topic foreign pensions and bank accounts in Deductions & credits

foreign pensions and bank accounts

confondante — Tue, 14 Apr 2020 18:38:16 GMT

Hello,

I have foreign pensions (from former employers when I lived outside of the USA). I have never withdrawn from these pensions and have not contributed in a number of years. The only change during the tax year is therefore to the extent that the underlying assets rise (or fall) in the marketplace.

Based on the above, in the section that asks whether these accounts 'had income, deductions or credits', what is the answer?

I also have a foreign bank account - the equivalent of a checking account. There is no interest on this account. Throughout the year, I deposit and withdraw money on a regular basis.

Based on the above, in the section that asks whether these accounts 'had income, deductions or credits', what is the answer?

Thank you for your help.

Re: foreign pensions and bank accounts

MarilynG1 — Tue, 14 Apr 2020 19:05:04 GMT

You don't need to report anything for your Foreign Pensions unless you take a Distribution.

At that time, you would create a Substitute 1099-R to report the income.

Click this link for more info on Foreign Pensions.

You also don't need to report anything in TurboTax for your Foreign Checking Account.

If the account exceeded 10K at any time during the year, you may need to file FinCEN Report 114 (Report of Foreign Bank and Financial Accounts) through the government's BSA E-filing System Website.

Click this link for more info on Foreign Bank Accounts.

Re: foreign pensions and bank accounts

confondante — Fri, 17 Apr 2020 15:52:05 GMT

Hello,

Thank you for your reply.

I checked the IRS 'Instructions for Form 8938'. It says:

Unless an exception applies, you must file Form 8938 if you are a 'specified person' that has an interest in specified foreign financial assets and the value of those assets is more than the applicable reporting threshold.

If you are required to file Form 8938, you must report the specified foreign financial assets in which you have an interest even if none of the assets affects your tax liability for the year.
Based on the Instructions, I seem to satisfy the 'reporting thresholds'.
The Instructions also say the following: 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.

Are you saying that I do NOT need to report my foreign pensions and foreign bank account because of the above last bullet point? Would movement in the pensions not count as 'gains' or 'losses'? Since Form 8938 does talk about foreign bank accounts, in which instances would foreign bank accounts need to be included?

This is the first year I am attempting to complete my tax return by myself. Two previous (unconnected) accountants included all my foreign pensions and foreign bank accounts. The facts were no different when they completed the returns: they included bank accounts which did not have interest as well as foreign pensions to which I had not contributed or withdrawn funds. I am therefore confused - I seem to be missing something.

As for the FinCen (FBAR): thank you, I have completed that.

Thank you for your time.