# Aussie Expat in US Superannuation



## irok

Hi,

I am an Aussie who has been a US citizen (dual) for about 3 years (living in the USA for 13 years).
I am married to a US citizen.
I was reading an article about Superannuation, I'm 57 and am thinking about retiring in the next 10 years and someone mentioned about filing some form with the IRS.
I almost had a seizure...I have never filed anything with the IRS about having a Super plan in Australia. I just thought when I retired and withdrew my Super (bulk payment), I would have to address taxation on it in the US then.
I don't pay into them, they are a preserved benefit (therefore I can't withdraw it till retirement age).
Total value of (2 super funds) about $40,000 AU
Do I have to file something (8938 or FBAR) or does this apply (from form 8938):
"Married taxpayers filing a joint income tax return. If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year."

I don't have any bank accounts or other assets in Australia.

thanks


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## Bevdeforges

Like it says, if you fall under the threshold for filing, you don't need to file anything. 
Cheers,
Bev


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## ForeignBody

irok said:


> Hi,
> 
> I am an Aussie who has been a US citizen (dual) for about 3 years (living in the USA for 13 years).
> I am married to a US citizen.
> I was reading an article about Superannuation, I'm 57 and am thinking about retiring in the next 10 years and someone mentioned about filing some form with the IRS.
> I almost had a seizure...I have never filed anything with the IRS about having a Super plan in Australia. I just thought when I retired and withdrew my Super (bulk payment), I would have to address taxation on it in the US then.
> I don't pay into them, they are a preserved benefit (therefore I can't withdraw it till retirement age).
> Total value of (2 super funds) about $40,000 AU
> Do I have to file something (8938 or FBAR) or does this apply (from form 8938):
> "Married taxpayers filing a joint income tax return. If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year."
> 
> I don't have any bank accounts or other assets in Australia.
> 
> thanks


Views vary, of course, but the general view is that this would not need to be on the FBAR, because you do not have any signature control over the account and it is not in your name, but that it should be reported on 8938.

*However, you are below the filing threshold, so do not need to report.*


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## irok

Thanks to you both, that is a relief


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## BBCWatcher

ForeignBody said:


> Views vary, of course, but the general view is that this would not need to be on the FBAR....


I don't think views vary much at all. Australian superannuation funds are FBAR/FATCA reportable according to the consensus views of tax accountants from what I've been able to determine. Defined benefit pensions are a different matter. "Signature authority" does not mean "cannot withdraw at the present time."

But don't worry. There's currently no penalty for unprompted, voluntary late filing of FBARs (FinCEN Form 114) with a reasonable, truthful excuse -- "I didn't know" counts. Just go ahead and file your FBARs electronically for calendar year 2013 (due June 30) and for any prior calendar years when you were a U.S. citizen or U.S. resident (and thus subject to U.S. financial reporting).


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## irok

Okay, so I HAVE to file an FBAR.
Boy, I wish I had of known.


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## irok

Do I have to file a separate FBAR for each year I have been a resident/citizen (14 years)?
Or can I do it all in one process?


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## BBCWatcher

One filing per year. No need to go back any farther than 6 years plus the current filing. So now that'd be 2013 (due June 30, 2014) plus 2007-2012 inclusive.

On edit: I see above that I didn't phrase one of those sentences I wrote correctly. I should have written: "Signature authority" does not necessarily mean "can withdraw my funds now."


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## irok

BBCWatcher said:


> One filing per year. No need to go back any farther than 6 years plus the current filing. So now that'd be 2013 (due June 30, 2014) plus 2007-2012 inclusive.


How do I get the exhange rate for previous years or should I just mark 15a Maximum account value unknown for the years prior to 2013?

thanks


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## irok

I actually see I can email the Treasury and get those prior dates....


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## BBCWatcher

The IRS's Web site includes a list of exchange rates, and those are fine. Or you can use any reputable source for historical exchange rates such as OandA, Bloomberg, or something similar.

Take your best, most reasonable estimate based on a reasonable exchange rate choice.

On edit: You can e-mail Treasury, but don't bother. This information is easy for you to get online from a variety of sources.


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## irok

BBCWatcher said:


> The IRS's Web site includes a list of exchange rates, and those are fine. Or you can use any reputable source for historical exchange rates such as OandA, Bloomberg, or something similar.
> 
> Take your best, most reasonable estimate based on a reasonable exchange rate choice.
> 
> On edit: You can e-mail Treasury, but don't bother. This information is easy for you to get online from a variety of sources.


