# Bank forcing me towards OVDP



## NMAEF

I live in... Switzerland, the home of UBS the bank that generated a lot of this mess. But I most certainly do not have millions and am on a fixed income: disability pension for ADHD... so as you can imagine, ADHDers being notoriously bad at admin stuff and great procrastinators I have fallen 5 years behind in filing returns which I actually thought I did not have to file, my income being way below the foreign earned income exemption.
I did not know about FBARS etc

Now my local Swiss Bank (I have a mortgage with them) is asking me for copies of FBARs etc and since I do not have them is requiring me to do an OVDP.

I read on the IRS website:
_What is the objective of this program?
The objective remains the same as the 2009 OVDP and 2011 OVDI – to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities *to avoid or evade tax *into compliance with United States tax laws.
_

Hey thats not me..I am just late (and suspect Uncle Same actually owes me some $ 

Is filing an OVDP admitting to being a criminal ?


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## Nononymous

NMAEF said:


> Hey thats not me..I am just late (and suspect Uncle Same actually owes me some $
> 
> Is filing an OVDP admitting to being a criminal ?


Basically yes. Stay a million miles away from OVDP. 

If you must, I might recommend you just do quiet disclosure or streamlined program to catch up on the FBARs, and show that to the bank and hope that it satisfies them.


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## Nononymous

As probably you know by now, the FEIE amount (approx $97k) is not the limit which determines your tax filing obligation. That amount is the basic filing threshold, which seems to range from zero to approx $14k depending on circumstances.


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## jbr439

AFAIK pension income in not earned income, so the FEIE cannot be applied against it - you have to use foreign tax credits, if any.


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## Bevdeforges

Or, for pension income, you can fall back on any tax and/or social security treaties between the US and your country of residence. Some of them state quite specifically where you will be taxed for your pensions (particularly government pensions).

This may help: Instructions for New Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer U.S. Taxpayers

The streamlined filing compliance is designed for those in "low risk groups" - where you simply haven't been filing, but probably don't owe anything anyhow. Or, you can try quiet disclosure.
Cheers,
Bev


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## maz57

1. Do not touch OVDI with a ten foot pole. It's for criminal evaders-not folks like you. Joining OVDI is in effect admitting criminality.

2. You could figure out your FBARS for the last few years. Then try showing copies to your bank....they don't know you haven't filed them yet or you only filed them yesterday. It might just do the trick and buy you some time.

3. It's possible you aren't in as bad a shape as you think. As Nononymous pointed out, the filing thresholds vary by filing status. Your gross income from all sources (which are not otherwise exempt from tax) is your starting point. You need to do some research on the tax treaty between Switzerland and the US. The treaty may say your pension income is taxable only in Switzerland. If so, your gross income would be much smaller and you may not even have a filing obligation. That would leave you with only the FBAR problem. I'll leave the research to you.


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## NMAEF

Bevdeforges said:


> Or, for pension income, you can fall back on any tax and/or social security treaties between the US and your country of residence. Some of them state quite specifically where you will be taxed for your pensions (particularly government pensions).
> Bev


*Thank you ALL for the tips*. You are way more helpful in your explanation to the poor idiot I am than my ex-tax accountant from when I could afford one... 

It does look like I have a lot more research to do but at least I have a better idea of where to look.

Bev: Following your advice, I did look at the Swiss-US Social Security Treaty but found nothing about where I should be taxed though the Swiss have been taxing me on my pension.

Where do you folks think I can find info on my Swiss pension taxable status ?


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## maz57

I finally found a list of 8 countries where US Social Security benefits are exempt from US tax if you are a resident of that country. Unfortunately, Switzerland is not on that list. 

http://www.irs.gov/pub/irs-pdf/p915.pdf 

Sorry.


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## NMAEF

maz57 said:


> I finally found a list of 8 countries where US Social Security benefits are exempt from US tax if you are a resident of that country. Unfortunately, Switzerland is not on that list.
> 
> http://www.irs.gov/pub/irs-pdf/p915.pdf
> 
> Sorry.


I don't get US Social Security... so nothing to be sorry about. BUT, I just realized by reading the treaties that my overseas time might contribute "quarters" allowing me to qualify for a small US Social Security pension.. 

I'll be more than happy to pay US taxes on it if I can get that.

So Thanks again.


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## BBCWatcher

To elaborate a bit, in order to qualify for U.S. Social Security retirement benefits most people need at least 40 quarter credits. That equates to contributions for 10 or more calendar years for most people. But there are exceptions.

One exception is if you contributed to one or more social security systems in countries that have a social security treaty with the U.S. In that case you can become eligible for U.S. Social Security retirement benefits with a minimum of 6 quarter credits. In theory you could contribute to U.S. Social Security for as few as 2 days of employment as long as those days fell in separate calendar years, and then you might have your 6 (or even 8) credit quarters. Because quarters aren't actually calendar quarters any more. You get one credit quarter when you earn a certain amount in Social Security taxable earnings (which increases each year with inflation), and it isn't very much. So a lot of people who worked for rather short periods of time in the U.S. (or in a few cases for U.S. employers outside the U.S.) can qualify for some benefits. Perhaps modest benefits, but modest is better than none.

OK, so, if you think you might qualify for benefits just contact the U.S. Social Security Administration to find out. Be sure to let them know whether you contributed into the social insurance system in another country (or countries) with which the U.S. has a treaty. Also make sure you tell them if you're married, including any same sex spouse, no matter what nationality, because there's a potential spousal benefit, too.

