# Question on Tax Bill



## Madison1980 (Jan 12, 2017)

Ok, started filing a few years ago - with lots of help from this website. Fbars, etc for past years. I have lived in uk since 1995 - my husband and I have a small business here. I have had savings in the States for years. I was leaving it there for 'a rainy day'. It was with Merrill Lynch, but then a couple of years ago, they informed me that I had to move my money because I lived abroad. Found a new bank - but was a bit worried. So we took most of the money over - bought an apartment - for the 'rainy day'. 

It was 70k that we brought over - now the IRS have landed me with a tax bill for 14k. I really only put the numbers in tax return as per my paper work from bank. The bank invested that money in securities, which they sold to give me the money. I don't see this as earnings - actually with all that it cost me in expenses with the bank - and that the stock or whatever they bought performed terribly - I lost money. 

Don't really have 14k to pay them. I think I missed telling them that those securites cost me a heck of a lot to buy - it was possibly same year. I think it was or the next year. (with new bank) But as I said this money was sitting for years and not earning much. Any suggestions, Thanks


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## Bevdeforges (Nov 16, 2007)

I take it this was paperwork from the US bank - or was it from Merrill Lynch?

Ultimately, what you "should" be getting taxed on would be the "earnings" from whatever your original basis was in the securities - so probably a mix of capital gains and interest or dividends on the investments. Unless the money was in a "tax deferred" type of account (say, an IRA or 401K or something similar).

What kind of paperwork did you get from the bank? If it was a form 1099, what suffix did the form have? 1099-INT is for interest payments, there are other types of 1099 forms. But if you have capital gains, they may report things differently and they may or may not have information on what you originally paid for the securities.

Probably a good idea to pull together all the paperwork you have on these funds - what you originally paid, how long you held them, etc. - and either talk to a tax adviser or possibly contact the IRS Taxpayer Advocate to see what can be done to try and sort out what you actually have here and what you do or don't need to pay taxes on.


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## Madison1980 (Jan 12, 2017)

Thanks for reply - Bev. Just looking at my paperwork again. It was a new bank - new paperwork and I think I missed the Form 1099-B - which I didn't fill out on tax form. ugh. The other pages are so easy - for 1099 - INT it says put this figure in form 1040 line 8b. But this page is a lot of writing and doesn't give step by step instructions. So I will read this and see if I can figure it out. 

Thanks - I'll probably be back!! When and if I can figure anything out.....


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## Wirges (Nov 12, 2016)

I have an appointment with the FISC on the 17th. They have made errors every year that I have filed and I have always had to pay a tax attorney in Paris 500€ per hour to straighten it out. My French is not good and at the Hyeres office there is evidently no one who admits they speak English and the rest are clueless. This is a nightmare every year. I thought the IRS was inept but from where I sit they're geniuses. The Paris attorney has told me that according to article 24 of the Franco-American Tax Treaty that income derived from the US is taken in account for the calculation of the French tax if their beneficiary is a resident of France, BUT in this case he is entitled to a tax credit equal to the amount of the French tax corresponding to that income. Therefore I should be only taxed on my French income which was only 495€ in 2018.


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## Madison1980 (Jan 12, 2017)

Wirges - I'll let Bev comment on your case. I agree that it's all a headache. 
My case - in case someone is interested - was easy enough to solve. I really am new at all of this. I needed another form from Bank- 1099B - I had to fill out an amended return using this info. The pain problem was that gain was reported to IRS by bank, but not the cost. So, I have posted it off showing the cost. Hopefully, they will be happy enough. It was a genuine mistake on my part. I omitted to enter gains and costs on original tax return. It's all a learning curve. Thanks for help again.


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## Bevdeforges (Nov 16, 2007)

Wirges said:


> The Paris attorney has told me that according to article 24 of the Franco-American Tax Treaty that income derived from the US is taken in account for the calculation of the French tax if their beneficiary is a resident of France, BUT in this case he is entitled to a tax credit equal to the amount of the French tax corresponding to that income. Therefore I should be only taxed on my French income which was only 495€ in 2018.


That's not really how it works. 

What happens is that they take your worldwide income, including your US source income and calculate the tax on it. Your tax credit for those bits of your US income that are subject to the tax credit is then done as a percentage of the total tax.

So, simple example:

Let's say your French income is 495€. But your US income is 50,000€. Now, let's assume that all your US income is subject to the tax credit (which may or may not be the case, depending on the source).

First, figure the French tax on 50,495€. Using the 2019 tax rates, that comes to 9202€

OK - your credit on that is now 50,000/50,495 * 9202 = 9102€ Leaving you with 100€ in French tax to pay. 

But not all US source income is eligible for the tax credit in that manner. Some kinds of investment income are taxed in a different manner which takes into account the assumed US taxes on the amounts involved. That's where things get tricky - and may be where your problems are coming from.


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