Weekly Q&A #2

Jeremy: I live in Germany and the only account over which I have signatory authority briefly had close to 200 000 Euros in it. This was for a period of several hours during which we bought our house. Do I still need to file a FATCA and FBAR?

Locus Tax: Congrats on your new house purchase!

Yes, the rule does not indicate exceptions on such cases. However, if it is not delinquent, it should just an informational return, and if it is delinquent, it would possibly be qualified for reasonable cause exception.


Mike: I live in Germany with my German husband. How does that work tax-wise? All of our bank accounts are joint. How are they taxed? I do apply for the foreign earned income exclusion.

Also, the last 2 years I earned income in the US but this year I did not. Do I still have to file state taxes?

Thank you so much for doing this. I’ve asked the CPA I used in the States but this was beyond her.

Locus Tax: This is certainly a complicated situation, and without having too much background information, I can only give you a general answer which should be enough to get you going.

Generally, a married couple can’t file a joint return if either spouse is a nonresident alien at any time during the year. However, if you were a nonresident alien or a dual-status alien and were married to a U.S. citizen or resident alien at the end of 2015, you can elect to be treated as a resident alien and file a joint return.

However, it should be noted that if the election is made, the other resident’s worldwide income will also be taxed in the U.S., so it is advised that the couple should consider tax implications in each scenario.

Generally, most states have their own rule to determine state residency, and it should be reviewed under such rules comprehensively.
I hope that answered your question. Feel free to shoot me a message though!


Michelle: Please say you’re still answering questions!!

I lived in Japan from 2/24/15-9/29/15 and made appx $14,000 USD. I obviously do not qualify for the physical presence or bona fide residence requirements.

I was filling out my forms on H&R block online and was entering my foreign income- it basically just asked me to enter my works address, my address in Japan, and my income in Japan (didn’t ask what I paid in taxes there) and as soon as I entered this info my refund showed that it dropped about -$900 and I went from earning to owing.

Is there something else I need to do? I read something about them not being able to double tax me, since I did pay taxes on my Japan income. Also, would I be able to claim moving expenses even without the physical presence.

Locus Tax: Congrats on your new house purchase!

Yes, the rule does not indicate exceptions on such cases. However, if it is not delinquent, it should just an informational return, and if it is delinquent, it would possibly be qualified for reasonable cause exception.


Dan: I am an expat US citizen. Does my spouse need an ITIN? My spouse has never lived or worked in the US. My filing status is “Married filing separately”.

I am finished with my taxes (on the free version of H&R Block) but it keeps giving me an error about missing my spouse’s SSN or ITIN. It says I can print my return with the errors and mail it in (it won’t let me e-file) but it could be declined. What should I do?

Locus Tax: Yes, your spouse needs an ITTN to claim tax benefits, i.e., dependent, personal exemptions etc. Message me if your return still feels incomplete. We’d be happy to help further.


Nella: Hi! Thanks for doing this. I lived outside of the US until the end of October last year then moved back to the States. I have been living abroad for several years and was being excluded from federal income tax using the physical presence test. But now I think I will have to pay for 2015 since I moved back home (as was n US for more than 30 days). Is this right? How much can I contribute to a Roth IRA for 2015? Thanks!

Locus Tax: Answer to question #1- If you are a citizen, file for 1040 If you are a foreign national, file for 1040 NR Presence Test: You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting: All the days you were present in the current year, and 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year.)

Answer to question #2- For 2015 and 2016, your total contributions to all of your traditional and Roth IRAs cannot be more than: a) $5,500 ($6,500 if you’re age 50 or older), or b) your taxable compensation for the year, f your compensation was less than this dollar limit.

Hope it helps!


Ryan: I learned about FBAR literally two hours ago. I have been living in Canada for the past five years, for most of that time with less than 10k since I was a student. However, I dd do an internship and have had at least 10k across all accounts for some time. I have been filing taxes both in Canada and the US, and I never read anywhere that FBAR was needed. No government agency has ever contacted me about this.

Locus Tax: Hey there! Take a deep breath! From what I gathered, you are not in danger to lose your money at this moment. The IRS intends a taxpayer to voluntarily report the FBAR to the US government.

The FBAR reporting obligation is satisfied by answering a question on a tax return Form 1040 such as Schedule B. Since you fled the US Tax return, you can find the information on Schedule B.

Do I need to file FBAR every year?

Yes, you do need to file the FBAR every year when the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year. For this year, the FBAR due date s on June 30th. You can file for the delinquent FBARs till then.

Tip: Effective July 1, 2013, the FBAR must be filed electronically through FinCEN’s BSA E-Filing System. Note that the FBAR is not fled with a federal tax return.

Will I be penalized for not doing the FBAR filings previously, and if so, where can I find information on such penalty?

Those who failed to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation that are not due to reasonable cause. Since your case is a non-willful violation, you may be able to wave the penalty by submitting for a reasonable cause.

Is the 10k limit n USD?

Yes, the limit s 10K n USD. The amount will be converted using the average of the exchange rate during the filing year.
Let me know f you have more questions!