You can start collecting as early as age 62 and as late as age 70. Don't wait any longer than that -- you just lose payments if you don't start collecting by age 70. But the longer you wait until age 70, the bigger your monthly benefit. If you're in good health and don't need the money right away, it makes good sense to wait, perhaps as long as age 70.

Your benefit will be denominated in U.S. dollars, so the amount you receive each month will fluctuate depending on the exchange rate. Benefits can be paid in most countries. Annually there's a cost of living adjustment tied to the U.S. consumer inflation rate.

If you predecease your spouse there's a small death benefit, and generally your spouse's spousal benefit ends. But generally your spouse continues to receive your benefit for the rest of his/her life.

You may also be able to enroll in U.S. Medicare. Check with the SSA about 2 months before your 65th birthday -- put a reminder in your calendar. If you are eligible, Medicare Part A is typically free of charge, so you might as well sign up no matter where you live. Other Medicare parts are not free, so it generally doesn't make sense to sign up for those other parts if you live outside the U.S. and never or seldom visit the U.S. If you are eligible then generally your legal spouse is as well (same or opposite sex) when he/she reaches age 65. If he/she reaches age 65 before you do, get him/her signed up for free Part A and (possibly) for other parts if they make sense.


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## NMAEF

*Thanks* a lot for the info BBCwatcher. However (and I am not sure I mentioned it), at this time I am talking "disability", not retirement and I seem to remember the qualifying rules were different than for retirement I will have to re-check those rules..

But first I need to straighten out the tax stuff (nightmare seems more appropriate a word).


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## BBCWatcher

There are two possibly relevant U.S. Social Security programs: the regular disability program (let's call that SSD) and SSI.

To have SSD coverage you need both a certain number of years of contributions and some relatively recent contributions. How much depends on your age.

SSI may cover you if SSD doesn't, but it's means tested (income and wealth).

The SSA's Web site is pretty good at explaining both of these programs, so have a look when you get a chance.


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## maz57

BBCWatcher said:


> If you predecease your spouse there's a small death benefit, and generally your spouse's spousal benefit ends. But generally your spouse continues to receive your benefit for the rest of his/her life.
> 
> You may also be able to enroll in U.S. Medicare. Check with the SSA about 2 months before your 65th birthday -- put a reminder in your calendar. If you are eligible, Medicare Part A is typically free of charge, so you might as well sign up no matter where you live. Other Medicare parts are not free, so it generally doesn't make sense to sign up for those other parts if you live outside the U.S. and never or seldom visit the U.S. If you are eligible then generally your legal spouse is as well (same or opposite sex) when he/she reaches age 65. If he/she reaches age 65 before you do, get him/her signed up for free Part A and (possibly) for other parts if they make sense.


Your long write-up is a very good synopsis, BBC. My father died last fall, and I can confirm your notes about the spousal benefit. My mother's benefit stopped but she was bumped up to what previously was my dad's benefit. The death benefit was $255, not much but it's something. As I helped her sort things out I had occasion to phone SSA and I found them to be pretty knowledgeable and user friendly.


I do have one question about Medicare Part A. Is there a short window for applying for Part A or can it be done anytime after age 65? (Not relevant for me but I know some others who might be affected.) Medicare generally wouldn't be of much use to folks in Canada because of universal public health care, but travelers (snowbirds) could possibly benefit and the price is right.


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## BJ100

maz57 said:


> I finally found a list of 8 countries where US Social Security benefits are exempt from US tax if you are a resident of that country. Unfortunately, Switzerland is not on that list.
> 
> http://www.irs.gov/pub/irs-pdf/p915.pdf
> 
> Sorry.


@ NMAEF - use this link to see what information the IRS has on the tax treaty with Switzerland. Usually, the tax treaty docs are in two forms 1) the actual tax treaty with all the legalese that your average thinking person wouldn't understand. 2) a technical explanation that covers the scope of the tax treaty in more user friendly language. I used this to look up the South Africa- US pension tax treaty - I'm sure the Swiss versions would cover the topic of US Social Security (i.e. whether or not there's reciprocity, etc). Also if you google the US-Switzerland tax treaty, you'll find expat tax planning websites that discuss this - there are many expat financial planning firms servicing US expats in Europe who cover this topic on their blogs/websites. Obviously, you can't take everything you read on these websites as gospel but the info may help clarify some areas of ambiguity from #2 above. 

United States Income Tax Treaties - A to Z


Good luck!


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## BBCWatcher

There's no time limit (except death) to sign up for Medicare, for any part. If Part A is free it stays free, so obviously you might has well sign up at age 64.9, but yes, you can sign up later.

The other parts begin to increase in price if you wait too long. But I'm talking about Part A here. If that's free, grab it, even if you'll never use it. And if you haven't grabbed it yet, and you're age 65 or older, go grab it.


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## Nononymous

Do you need to be tax compliant to sign up for medicaire? <wink>


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## BBCWatcher

Interesting question! No, actually. Uncle Sam isn't pulling the plug on grandma because she didn't fill out her 1040 correctly (or at all).

Keep in mind you can't actually use Medicare without being in the U.S. (Well, OK, there are some very narrow exceptions that wouldn't apply to the vast majority of expats.)


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## maz57

BBCWatcher said:


> There's no time limit (except death) to sign up for Medicare, for any part.


LOL, at that point everyone would be far more likely to required the services of a gardener rather than a doctor!


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