Author Topic: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.  (Read 8191 times)

honeybun

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PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« on: March 16, 2014, 06:12:46 AM »
 
OMG please help me, I have not slept or eaten in 2 days I am beyond sick with worry.
 I was reading on a travel site about people who live and move form USA to other countrys, and vice vera, then one lady asked about
FBAR....I continued to read since I had no idea what that was, to my absolute horror it is a foreign bank acct report.
Also to my horror people who are US residents and have RRSP in canada   are suppose report this on their 1040,using a 8891.
also you have to fill out  FBAR  to the dept of treasury if you have more than $10,000 us.
this was all from extensive research for 2 whole nights, and days.

Here is my background,
married to a canadian 22 years ago, moved to usa 19years ago.
to date as of dec 2013 I still have 2 RRSP'S worth about $6,000  mine
my husband has 4 small RRSP'S as of dec 2013, they were worth $14,000
the RRSP's have just been in TD and RBC ,they have not been touched, moved ,or even looked at for years.

We receive the end of year statements form canada and thats it,  ...or so I thought.

I had no idea that these were foreign, off shore assets, I swear to god.
Since they RRSP and similar to IRa's I just left them be, we never received 1099's or anything  similar to suggest anything else.
I understand ignorance on my part is not a defense.
nothing was removed from the accts, they have stayed the same for years, in fact I think my husbands RRSP have grown a total of maybe $1,500 in more than 10 years.
my main worry is his, since its more than $10,000us
 
I am out of my mind with panic and worry, seriously have only   slept 4 hrs in the past 48 hrs.
 From all my searching, this is what I am thinking to do.
on monday call our tax person and explain to him  my findings, talk to him about amending our 2013 returns , and previous 3 years returns  using 8891 and get him to write a letter about his ingnorent client...me.
I will also ask him about the FBAR reporting.

I am totally a nervous wreck as you can tell, someone please help me.
we have never,ever tried to lie, deceive or hide anything ever.



 
 


grantmeaname

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #1 on: March 16, 2014, 06:26:13 AM »
You'll be fine. Take a deep breath and enjoy your Sunday, then try and be as calm as possible with your CPA and listen carefully to everything he says. I wouldn't be too worried about what the IRS will do to you. At worst they'll assess some small penalties on the balance due. If the account has only grown a hundred dollars or so a year the balance due shouldn't be oppressive.

szmaine

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #2 on: March 16, 2014, 06:33:52 AM »
I don't know anything about this topic. But if you haven't received a letter from the IRS or anyone else, then they don't know anything about you! CALM DOWN! It will be Ok.
What I do know is that these things rarely take on any kind of epic proportions for a small amount like that. Very small amount of money in an IRS type of account where no actual taxes would be due...no way this will turn into the mess you obviously fear. Now relax, while you learn there is no reason to panic and not sleep!!

http://taxblawg.files.wordpress.com/2013/02/sheppard_intertaxjrnl_2-4-13.pdf

Great overview of the subject...history,  significance, shit storm over harshness to Canadians, and steps IRS has provided in response to said shit storm, paths to fixing the problem that were instituted.

This should get you through until you can talk to you CPA...there is no way The IRS will be screwing Canadians over there retirement funds.
« Last Edit: March 16, 2014, 06:54:22 AM by szmaine »

mariarose

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #3 on: March 16, 2014, 06:37:51 AM »
I don't know about FBAR and all, but I do know the IRS has heard it all before.  They are not going to pass moral judgement on you, They will just want this fixed.

It sounds like you have a plan already, and between the IRS, your tax person, and you, it will all get sorted.

So Breathe, Read the Sunday comics, and take a nap!  Sounds like you can use one.  You'll be fine as long as you do what needs done from now on.  Have a good Sunday.

golfer44

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #4 on: March 16, 2014, 09:23:11 AM »
You're not the type of person they're after. You'll be fine, especially if you're going about it the right way (which it sounds like you are).

Give yourself the afternoon off, pick back up on Monday.

Cpa Cat

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #5 on: March 16, 2014, 09:31:48 AM »
This is not a big deal.

