Chile Forum

The FBAR laws keep getting updated. For those who don't know what an FBAR is, it is a Report of Foreign Bank and Financial Accounts, commonly referred to as the FBAR. It is filed on the US Treasury Form TD F 90.22-1.

I found this summary of the new laws and thought I would pass it along as others might be interested. The full summary can be found here http://www.financialsense.com/node/6896 (starting on the second page after some commentary). There is also a link to the complete 11 page Instructions. Here are some excerpts:

"The new regulations became effective March 28, 2011, and applied to FBARs that were required to be filed for calendar year 2010.

"That’s right. The new regulations were retroactively effective, leaving investors no time to make adjustments with their offshore holdings as regards reporting requirements....

After reviewing the draft instructions, and as the title of the form suggests, US persons will be required to report all worldwide assets subject to exceptions and applicable threshold amounts. And it appears that the new form and reporting requirements apply to tax year 2011...

"Questions about what constitutes a foreign financial account continue to plague FBAR reporting. However, Form 8938 makes it fairly clear what is considered a specified foreign financial asset in two paragraphs:

"You have an interest in a specified foreign financial asset if any income, gains, losses, deductions, credits, gross proceeds, or distributions from holding or disposing of the asset are or would be required to be reported, included, or otherwise reflected on your income tax return.

"You have an interest in a specified foreign financial asset even if there are no income, gains, losses, deductions, credits, gross proceeds, or distributions from holding or disposing of the asset included or reflected on your income tax return for this tax year.

The 11-pages of instructions cover much more, including many more taxpayer asset structures and scenarios. And there are numerous nuances to the new language contained in the Final Ruling on FBAR reporting.

I read through the form 8938 draft instructions. Essentially, if you have a partial ownership interest in anything, you have to report the total value. So, a $1 interest as a partner in a million dollar asset, you have to report the entire value. That is just frigen crazy. The rest of the instructions are all over the place. Sometimes the threshhold is $200,000, sometimes $50,0000, and there is at least one example that seems to be under $50,000 . So which is it?

There is explanation of what to do if you are married to a foreigner, and do not live in the U.S. Most of the rules and examples seem to be squarely targeted at Americans living in the U.S. with assets of any sort overseas.

Did not see any explanation regarding Gold or Real Estate.

Certainly it is as clear as mud at midnight at the bottom of well...

My reading of it is that it is necessary to report anything that is in an account, stock, trust, custodial arrangement or partnership of some kind. So a precious metals account somewhere exceeding the threshold would need to be reported. Same with real estate. But I don't see anything that indicates that real property such as a Chilean Campo where you live would need to be reported but I'm not a tax attorney. As to a $150,000 bottle of wine in a safe-deposit box in Santiago, a painting on your wall, or the platta you have in your dog: I don't think so but it seems a bit vague. Certainly will need to ask my accountant what he thinks.

I'm also really confused about the two forms. There is the US Treasury Form TD F 90.22-1 that has a simple threshold of $10,000 in overseas accounts and then there is IRS form 8938 that has very confusing rules. It seems from the instructions that if you were married spending less than 330 days a year in Chile, you wouldn't need to report on form 8938 until your foreign asset accounts exceeded $100,000 on the last day of the tax year and $200,000 on any given day in the year.

But do you still need to report Form TD F 90.22-1? I think you do.

Don't know yet...

Related threads:

US IRS Form 90-22.1, do people file this?
topic1460.html

US tax - IRS form 8938 - Foreign Account Tax Compliance Act
topic6396.html

Thanks RX. Looked for those threads and couldn't find them.

Kel wrote:But do you still need to report Form TD F 90.22-1?

Yes. This is a FINCEN TREASURY form, not IRS and must be sent to a different address BEFORE the deadline (not postmarked by date like an IRS return).

Thanks for the answer to that, RX.

Do you know the answer the other question about real-estate and collectables...?

Kel wrote:Thanks for the answer to that, RX.

Do you know the answer the other question about real-estate and collectables...?

No, I was hoping you can get your tax attorney to clarify those for the rest of the forumites.

I've sent him an e-mail...

As you mentioned above, does this impact people that live in the US that have foreign holdings or true expats with some accounts back in the US? I still own a home that I'm renting out. I still need some accounts opened in the US to handle some payments, but the bulk of my income will be consumed in Chile.

Appears, everyone

I remember back in the 90s all the "expat" scam ops selling expensive "bulletproof privacy" international trusts, international corps, etc.

Then the Panama as financial privacy paradise this and that push.

Where are all these sociopathic assess with those a$$et$ now Probably living in Patagonia with the proceeds from those $cammed expat a$$e$.