User talk:Lizzit

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Hello and welcome to TaxAlmanac! I like the detail on your user page - great job!

Please let me know if I can help in any way with you getting used to TaxAlmanac - that's what I am here for.

- Tim Doyle, TaxAlmanac Moderator - Talk to me 09:33, 11 September 2006 (CDT)

Hi Lizzit,

Thank a bunch for you help.



excellent points.


i paid a variety of credit cards but I still cannot get copies of the original invoices?

can't I sue esmokes for consumer fraud with the state being a plantiff also

I was mislead

they should be responsible

Check list

any chance I could get a copy of your checklist? I am relativley new at preparing taxes in my own business and a list should would be helpful.

My email is if you would be willing to share it and email it.

Thanks! Beth

Beengel 09:07, 4 March 2007 (CST)

Check list

Aloha Lizzit, my e-mail address is I would love to receive your checklist.


question on your comment 12/2/06

Hi Lizzit I was searching to solve my case (posted on 4/11/07 re 5471 non-filing)and saw your comment on International Tax (12/2/06)

"File the prior years' 5471s. If there is no SubPart F income, file just two past years' worth and this year's. If there is SubPart F income, file the past five years' and this year's. The accompanying 1040X will just be blank (unless there's SubPart F income). Getting out of penalties should be easy-peasy; you may want to review your reasonable cause waiver request for nonfiling of the 5471 with a lawyer or tax professional who's written a bunch of these (successfully) before. "

--- I have a client who hasn't file 5471 for 4-5 years and I am thinking of filing all prior years' 5471. As your comment suggests, do you recommend to file with 1040X instead of just sending 5471 with a reasonable cause cover letter? If so, shoudl I include reasonable cause statement on the back of 5471? Do I need to have taxpayer sign the cover letter (or the statement) under the penalty of perjury? --- I am a self-employed and this is my first penalty case for 5471. I woudl like to know how other professionals handle this. I would appreciate your comment on this Thank you! YH YH 19:40, 11 April 2007 (CDT)

Thank you!

Lizzt - thank you so so much for your time. Your explanation was very helpful. I will keep in touch with you -- Thanks again.

bank charges

i saw your post for the TP that had no bank statements nor cancelled checks, it is truely a sham that some of the biggest banks in the US (bank of america and chase) do not provide the cancelled checks back with the statements nor provide a copy of the cheks, I have told every client that if they choose to use a big bank, then they need to download every cancelled check or pay extra for that fee. Unfortunately here in the states the banks can and will do whatever they want and charge accordingly, thank you for all your comments ! TexCPA 14:23, 25 April 2007 (CDT)


i saw your post to trish's thread..where do you get "error and omissions" insurance?

thx, sue

Reply to Sue


You didn't leave a way to contact you.

It's rather obvious, really, and you've probably already resolved the question by now. Just search on Google for "errors and omissions insurance". Also, your EA or CPA or other organizations that you are a member of may have special discount or sweetheart deals.



Resident or Dual-Status?

Hello there,

It seems like you may know a bit about resident/non-resident issues so I thought I'd ask you...

My clients left the US on June 1, 2007 to return to India. They passed the substantial presence test but my question is Do they get to choose whether or not to file as a resident or dual-status and must I file Form 1040-C (Departue or Sailing Permit) with their tax return? What about Form 8854 (Initial and Annual Expatriation Info. Statement)?

Thank you in advance for any help you can give me, Aisha

Expat Allowance

Thanks for the help! My client misunderstood and it was already included in Box 1 etc, just as you surmised.

TheTinCook 16:08, 19 April 2008 (CDT)

Hi, wondering if you could clarify something for answered a question I posted last year about a nonresident alien 1040NR. so i thought I'd access you again, since I read your profile and this seems to be your area of expertise...the NRA (Japan) has a brokerage account in US. Has divs from US companies, some foreign companies (with foreign tax withheld), interest on bonds from US companies and US treas interest. Japan treaty is 10%. Am I correct in assuming the following?

US divs taxed at treaty rate (10%), capital gain distributions not taxed, other foreign divs no tax (no credit given for foreign taxes withheld), all corporate bond interest taxed at 10%? what about US treas interest? the treaty is worded in such legaleze that it makes no sense to me. does portfolio interest which is not taxed at all only include bank interest?

thank you in advance for your help, greatly appreciated.....I hope this is a simple as I've stated above......