Number 1: Form 8891 is essentially a tax treaty form designed to specifically exempt Canadian RRSPs from the kind of legal implications that you're concerned about. So amend your returns and sleep easy. Question 6 is just an election to treat your RRSPs as though they are IRAs.

Number 2: You can amend your returns and file Form 114 (FBAR) yourself. These are simple forms. The FBAR is filed online at BSA's website. And 1040x will be easy, since you aren't changing anything, you're just attaching a form 8891 for each retirement account.

honeybun

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #6 on: March 16, 2014, 10:47:07 AM »
  THANK YOU ALL SO  MUCH XXXXX
 
 I will try not to panic,
 I have made notes on everything and will talk to my tax  guy tomorrow.
Just happens we will be in canada this weekend to see the inlaws, I will go to the banks and ask for statements from the past few years, I tried online but no luck.
I have totals for end ends for 3 years only ,I will try to go back maybe 3 more, my husband balance would have only been slightly over $10,000 at that time.

thanks again for you comments and kind words, if anyone has any experience with all this I would be happy to hear about it.

Cpa Cat

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #7 on: March 16, 2014, 11:17:28 AM »
The statute of limitations on your tax return (form 8891) is 3 years - so for amending, you do not have to go back more than three years (up to your 2010 return). Make that question 6 election to treat it as an IRA with your 2010 return and there will be no taxes owed (because you're electing to defer, just as you would a traditional IRA).

FBAR is 6 years, but it is also an informational form. Go back as far into the 6 years as you can, but if you have trouble, you are safe to estimate on the older forms. If you know that your value was $12,000 in 2010, but aren't sure about earlier years, round up to $12,000, which is the earliest accurate number that you have.

I've filed a few of these, and people don't normally file their FBARs with the exact amount that's in the account. People don't say they have an account worth $17,895.34. They report $18,000. Or even $20,000 if they aren't sure but want to throw in a safe margin.
« Last Edit: March 16, 2014, 11:29:39 AM by Cpa Cat »

lexie2000

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #8 on: March 16, 2014, 11:22:04 AM »
I don't know anything about your situation, but I do hope that what some of the other posters have told you gives you a little peace of mind.  Please go eat something and do something physical to release some of the adrenalin that is pent up in your body.  You'll feel better.

Cheddar Stacker

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #9 on: March 16, 2014, 11:24:27 AM »
The IRS statute of limitations is 3 years. You do not need to amend more than three years back.

Kinda sorta. I don't know the details of this specific form, but in most cases the statute doesn't begin until you file a form. So if you never filed, the statute never started.

Either way, this isn't something to stress over. You might owe a bit of tax, but that's the worst that can happen for someone with a small foreign balance. This law is intended to catch people with Millions hidden in Swiss bank accounts and the like. Those are the people that might end up in jail for not filing this form.

arebelspy

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #10 on: March 16, 2014, 11:26:40 AM »
I just want to reiterate: it will be okay.  :)

The type of person who contacts the IRS to fix their mistake and asks for help in doing so, they're actually quite helpful and accomodating.  Don't fret, work on it ASAP but it will all work out.  Let us know how it turns out.
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TacosForever

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #11 on: March 16, 2014, 11:50:16 AM »
I have an IRS story that might make you feel a little better :)

A few years ago, my mother cashed out a $50,000 IRA, didn't report it as income, and didn't have any tax withheld. She claims she didn't realize she needed to do any of those things (whatever, mom). She escaped without notice for three years, until of course they caught up with her and sent her a notice that she owed over $12,000 in taxes and penalties. My mom told me later that the person who worked her case at the IRS was one of the nicest, most helpful people she had ever met. At no point was she threatened with jail, garnishment, or anything of the sort. All they were interested in doing was resolving the situation.

Nothing bad is going to happen to you - the US tax code is one of the most complex and ridiculous things in existence, and nobody knows that better than the IRS. Just amend your returns as appropriate, and work with them if they contact you. All will be well!

