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This is a rather specific question which I am trying to get help with. I can't find any tax pros that seem to understand much about non US tax issues to help advise.
I am a resident alien green card holder (UK citizen). I have shares in my father's UK family business in the UK (he is non US resident). He pays out a $20k dividend to me annually which he deposits in my UK bank account. At times I may or may not transfer over some cash from the UK which includes other sources of income such as rent from a UK property.
To date I have been declaring this UK dividend as a dividend and the rental income on my tax forms.
I was recently reading though about people declaring this dividend income as a gift. Since the money is simply going from my father's UK bank account to my UK bank account apart from the UK tax people there is no other record of it as a dividend.
Could I just say I received a gift from my father annually or maybe just not declare it at all? I would of course continue to declare my UK rental income.
What kind of risks might be involved? I guess it depends on just how much the INS follows paper trails abroad and liases with the UK tax people.
The whole tax situation in the US seems so incredibly complex it seems almost impossible for people with moderately complex circumstances to avoid making a mistake somewhere along the line. Most of my ex pat friends don't even declare their foreign income at all or file an FBAR form.. I guess everyone is just "playing the game"
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Most of my ex pat friends don't even declare their foreign income at all or file an FBAR form.

Make sure you check the silver after they visit. The fact that they've not yet been caught doesn't change the accompanying fact that they're thieves.

You've been reporting things correctly (including your FBAR reports, I assume). I don't know what reading you referenced, but from what I read elsewhere the US government is really touchy about proper foreign interest reporting.

I just double checked my passport, and my visas from the UK didn't include a caveat that I didn't really have to comply with their rules while there. One hates to be so blunt, but you and your friends are here by the good graces of the American people. If we make it too hard for your taste, leave. If not, comply with the law.

Phil
Rule Your Retirement Home Fool
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The whole tax situation in the US seems so incredibly complex it seems almost impossible for people with moderately complex circumstances to avoid making a mistake somewhere along the line. Most of my ex pat friends don't even declare their foreign income at all or file an FBAR form.. I guess everyone is just "playing the game"

Just because the IRS seems to be playing the game along with your friends, don't expect that to go on forever. We lived and worked in the Caribbean for close to a decade, and when we unexpectedly came back to the mainland, the IRS wanted to know where we had been all those years when it came to paying taxes. Fortunately we had extensive documentation showing we had payed all that was needed, but the IRS can go back as far as they think they can get away with if they think you have defrauded them. Just because they ignore your friends today, doesn't mean they will get away with it forever. Which is as it should be.

IP
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Fortunately we had extensive documentation showing we had payed all that was needed, but the IRS can go back as far as they think they can get away with if they think you have defrauded them. Just because they ignore your friends today, doesn't mean they will get away with it forever. Which is as it should be.

IP




If you had documentation showing you had paid, how come the IRS was asking about it? They should have had the records, too. I don't understand this.

AM
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If you had documentation showing you had paid, how come the IRS was asking about it? They should have had the records, too. I don't understand this.

AM


The IRS can't always find the records they should have.
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Whether or not the cash receipt is a gift for US tax purposes depends on the facts. These are not entirely clear from your description.

I think it would be difficult to take the position that the annual receipt is a gift for US tax purposes, if, as I infer, the dividend is paid by a corporation to you in your capacity as a share owner, presumptively after a board of directors's meeting at which a dividend was declared payable to shareholders (not just to you), which board action is supported by the company's books and records. It's hard to know for sure, though, since you refer to the payment both as a dividend in respect of shares you own in your dad's company, and as a payment by your dad from his account (not a corporate account?) to yours.

If you are the record or beneficial owner of the shares, the company declared a dividend, and the cash deposited to your UK account is the amount of the dividend, there's no basis for saying it's a gift, even if it was disbursed to your dad then paid by him to you. If you own the shares, but the company didn't declare a dividend, and you nevertheless got a cash contribution to your account from your father"s, maybe it's a gift. If your dad owns the shares, and treats himself as the owner of the shares and the dividends for UK tax purposes, and includes the dividend in his UK taxable income, even though he has paid it to your account, then maybe it's a gift.
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If you had documentation showing you had paid, how come the IRS was asking about it? They should have had the records, too. I don't understand this.

Well, we were pretty darned perplexed ourselves, particularly as they had kept track of our social security payments just fine, but the US territory we were in had a parallel but separate tax system and the tax dollars stayed on the island. They were inept at best, and had never shared with the Feds that we had payed our legally required taxes. Fortunately, we had been advised to bring a copy of our return when we dropped off our taxes in person, and have them stamped as received with an official dated stamp. We kept them for all the 9 years we were there. I'll never throw out a tax document again.

Even with all those docs it took over 18 months and a tax payer advocate on our side to straighten it all out. Seems as though once the IRS realized that fixing the issue would not bring them more revenue, they didn't want to deal with it. Had to go through the process of overnighting copies of our copies three times, starting over with the explanations every time a new letter was received and a new person assigned to the case. When asked by the IRS the department of revenue on the island either couldn't be bothered to try to find our docs when asked to do so, or they never kept them.

That was one part of coming back home I could have done without. I still get chills every time I see a letter from the IRS, knowing what a PITA it can be to deal with them even if we've done no wrong.

IP
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The reason that the whole thing seems like a game to me is that the worst offenders are actually US citizens. Many of the people I work with both US and non US citizens have worked in many countries and hold foreign bank accounts. I am constantly amazed how little US citizens (at least those I work with) seem to know of their own tax laws. The ex pats sometimes have some inkling of the obligations to report foreign income, interest, FBAR etc. Many of the US citizens have no idea that they were even supposed to be filing US tax forms, let alone reporting foreign income and forms like FBAR.
In terms of general income tax reporting I have found that ex pats are generally more cautious about things like deductions whereas the locals claim all sorts of outrageous and patently fraudlent things. They just say that the chance of getting caught is so unlikely that it's not big deal.
I always strive to do the right thing but even my tax professional was advising me to take all kinds of dubious deductions I was fairly sure I couldnt take and also totally failed to inform me of my obligations to file forms like FBAR. I fired them and decided to go it alone now, hence questions like this one.
I'll most likely continue to file as I have been and secretly hope that some of my coworkers get audited just so I can stand by and watch the show...That said I feel that no matter how honest I try to be something will trip me up somewhere along the line.
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of course I don't mean to tar all us citizens with the same brush. It is certainly a straw poll but as a foreigner you can but only take your cue from the locals as it were, and the people you work with are most generally the ones you look to in the first instance for advice, recommendations etc.
I have been on the fool for some time though doing my best to educate myself as much as possible and have tried to educate those around me with what little information I can glean.
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