Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 06-23-2016, 10:10 AM
Junior Member
 
Join Date: Jun 2016
Posts: 2
Household Allowance Taxable?

I'm a US Citizen housewife living in Hong Kong. My husband is a local, not a US Citizen, with no connections to the US. We got married in Hong Kong, and we live in Hong Kong. Hong Kong is home and we haven't been back to the US for many years.

I used to work, and was filing income tax during those years, also deducting Foreign Earned Income Exclusion. Since I never exceeded the Exclusion, I've never had to pay tax. 8 years ago, we had a child, and I stopped working, and did not have any income from that time forward. Since I didn't have any income at all, I stopped filing US taxes.

In 2012, my husband decided to arrange for his company to deposit some of his salary directly into my bank account for household expenses, school fees, etc.. This was part of my husband's salary, and was declared by my husband to the local tax authority, and local tax paid on it. The monthly amount is about US$5000 per month (Yes, Hong Kong is very expensive). I assumed that since this wasn't salary, I haven't filed this with the IRS as income.

Recently, my bank sent me documents to fill in for FATCA (https://www.treasury.gov/resource-ce...ges/FATCA.aspx) so they could report my bank account to the IRS. This bank account is already declared in my previous tax filings, and is not a new account.

Due to having to sign the FATCA forms, I've been looking at the IRS website, and from what I can gather, the amount that is banked into my account can be considered income?

I have a few questions.

1. Is this considered income by the IRS?

2. If this is considered income, how do I declare the amount since I don't pay local tax on it and there are no "employer" documents, and this isn't salary?

3. Since I started receiving this amount since 2012, I assume I'll have to file for 2012 onwards, but since the amount is still less than the Foreign Earned Income Exemption (https://www.irs.gov/individuals/inte...n-requirements), I'd assume that I can still take the Exclusion and not pay tax on it?

Any information would be greatly appreciated..



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 06-23-2016, 07:36 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,233
. Is this considered income by the IRS?=========>I guess so as it is deposited into your bank acct overseas; for example, An annual FBAR must be filed with the Treasury whenever you, a UC expat, has an interest in, or signature authority over, a foreign financial account with a value over $10k any time during the calendar year. It makes no difference if the average amount in the account during the year is less than $10k or all the money is withdrawn by the end of the year. If the account held more than $10k any time during the year, the FBAR must be filed. UNLESS the money is deposited into yur bank acct, your spouse and you do not need to report it to IRS


2. If this is considered income, how do I declare the amount since I don't pay local tax on it and there are no "employer" documents, and this isn't salary?=========>In my opinion, you need to repot th e interest income generated from your bank acct. you are preparing your Form 1040 income tax return and completing Sch B of 1040 for the Interest income. FinCEN Report 114 is used to report as you have a financial interest in, signature authority, or other authority over one or more financial accounts in a foreign country if the aggregate value of the accounts is $10k or more. The forms are required to be electronically filed by June 30 at FinCEN.gov.




3. Since I started receiving this amount since 2012, I assume I'll have to file for 2012 onwards, but since the amount is still less than the Foreign Earned Income Exemption ==========>>>In principle unless you reported the interest income since then , then you actually need to file 1040X even if amount is still less than the Foreign Earned Income Exemption (since you did not report the interest income since 2012). The IRS is very interested in offshore accounts and making sure that everything is reported correctly. Foreign banks are cooperating with reporting this information now, so be sure you are compliant with all of the financial reporting requirements.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 06-23-2016, 10:02 PM
Junior Member
 
Join Date: Jun 2016
Posts: 2
Thanks for your reply.

1. I'm not too sure on what you mean at the end of point 1, where you said:"If the account held more than $10k any time during the year, the FBAR must be filed. UNLESS the money is deposited into yur bank acct, your spouse and you do not need to report it to IRS".

The money IS deposited into my bank account directly from my husband's company and the total amount held in the account has exceeded US$10k during the year. So, I'll need to file FBAR then? My husband has never filed anything with the IRS since he is not a US Citizen and has no financial dealings with any US companies.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 09-10-2016, 07:41 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,233
Quote:
Originally Posted by anderson View Post
Thanks for your reply.



#1The money IS deposited into my bank account directly from my husband's company and the total amount held in the account has exceeded US$10k during the year. So, I'll need to file FBAR then?




#2My husband has never filed anything with the IRS since he is not a US Citizen and has no financial dealings with any US companies.


#1The money IS deposited into my bank account directly from my husband's company and the total amount held in the account has exceeded US$10k during the year. So, I'll need to file FBAR then? ====>It depends ; if you want yes go ahead and file your fbar a there is no penalty in filing the form with the US treasury; Or if you do not want to file FBAR then you need to prove( I may have told this to you before I guess) that the deposited into your bank acct in the foreign country belongs to your spouse. I mean you have no financial interest in, signature authority over the deposited money.
Help in completing the FBAR is available Monday through Friday, 8 a.m. to 4:30 p.m. Eastern Time, at 866-270-0733 (toll-free inside the U.S.) or 313-234-6146 (not toll-free, for callers outside the U.S.). Questions regarding the FBAR can be sent to [email protected].




#2My husband has never filed anything with the IRS since he is not a US Citizen and has no financial dealings with any US companies====>>Right; UNLESS he wants to file his return as MFJ with you, he actually does not need to file return with the IRS/State.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Meals allowance by client question farmboyfarm S-Corporation 3 08-31-2015 03:16 AM
Railroad Meal Allowance Help lemwoh71899 Income 1 02-11-2015 04:23 PM
Partial Mileage Reimbursement/Car Allowance loslobos9461 Auto Expenses 2 04-03-2013 01:58 PM
Depreciation and recapture of Special Depreciation Allowance when converting to personal use? texasadam Depreciation 5 02-17-2013 05:56 PM
What is the Foreign Earned Income Exclusions and Housing Cost Allowance for 2011? TaxGuru Income 0 12-13-2011 02:44 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning