Thread: Yanks, Thai Banks, and the IRS

When I was doing my US taxes. There was a place on one form that if I had over $1500 in devidend or interest payments, that I had to check a certain box yes and file a separate form the the US treasury.

Basically if you had any transaction over $10000 either sent into Thailand or you account ever went over that amount, you had to file this document.

Then I read in another International Tribune that the IRS and Treasury are looking at people who don't file this this year so they can assess penalties. (Something like half of the account balance). Could be big bucks for someone who say maintains a retirement account for visa purposes.

If this applies to you, first of all congratulations for planning and having a few bucks stashed away; and second don't get caught by not filing the form. 2007 has a June 30 deadline this year.

http://www.irs.ustreas.gov/pub/irs-pdf/f90221.pdf

Report Your Foreign Bank Accounts Or Go To Jail?

"Form TDF 90-22.1 is required to be filed by U.S. citizens and permanent residents who have financial interest in or signature or other authority over any financial accounts, including bank, securities, or other types of financial accounts in a foreign country, if the aggregate value of these financial accounts exceeded $10,000 at any time during the tax year (the highest value of each account during the tax year combined with all other foreign accounts exceeds $10,000 at any one time during the year). The form is due on June 30th of each year following the year reported on.

The civil penalty is the amount of the transaction or the value of the account, up to a maximum of $100,000; the minimum amount of the penalty is $25,000. In addition, any person who willfully violates this reporting requirement is subject to a criminal penalty. The criminal penalty is a fine of not more than $250,000 or imprisonment for not more than five years (or both); if the violation is part of a pattern of illegal activity, the maximum amount of the fine is increased to $500,000 and the maximum length of imprisonment is increased to 10 years.
Congress in 2004 amended this section to provide that the Treasury can assess the a $10,000 penalty whether the failure to file this information form is willful or not.

Originally Posted by cluezo

Fuck them - don't file, period. IRS ain't got the budget to chase.....

Really not good advise, if someone has a retirement account where they transfered over $10000 baht via a SWIFT transfer since the SWIFT transfer amount would have been reported by the US bank with your social security number attached already. The have your name, the receiving bank account. Not worth the risk of the fine and loss of funds in the account.
Now they (IRS and US Gov.) are treating retirees like international terrorists and drug launderers. Sad but true. The laws were enacted long ago for one purpose but now are used against normal folks.

Originally Posted by DontTaserMeDude

you would really have to be rich already to earn that much in interest

Some would call it retirement planning not rich.

Anyway just pointing it out here, so that anyone affected will be able to file the correct form and avoid confiscation of assets.

Originally Posted by cluezo

Why is it that anyone in their, say late 40's or older have not figured out a way to sneak their money around?

Because we don't have to sneak it around.

Transfers are legal and cheap. We like to keep our money in federally insured banks in nice CDs collecting interest and a use a Thai bank account to legally qualify for the retirement visa. Nothing sinister. Nothing to sneak.

I pay my taxes. I was, after all, a government employee much of my life. Taxes paid much of my salary afterall. I am a Liberal not an Anarchist.

Thanks for the heads-up on this. With the weak dollar and strong Baht more people will qualify.

Unfortunately, it looks like just another Big Brother looking over your shoulder, loss of privacy, power grab to me though.

Originally Posted by MisterStretch

^555

I don't ask anything of my government. The services I do require I have to pay stiff fees for; passports, notarials, etc.

I don't want anything from them, so I don't owe them anything. Just my way of thinking.

Since you probably don't make the $80,000. Let/s look at the logic of this approach.

The first $80,000 of money earned abroad is Tax Free. So you pay $0. All you need to do to claim this is not file.

Failure to file results in loss of this exemption. Penalty fees on the amount of the tax. And interest on the tax that you are now required to pay because it is no longer exempt. (Probably near half of whatever they can prove you make.) Now there is a paper trail. Thailand, Korea have Tax Treaties with USA. I assume you are American since the thread is geared for Americans. Any funds put into a bank account would be assumed to have been earned income. So lets say you get $2000 per month. File it is tax free. Don't file. Get caught (this most frequently happens when after years of no tax you suddenly reappear in your home country, earning an income.

This event of course triggers a red flag in the computers and the probability of being audited is now likely rather than say 1% that it would have been if you had filed your $0 due 1040s.

So you get audited. They ask you where you were. You say Korea. Or lie (but there is an electronic trail of wire transfers, phone records from Korea to you mom's house, the occasional document notarization at the embassy. A few phone calls back to Korea after you leave.

Irs puts a wire to Korea, gets the bank records. Say you were there 10 years at $2000 a month . $240,000 earned.

With the proper forms, no tax due, no audit. But time each year to fill out the damn form and waste a weekend.

Your way, 20% of $240000=$48000. Plus penalties of around 25% another $12000. That is $60,000. And of course interest on all that money. Lets round it off to say $15,000. Total is now around $75,000.(Let's say interest rates are equal to mortgage rates of 6% and you would have to pay interest of $325 per month just to stay even without increasing principle amount due. You will have to pay interest on a hopefully declining amount until paid in full.

And you still have to do the forms. Now you have a real project. Filing each years forms based on the tax code in effect each year without the exemption. Hassle each year, imagine 10 years worth. Different tables, exemptions, numbers. etc.

Mai bpen rai. Your problem not mine.

If you want to follow that procedure you can.

I would suggest you refrain from giving others such brilliant financial advise. Perhaps even consult an accountant or expat book keeper before returning to the states and filing the back forms,

Or

start learning how to pass the Thai reading and writing course, pay 191,000 baht for residency status, with an eye on becoming a "Thai Citizen" or the citizen of another country should your stay here ever displease the locals.

Good luck.

Interesting that congress removed the "willful" requirement for assessing the fine.

Originally Posted by pumpuiyai

Interesting that congress removed the "willful" requirement for assessing the fine.

Which make me think that this year they are going to enforce it. Anyone who made a SWIFT transfer for more that $10000 better file the form as they already have the information anyway.

Damn fascist American Government under His Imperial Grand Nothingness George W.

But I did file. In fact I think I'll do it twice, certified mail, return receipt requested just to prove it to the damn bastards.

UPDATE:
Someone asked about the Foreign Earned Income Exclusion: Find that information here:http://www.irs.gov/businesses/articl...pdf/f2555.pdfl

The 2007 form is here: http://www.irs.gov/pub/irs-pdf/f2555.pdf

and the US Citizen abroad information is here: http://www.irs.gov/pub/irs-pdf/p54.pdf

Also article 23 of the US Thai tax treaty may be significant for Newbies.

ARTICLE 23
Teachers
1. An individual who visits a Contracting State for a period not exceeding two years for the
purposes of teaching or engaging in research at a university, college or other recognized educational
institution in that State, and who was immediately before that visit a resident of the other Contracting
State, shall be exempted from tax by the first-mentioned Contracting State on any remuneration for such
teaching or research for a period not exceeding two years from the date he first visits that State for such
purpose.
2. This Article shall apply to income from research only if such research is undertaken by the
individual in the public interest and not primarily for the benefit of some other private person or persons.

When I was in Korea, I did not have to pay taxes on my salary because of it. Not sure if anyone is claiming it in Thailand. But it is on the books. The Embassy would surely know. It basically means that for the first two years you would not pay Thai Taxes.

Full text: http://www.irs.gov/pub/irs-trty/thailand.pdf