Cpa Cat

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #12 on: March 16, 2014, 12:17:00 PM »
Quote
Kinda sorta. I don't know the details of this specific form, but in most cases the statute doesn't begin until you file a form. So if you never filed, the statute never started.

Form 8891 isn't a form that is independent from the 1040 - you can't file 8891 by itself. She filed her original tax return and left some information out (without fraud or a gross understatement of tax) - thus the 3 year statute of limitations applies.

I would also like to point out that there are no particular penalties associated with failing to file an 8891. You should discuss with your tax adviser whether you want to amend at all - the best course of action may simply be to file it with your 2013 return and move on with your life.

ID Debt Killer

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #13 on: March 16, 2014, 12:24:21 PM »
I sent you a PM, honeybun.  I've been a reader on here for a while, but I wanted to join so that I could reassure you as other have that you will be fine.   I work for an accountant and we have clients who have large accounts that they disclose and we have yet to see any follow up by the IRS.  They are trying to get a handle on who has foreign accounts and this is their first step in gathering the information to try to make sure that foreign income received by US filers gets reported. 

The forms require reporting of the "maximum amount" in the account during that particular year.   Don't lose anymore sleep! 

And yes--I was going to say as CPA Kat mentioned--If it was my own situation I probably would just start reporting it this year.

 By the way--It takes a LOT to make the IRS into a big nasty monster :-) they have a lot of things to follow and as mentioned this is not a huge one YET. 
« Last Edit: March 16, 2014, 12:31:10 PM by ID Debt Killer »

honeybun

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #14 on: March 16, 2014, 05:11:58 PM »
 
   I would like to say a huge thank you to all you lovely people, words cant express how much better I feel,
 I will get some sleep tonight.

just a quick question to cpa CAT...  on line 6a  do I check " yes" ???

    again many, many thanks xxxxx

honeybun

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #15 on: March 16, 2014, 05:47:23 PM »
   

  one last bit of information,

 just found some old spread sheets.
looks like my RRSP'S have gained  $ 650 in 8  years !!! average of $81.00/year
  my husband RRSP 's have gained $ 3060 in 8 years ...avaerage of $382.00 /year.

 

Cassie

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #16 on: March 16, 2014, 06:11:09 PM »
A number of years ago we made a mistake and found it ourselves. We resolved it very smoothly with the IRS & they were so very nice. I was afraid like you but very surprised at how great they were. Yes we owed a penalty & had a reasonable repayment plan.  No worries:))

honeybun

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #17 on: March 17, 2014, 10:56:53 AM »
    update from honey bun.


   Just got off the phone with our CPA.
  He said no worries, all we have to do is bring in our  year of end statements for the RRSP'S from canada, and he will fill out a 8891 for each ,then attach to a 1040 x....
he said the everything will work out as zero, since nothing was touched, but IRS needs to know this information.

also he said the goverment are just tring to get a handle on people with huge amounts of money that they are tring to hide, not a tax sheltered retirement fund earning less than $100 a year, but he stressed they still want this information.
He also mentioned that most expats have no clue that they have to do this, especially tax sheltered funs and people are shocked ....just like me.....
he was fully aware of the topic, but he said he would have no clue if I had ever lived in canada ,or had RRSP unless I had  told him, which I have never told him.

will fill out the FBAR myself, disclosing our RRSP totals.

Thanks for all great information and tips, I was able to talk through all this with the cpa , with lots of information.
 thanks again


arebelspy

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #18 on: March 17, 2014, 12:11:32 PM »
Awesome, glad it worked out.  Sounds like no jail time for you, you scofflaw.  ;)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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Better Change

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Re: PLEASE,PLEASE HELP..SICK WITH PANIC AND WORRY.
« Reply #19 on: March 17, 2014, 12:37:28 PM »
For what it's worth, I had to pay three years's worth of back taxes on a $30,000/year fellowship that I didn't realize was taxable income (WHOOPS).  The IRS fined me $50.  I was in a similar situation - not sleeping and freaking the heck out - but it all turned out okay.  Except for the thousands of dollars in taxes that I owed, of course ;)