I see the IRS uses 'average currency exchange rates', can we use these or do we have to use end of year (Dec 31st) rates instead?


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## BBCWatcher

Both are reasonable and defensible approaches.

If the Web site providing you with historical exchange rate data can tell you what the strongest Australian dollar rate was for that year, that's great, too.

Any reasonable approach is fine. Looking for the moment in time when the Australian dollar was the weakest during the year would not be a reasonable approach, for example.


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## irok

Also, if I put 'did not know I had to file' as a reason for the previous 6 years, will that be okay?
Has anyone here been fined for not filing when they didn't have a clue???


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## Nononymous

No reports of anyone ever having been fined. Exhale. Relax. Millions don't know about (or choose to ignore) this.


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## irok

One more question, I only get quarterly statements and being that it is invested in the stock market it fluctuates daily (like 401K), can I just use the highest statement amount (example: 2nd quarter) as my $ amount?


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## Bevdeforges

irok said:


> One more question, I only get quarterly statements and being that it is invested in the stock market it fluctuates daily (like 401K), can I just use the highest statement amount (example: 2nd quarter) as my $ amount?


One of the methods specifically recommended is highest statement balance for the year. 

And here's the IRS list of average exchange rates: Yearly Average Currency Exchange Rates
Cheers,
Bev


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## irok

My head is about to explode.
I have never used 1040B, am I supposed to fill this in (Part 111) for my superannuation (I don't contribute to it (preserved fund) or receive anything until I retire, just like a 401K)?


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## Bevdeforges

Are you referring to the Schedule B (for the regular 1040)? If so, the only thing you really NEED to fill in is the stuff at the bottom of the form that asks if you have overseas financial accounts that amount to $10,000 or more. Check the appropriate boxes and indicate the countries. 

Then you file an FBAR online. 
Cheers,
Bev


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## irok

I have already filed my taxes (via Turbo Tax) and received my return (like 3 months ago).
I wonder if it would be easier to just wait until 2014 taxes, check the box on Sched. B and file a FBAR then.
I mean it's been 13 years and this is the first I have heard of FBAR, etc.


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## BBCWatcher

Easier, yes, but unintentionally forgetting to check a box on Schedule B is an error with no penalty. Don't do it again now that you know. Willful failure to file FBARs is a felony with stiff penalties, at least on paper. You now know about the requirement to file, so I recommend you file now while there is no penalty for late filing. For tax year 2014 start ticking that box on Schedule B. If the IRS wants something else, they'll let you know.


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## irok

BBCWatcher said:


> Easier, yes, but unintentionally forgetting to check a box on Schedule B is an error with no penalty. Don't do it again now that you know. Willful failure to file FBARs is a felony with stiff penalties, at least on paper. You now know about the requirement to file, so I recommend you file now while there is no penalty for late filing. For tax year 2014 start ticking that box on Schedule B. If the IRS wants something else, they'll let you know.


If I went that route, then I guess I should just file an Fbar for 2013 only, filing previous years may look like I knew but failed to do so.


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## BBCWatcher

irok said:


> If I went that route, then I guess I should just file an Fbar for 2013 only, filing previous years may look like I knew but failed to do so.


No, _failure_ to file back filings would look like you knew and didn't file. Now that you know, get caught up. That requires 6 years (2007-2012) plus the current (2013).

You're tremendously overthinking this. _If you want to get compliant_, there's one and only one option: file truthfully. "I didn't know I had to file" is apparently a truthful explanation, and there is currently no penalty for voluntary, unprompted late financial filings with reasonable cause. ("I didn't know" if truthful is reasonable cause.)

Stop with trying to second guess the tax authorities. You're really not doing a very good job as psychic here.


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## irok

Lol...probably so...
I guess I will file 7 years and remember to check 1040 part lll schedule B next year.

Thanks all for your help


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## BBCWatcher

That'll work!

Your idea of filing 2013 only is really not a good idea. The U.S. government knows you've been a U.S. citizen for years, and you're only now getting around to reporting a fairly chunky Australian superannuation account? Well, OK, fair enough, but if you knew enough to file for 2013 then why didn't you file prior years? It's a pretty safe bet you didn't contribute to that superannuation fund from Topeka, and it didn't get to be as big as it got solely within calendar year 2013. That's pretty clearly willful noncompliance: "one of these things is not like the other." And maybe the U.S. Treasury would send you a "polite" (ahem) letter asking where those prior year filings are.