Prior messsage left - 1040NR

Oops, I messed up how I left the last question, seems I added it so someone else's last post and forgot to sign it. so here it is again. my apologies.....

Hi, wondering if you could clarify something for answered a question I posted last year about a nonresident alien 1040NR. so i thought I'd access you again, since I read your profile and this seems to be your area of expertise...the NRA (Japan) has a brokerage account in US. Has divs from US companies, some foreign companies (with foreign tax withheld), interest on bonds from US companies and US treas interest. Japan treaty is 10%. Am I correct in assuming the following?

US divs taxed at treaty rate (10%), capital gain distributions not taxed, other foreign divs no tax (no credit given for foreign taxes withheld), all corporate bond interest taxed at 10%? what about US treas interest? the treaty is worded in such legaleze that it makes no sense to me. does portfolio interest which is not taxed at all only include bank interest?

thank you in advance for your help, greatly appreciated.....I hope this is a simple as I've stated above......

Lisasig 10:09, 20 May 2008 (CDT)

Whoops, wrong message.

I don't think this reply was meant for me. Thanks for the fast reply though.

TheTinCook 06:07, 22 May 2008 (CDT)


I'm not logging in so frequently any more, so I expect this is getting to you too late to be of any use.

>>>the NRA (Japan) has a brokerage account in US. Has divs from US companies, some foreign companies (with foreign tax withheld), interest on bonds from US companies and US treas interest. Japan treaty is 10%. Am I correct in assuming the following?

>>>US divs taxed at treaty rate (10%), capital gain distributions not taxed, other foreign divs no tax (no credit given for foreign taxes withheld),


>>>all corporate bond interest taxed at 10%? what about US treas interest?

Zero rate on these interest items.

>>>the treaty is worded in such legaleze that it makes no sense to me. does portfolio interest which is not taxed at all only include bank interest?

Zero rate on all interest except interest directly associated with running a business. So, if you Japanese guy had a K1 from a US-based business, the interest income on that K1 would be taxable. But if it's just a portfolio of corporate bonds, junque bonds, and US Tbills, no tax on the interest. It's why so many foreigners buy Tbills.

Retrieved from ""


Hi Lizzit, Would you be so kind as to forward me a copy of your return review checklist/ Thank you so much. Forward to An

Stir them up

Lizzit: you know I'm a proud Democrat, but I thought suggesting that we will re-paint the White House would stir them up around here. lol.CrowJD 12:25, 5 November 2008 (CST)

Foreign Taxes

Hi Liz,

  I finally got all the documentation for my entertainer who earned some income overseas.  Here's the breakdown:
  England:    Earned $36,000 USD   Tax withheld:  $7,209 USD
  Australia:  Earned $12,500 USD   Tax withheld:  $3,625 USD
  Canada:     Earned $11,750 CAD   Tax withheld:  $1,763 CAD

I believe that England won't be worth going after since he's above the treaty amount -- but how would I figure out the tax liability so I know what to claim on the 1116?

Also, for Australia and Canada what do you think is the most efficient way to get those taxes back? Should I attempt to file or contract the work out?

Thanks for any guidance you can give me.

-Chris ( if you wish to email me directly)

ChrisV2 20:20, 23 March 2009 (CDT)

I note you very informative answers.Would appreciate with some leads on the following case :

Facts: 1)H, is a NRA, married to W, also an NRA .(Non-Treaty domiciled in community) 2)H and W own a joint bank account in the State of NYK with Rights of Survival. 3)H and W own a joint broker account in the State of NYK with right of survival 4)H is the sole contributor to the NYK bank account by way of his employer directly transfering the funds to the Joint account (employment not connected with a trade/business in the US). 5)H is the sole contributor to the NYK broker account by way of receiving US shares from his employer(employment not connected with a trade/business in the US) ~ I read PLR 7737063 which defines bank accounts as "intangible assets"

Questions : 1.Would H’s contribution to the joint bank account be defined as "intangible assets" ? 2 Would H’s contribution to the joint broker account be defined as intangible asset ? 3.Are there any gift tax implications on the incoming funds/shares ? 4.Are there any gift tax implications if the couple wire funds (not shares)from their joint US bank or joint US Broker to a joint account outside the US ? 5.Are there any gift tax implications if the couple wire funds to separate accounts outside the US.

