# English teacher with tax issues



## Sparky McGhee (Nov 12, 2014)

I left the U.S in early 2006 and have never returned. I teach English in China now. I have about $80,000 in savings. Before moving to China about a year and a half ago, I was studying in Australia for two years. Before that, I was studying in New Zealand for one year. Before that, I taught English in Korea. I have bank accounts (checking) in all of those countries and one investment account in Korea. It is an index fund that has not performed very well. I estimate it has made about 3% per year. I have had it for about seven years. 

I just found out about this FBAR thing. The trouble is I also owe back taxes. I hired an accountant to find out the details from the IRS about what I owe, and it appears I owe about $15,000 dating back to 2001. From what I understand, having back taxes complicates any FBAR filing and I don't know what to do. 

Any help would be appreciated.


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## Bevdeforges (Nov 16, 2007)

The FBAR is only an informational return. You report your foreign bank accounts, but no money changes hands. OK, you have to clear up your tax situation however you must, but for the time being, you can (and should) back file 6 years of FBARs. If you don't have all the statements to find the precise high balance for each year involved, make an educated, good-faith estimate and file that information.

Probably best to file those now, without waiting for how you're going to resolve your tax issues. The full force of the FATCA legislation is only just getting started this year. Back file what you should and get it behind you. There's a place on the forms to present your "excuse" for late filing, which in your case is that you only just learned of the FBAR requirement. 

As long as there is no blatent discrepancy between your tax filings and what you report as accounts on the FBAR you should have little or no problem.
Cheers,
Bev


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## Sparky McGhee (Nov 12, 2014)

Thank you for the response Bev. I have foreign (checking) accounts going back to 2006. Two of them are long closed -- actually that might not be true. I may have forgotten to close them and they might have a negligible amount in them (say, $10). Should I just forget about them? It would be an incredible hassle to get account info on them and I really haven't got the foggiest how much was in them -- though definitely not a huge amount. 

Also, my understanding with the six year thing is that they want 3 years of tax returns to accompany them. Is that right? I am positive that I don't owe any back income taxes for the past 3 years. Also, what happens after I file the FBAR's and such? Do I just wait? How do I know when it is safe to tackle my other issues with delinquent returns? One thing my accountant told me was that there was a tax lein in 2008 which was never collected. Is an alarm going to go off when they process my FBARS? Sorry for all the questions but I am completely lost. I am working on the FBAR's now.


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## Bevdeforges (Nov 16, 2007)

The tough thing to understand here is that your FBAR filings are completely independent of your tax filings. You can file one without the other and chances are they won't actually cross check them - unless they have some reason to do so.

You absolutely don't file the FBARs together with your tax returns - they go to different offices anyhow.

There are plenty of folks who don't have to file income tax returns (due to having income less than the filing threshold) but who do have to file FBARs. It sounds like maybe your accountant is getting things sorted out for the last few years, so let him or her continue with that. You can still back file the FBARs (online - the only way they'll accept them these days) for the last six years and get yourself caught up on that. (Only takes you back to 2008 by my reckoning.) Do your level best to find or estimate your high balance for the past year - and frankly, if you forget an account or two with minimal balances, chances are it won't come back to haunt you. 

This is, however, definitely one of those things where you file your back reports and then figure that no news is good news.
Cheers,
Bev


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## DavidMcKeegan (Aug 27, 2012)

If you haven't filed taxes for the last few years, I would recommend getting caught up on those as soon as possible as well. Especially if you owe back taxes, you are going to want to file returns to prove that you are not continuing to owe year after year (should the IRS start sending you notices, they could assume the worst and send you collection notices for taxes due each year they don't have a return for you).

The best way to get caught up on your taxes is with the Streamlined program. File the last three years of returns, and six years of FBAR. You can file the FBAR's first (they are all e-filed and are much simpler to complete than the tax returns), but make sure to make copies of all of them so that you can include the copies with your Streamlined submission (once your taxes are completed).

If you are not able to pay the balance of the tax lien now (when you submit under the Streamlined program), you can set up a payment plan. 

Good luck!


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## Sparky McGhee (Nov 12, 2014)

I am going to do the Expat Streamlined Program. I have a question about form 8938. I am single and have considerably less than $200K. I see in the instructions:

"Unmarried taxpayers. If you are not married, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year."

So, I don't think I have to include this form. Correct?


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## BBCWatcher (Dec 28, 2012)

It sounds like you don't meet the reporting threshold, so then no, you wouldn't file IRS Form 8938.


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