Take. The. Deal. The current price for full FBAR compliance is advertised as zero, so _if you're going to be compliant_, why on earth wouldn't you do it the right way?

As an aside, it appears that the FATCA agreement between the U.S. and Australia does not require routine reporting of superannuation funds. However, even though the U.S. Treasury may not receive adequate information in this circumstance to pursue compliance cases should it choose, the legal reporting requirement you have is still in force. In other words, while the risk of detection of a non-reported superannuation account may be small, hopefully we're not all conducting our lives based solely on what we might be able to get away with. Especially if the cost of compliance is zero or very nearly zero. This is a financial report only, and there's no point taking the risk.


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## irok

I didn't know it was zero, all I had read was up to $10,000 fine....even for coming 'clean'
Aside from what it sounds like on here, I never 'try to get away' with anything, before (and since) becoming a citizen, I pride myself on being an upright citizen. I may over think but my intent was never to get away with anything.
My super is a preserved fund, before I left Australia I was able to withdraw it all except a portion that has to stay in the fund until retirement age. I haven't contributed to it since I lived in Australia some 14 years ago.
Thanks again for your help


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## BBCWatcher

Oh, don't worry about it. Millions of U.S. citizens and nationals are unaware of this reporting requirement. Now that you're aware, there's an easy, straightforward solution. No problem.


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## Bevdeforges

The FBAR isn't due until the end of June. To be honest, in your situation, I'd just file this year's (i.e. for 2013) and keep on filing going forward. If your super-annuation is the only reportable account you have, they're really not going to come after you about the back filings or the failure to have checked the box on the Schedule B.

Now, if you have other "significant" holdings outside of the US that you haven't been reporting, that's a whole different story.
Cheers,
Bev


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## BBCWatcher

Bev, what's the _advantage_ to _not_ filing 2007-2012? I can think of some potential disadvantages, but I can think of no advantages whatsoever, _assuming one wants to be compliant_.

What's the upside with that advice?


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## Bevdeforges

The up side is that you appear on the radar for the first time in 2013. For a single $40,000 retirement fund, it's very unlikely they'll swoop down on you bearing handcuffs. In fact it's very likely that they'll just assume you set up the fund in 2013 and be done with it.

If they really want the information, they might (if they have nothing better to do) send you a note asking if you should have filed in earlier years and asking you for the back FBARs. But it is extraordinarily difficult to believe they would do that. (Have filed a "first FBAR" for several times that amount - for a friend - and there was never any comeback.)

They really aren't looking for small timers here. But if it makes you feel better, file the back FBARs. Either way, it's very unlikely you'll ever hear anything back.
Cheers,
Bev


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## BBCWatcher

That's no upside.

Look, I think this really is very simple, and I've said it before: "Don't be a jerk," even a minor one. The offer still on the table, still advertised, is zero penalty for voluntary, unprompted backfiling with reasonable cause, e.g. a truthful "I didn't know." Take. The. Deal. Don't be cute.

That'd be my advice.


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## Nononymous

BBCWatcher said:


> ...hopefully we're not all conducting our lives based solely on what we might be able to get away with.


Well, actually, that's a very useful principle to live by, at least with respect to non-resident taxation.


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## irok

I looked last night and actually might have difficulty (I can't see them sending me 24 statements in less than a month from AU to USA) getting 6 years (24 statements) from the Super fund anyway.
I never thought I would need previous statements so I only keep 2 years worth.
Super funds like 401K all have charts showing past performance, so I figured I didn't need them.


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## Bevdeforges

irok said:


> I looked last night and actually might have difficulty (I can't see them sending me 24 statements in less than a month from AU to USA) getting 6 years (24 statements) from the Super fund anyway.
> I never thought I would need previous statements so I only keep 2 years worth.
> Super funds like 401K all have charts showing past performance, so I figured I didn't need them.


Report what you have and then going forward. It shouldn't cause you any problems, really.

In the case where I started filing FBARs for my friend, her husband had died and he was the one who handled all their taxes. Two years later, she got nervous about filing - and so we just started filing at that point. We have no idea what (if anything) her husband was filing before he died. 

The really important thing (as long as you have nothing to hide) is to make a good faith effort. You generally won't be penalized for that.
Cheers,
Bev


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## 1143442

So irok, what eventually happened in your case? I'm in a similar position...I've been here since 2001. I had no idea about the FBAR thing until last year when another expat mentioned it. I back filed FBARs to 2009 after I found that out.


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