Thank you . Paris 13:49, 16 May 2009 (CDT)

NRA to NRA query

Dear Lizzit,

Thanks very much for taking the time to guide me in my query. Would appreciate your thoughts on the below:

My query related to potential Gift taxes only (I believe Non Resident Aliens ,NRA, are exempt from taxes on interest and capital gains and NRA's US bank deposits do not have US Situs for estate tax purposes).

In my example (where both account owners are NRAs)I used New York as the location of the account because in that state a joint account is deemed 50%/50% ownership hence potentially the "gift" occurs when funds come in.This is the only state where joint accounts are not based on "contribution" hence assume 50%/50% ownership .

However,NRA's have an exemption from gift tax of transfer of "intangible property" which,I believe includes "Bank Deposits" so I am not clear if that 50% gift can be deemed "intangible".If that is indeed the conclusion, then no gift tax occurs.

Assuming the 50%/50% ownership assumption above in New York,I would have thought that on withdrawal,if one spouse withdraws more than his 50%, without obligation to repay, might be construed as gift.But in this case as well, the question arises whether this is "intangible" property

Clearly,if they are spouses, each would enjoy the annual exclusion of approximately $133,000 in 2009.

I may be wrong, but I think form 3520 applies only to US persons .NRAs would not be obliged to sumbit the form.

Any thoughts are appreciated.

NRA to NRA query

Hi Lizzit,

Did you get a chance to look at the query/question I sent you a while back . Am still unclear on the application of 2523(i)(3) on joint bank accounts by two NRA spouses. 1.Are funds in the joint account owned 50%/50% on creation i.e when funds enter the account ? 2.What happens when one spouse withdraws from the joint to his own account ? is he allowed to the extent he doesnt withdraw more than his share ? 3.Can it be deemed that in (1) above donor gifts half of the deposit amount which is intangible property ? 4.What happens when there is transfer from joint account to joint account ? If i understood you , there were no gift consequences ?

NRA question asking person

Without your name/email/contact details, no, I can not reply... write to me at Liz at BritishAmericanTax dot com.

A cry for help from the Land Downunder


I came across a discussion forum ( February / March of last year ) regarding Form W-8BEN and US income and was very impressed with your input and I am really hoping that you can help me ( or point me in the right direction ) with what is proving to be a real challenge.

The short version is:

A deceased US resident alien ( who was an Australian citizen living in Illinois ) created a discretionary trust prior to his death.

The beneficiaries of the trust are his elderly brother and sister who both live in Australia………are both very ill and unable to look after their own affairs……..and both require full time care.

His chosen successor trustee who is a US citizen appears ( under the guidance of the trust’s US attorney ) to have done all the right things as far as the IRS is concerned but unfortunately:

 (i)the attorney has subsequently had a nervous breakdown and without any warning closed his practice ( but not before he made a number of errors ) 
 (ii)the trustee is elderly and suffering from Parkinson’s disease and cannot cope with any stress.

In an attempt to resolve the situation the US trustee has been replaced by the beneficiaries daughter/niece ( and only living relative ) who is an Australian citizen and resident.

I for my part am trying to help sort out the mess left behind by the attorney in order to secure the funds for the beneficiaries long term care.

We are currently attempting to transfer the US investments into the name of the new trustee.

With the help of SmkTax I have established that the change of Trustee has by default changed what was a US domestic trust ( US Court / US Trustee / Aussie Beneficiaries ) into a foreign trust ( US court / Aussie Trustee / Aussie Beneficiaries ).

My questions are

a. under the circumstances is form W-8 BEN the right form to submit to the financial institutions ( I am aware of the reduced withholding tax due to the US / Australian tax treaty ) on behalf of the trust?

b. Do we continue to submit annual tax returns to the IRS and what form do they take?

c. Do we keep the EIN or do we need a different type of number?

d. Given that the change occurred mid year do we submit two different tax returns for the two parts of the tax year?

e. Does the change from a domestic to a foreign trust trigger a tax event requiring the submission of a Form 926 ( Return by a Transferor of Property to a Foreign Estate or Trust )? If yes:

f. When did the event occur (i) at the date of the change of Trustee or (ii) when the property is actually transferred?

g. Who signs the form given that the Trustee is not a US citizen and it is no longer a US trust?

h. Is there anything else we need to do?

