thanks!!


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## Bevdeforges

Sorry, but I don't know what a Swiss Pillar 2 retirement account is. However, the only retirement accounts that don't count for the FATCA stuff are government retirement plans (something similar to US social security). If it's an account that you manage and where you can withdraw funds at will once you've reached retirement age, I'm fairly sure that would have to be included with the totals for FATCA.
Cheers,
Bev


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## Bevdeforges

BBCWatcher said:


> And there's no penalty for FBAR/FATCA over-reporting.


Excellent point. If in doubt, report it. (They won't ever come back and tell you that you didn't have to - but they sure can't penalize you for "hiding" anything.)
Cheers,
Bev


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## Nononymous

I could well be wrong, but I think the key difference here is that it's being imposed on folks who are tax residents in Italy, not Italian citizens living abroad who are tax residents of other countries (which is the case with the US).


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## maz57

Well, I'm going out on a limb here, but Italy's Form RW sounds a lot like the IRS Form 8938. The difference being that if one ceases to be a tax resident of Italy, the Form RW obligation goes away.

If one is unlucky enough to be deemed a "US person", Form 8938 will hound you to the ends of the earth forever. Most countries tax the foreign income of their tax residents and require disclosure of foreign holdings toward that end. That obligation ends when the tax residency ends. The US tax obligation never ends. Form 8938 is appropriate for those who live in the US; it's an abomination for those who live (and pay taxes) elsewhere in the world.

The US is still the world leader in bad tax law. That will not change until citizenship-based taxation is abolished and the US tax code is rewritten. The fact that the US can't get on the same page as the rest of the civilised world boggles my mind.


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## Bevdeforges

BBCWatcher said:


> This thread is really interesting and probably illustrates that the U.S. doesn't have the worst reporting requirements in the world. Italy's Form RW apparently requires reporting all (or virtually all) foreign assets, not only financial accounts. It also requires individual reporting cross-border transfers in excess of 10,000 euro per year (total basis), which is a pain for record collection. (Japan has a similar requirement, I recall.) If you merely use non-Italian debit and credit cards a few too many times in Italy for purchases and withdrawals that total above the limit it seems you'd have to report that. And Italy seems to be pretty serious about enforcing all that reporting.
> 
> I hope there's a happy outcome for the original poster in that thread.


Actually, the need to report cross-border transfer in excess of $10,000 or €10,000 is pretty much a universal requirement these days, thanks to the OECD. In most countries, it's handled by the banks or other financial institutions making the transfer - but one time I was at the airport waiting for a flight and there were multiple announcements advising passengers that if they were traveling with financial instruments in excess of $10,000 that they MUST declare it to US Customs before boarding their flight. (I suspect they had word of someone living the country with lots of $$ or something.)

The requirement to file tax returns based solely on citizenship is still pretty unique in the world and, let's face it, a major PITA for those of us with limited interests in and ties back to "the old country." But it is very unlikely to change any time soon. So, based on our individual situations, we either learned how to deal with the requirement or we look into renouncing US citizenship, which has its own set of inconveniences to be considered. 
Cheers,
Bev


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