I sincerely apologize for dumping this on you but having encountered a lot of people who claimed they know the answers………….but in fact had no idea………..I have got to the point where I don’t know where else to turn.

Very best regards

James Spencer

A cry for help from the Land Dowmunder II

Hi Again

My email address is


Foreign money transfer, no gift form filed, what to suggest to client

Sorry, I posted this on the forum, I am new to this site, and am still trying to figure it out. I came across your comments about a similar case and would like to address this to you as well. I am not sure what to suggest to my client since he hasn't filed since 2006 any form incld the gift 3520. What do you think is best to do now in his situation. Thanks for your help, below is his case.

15 March 2010 A client is a US citizen/naturalised but has lived abroad since 2006 and have been unemployed abroad. He hasn't filed US income tax since 2006 because he has been unemployed abroad and hasn't made enough income. Here is where it gets tricky. Since 2006, while abroad, he has lived off money wires, transferred to his US bank account checking/saving from a foreign account ( his mother, a non- US resident or citizen). He has been using his US debit card and withdrawing money while he's abroad and this is how he's been surviving. So, mother sends money from her foreign account to his US account, and then, son goes and withdraws money while he's abroad to survive. The amounts he has received in his bank account vary for 2007-2207, 2008-2009, 2009-2010. I don't have exact numbers but the client says, for the period of 2007-2008, he had received about 25000 US of money wire transfers from his mother's foreign account. The sum was not received all at once but rather in several money wires, once in the sum of 17000 US, then a 1000 US, then 3000 US and etc. Please note, at first, the money were being transferred into his savings and he received a dividend of 25 US for only a few months as an interest on the money but then, he transferred the money to a non-interest account. Now, the client has not filed any forms including gift form since 2006, simply because he didn't know. My questions are: If the client has been receiving roughly about 20K to 25K a year, not all at once but in smaller amounts, and has been living abroad and receiving money wires from a non-US foreign account to his accnt in the US: 1) Was the client required to file the gift form 3520, or not since he was residing abroad? He hasn't filed any form, what forms should he file now to make up for the period he didn't file from 2007 till now?

2) Is IRS going to allow him to do an extension, or there will be a fine and criminal charges and his citizenship revoked as a result? I thought he was exempt for 13000 US a year, for money transfer from foreign source, not sure if this will apply to him or not.

3)For the dividend he had received on his bank account for a short time, only for a few months, and for about 25 US dollars, he hasn't filed any forms as well. The dividend was received sometime in 2007, but again for 25 US dollars. Does he need to do additional form now, or not?

4) Also, if he's residing outside the US since 2006, isn't he allowed to claim up to 75000 a year. He doesn't want to lose his US citizenship, he did't know about all that. 

5)So, please help me advise him step by step on what to do now. Thanks

You can email me to my email as I am struggling to find my way around on this site Todd Kaleb ABA certified

Need assistance with filing 8621 and reporting PFIC income


Saw your post on Tax Almanac. I have a client who needs to file and report PFIC income from 2003 onwards and since this is such a confusing area I have decided to seek assistance before preparing his amended tax returns. I will deeply appreciate if you will contact me via email or phone to discuss this case and the arrangement we can work under. Thanks and I look forward to hearing from you. My email address is Fa740 17:47, 9 July 2010 (CDT)

FBAR penalties

Lizzit, I am VERY interested in your comments regarding the elimination of FBAR penalties. As things stand now, my client is in jeopardy of paying $750,000 in penalties for mutual funds that he held in a Swiss account, and which, of course, lost money in the market crash.

He has retained an attorney who seems to be doing nothing more than going with the program.

I feel like a drowning man in a pool with sharks circling.

Any guidance that you can provide will be most welcome.



Jim Hill Baloun & Company 855 Sterling Ave Palatine IL 60067

FBAR penalties

Lizzit, In your post regarding FBAR penalties, you stated that you have had a success in abatement of those penalties. I recognize that you are in the UK, and my client is in the US; however I am very interested in any remarks you may have in relation to this issue. Right now my client is facing enormous penalties, and has retained an attorney to represent him with the Department of Justice and IRS, but I am seeking additional resources in an attempt to extricate him from his position.

My client has a foreign corporation and he decided to set up a Swiss brokerage account in 2003 in order to facilitate money transfers. He basically used it as a conduit. He put about $500,000 into it and had in and out activity based on his current needs. Now I'm told that the penalty will be 20% of the highest balance in the account for each year, so I'm figuring that amount to be around $700,000. In return for that penalty, the DOJ won't seek criminal charges. Such a deal!

My client is extremely cooperative, and has chosen to voluntarily disclose everything. He wants to submit all appropriate forms, pay the taxes and move on. As I mentioned, I will be very grateful for any remarks that you care to give me. By the way, I don't expect you to do this for nothing. I will be very happy to pay you if you submit a proposal for approval by my client.

Thank you,

Jim (Marcilio) Jim Hill Baloun & Company, CPAs 855 Sterling Avenue Palatine IL 60067 [] 847-991-1111 fax: 847-991-4553

Expatriate Tax Prep


I have recently become interested in Expat tax prep, and I would like to ask if you have any advice for someone who wants to get started in this area of the tax business. I am currently sitting for the EA exams. I passed part 2 this past weekend, and I am taking part 3 on Nov 13. I will be starting my own tax prep practice this tax season (see my profile for more details), and I am really interested in getting into Expat tax prep.

I certainly don't expect to just jump right into it, but long term I think it is a great niche, and I am very much interested in the international nature of the business. I was wondering if you might have any advice on a few things:

1. Are there any CPE courses or Seminars that you would recommend for Expat/International taxation?

2. If not how would you recommend a person educate themselves in order to be able to competently do this type of work?

3. How would you recommend a U.S. based tax preparer go about obtaining clients abroad.

I would be focusing on individuals to start. My business model is centered around clients submitting their paperwork to be by mail, fax, or online, and I think that this model is tailor made for Expats.

Thank you in advance for any information you can provide.

BTax2010 09:16, 27 October 2010 (CDT)

Thanks Liz!!!

Thank you for the info. Very helpful. I had thought about the embassies and consulates, but in other countries...hadn't even thought to start here in the U.S., great tip.

Also thanks for sharing that bit of insider info with me. Partnering or working for someone already in the international side of the biz is definitely something I will need to consider.

In terms of travel I am in the Chicago area, so O'Hare International can get me pretty much will cost more in some cases though....

You have given me quite a bit to thing about....agoraphobics....never heard the term before you mentioned it....excellent...

Thanks again!!

BTax2010 11:57, 27 October 2010 (CDT)


Hello Lizzit, I'm an EA in a suburb close to Boston. Hope you can help me. Client's 54 year old US citizen, born & bread brother in France (St Mandrier) for over 10 years hasn't filed for years, may not have had filing requirement. He does for '09 because of 1099B from Ameritrade on line stock trading. Gross proceeds over $45K on mult transactions runoff nets to ST gain of $6800. He said that he more or less just started trading a lot in '09. I mentioned to him to review earlier years as to stock sales amounts, besides maybe having a filing requirement, but in case he had capital losses it would/could be benefical to him to get the loss carryovers on the books so to speak. Here's what I know realizing I probably need to ask him a lot more questions; -married French citizen in USA, had child, moved to and divorced in France -says he's disabled/several hip surgeries -says he collects say 700 euros/month in "alimentare" pension. That would be about $12,000 US ar '09 average exchange rate. I googled alimentare, it's Spanish to do with food (noun) or to feed, to nourish (verb). Can't hit anything on point, maybe he's not telling me everything. Spinning my wheels trying to find info. Don't know if the "alimentare" is equivalent of social security (for US worldwide income income return, although if it was, not enough income to cause any of it to be taxable). To me it sounds, the word, must be like French welfare. I read something on the US/France "New Protocol" (para 1 article 18) Social Security and Pension Income sounded like only taxable to the source country, in this case France. Just found something on an overview of Taxes in France that as a French resident his captial gain income could be reportable on a French return? This could perhaps turn out that I just refer him to you.


Don Ritchie

Thank you - US-India Treaty

Lizzit, Again, thank you very much for your post on my thread. It was exact and detailed. I really appreciate you offering your specialized knowledge in this area.

--Wiles 18:13, 2 December 2010 (UTC)

US-India Treaty

Hi Lizzit, I posted a question to the Discussion:US-India_Treaty_-_US_Tax_on_Interest_&_Dividends thread. Would you be so kind as to reply and let me know if my understanding is correct?

Thank you for the reply!

form 5471

Hi Lizzit, sorry one more question on form 5471. With the assumption that NRA owns 100% of Entity A and my U.S. citizen client marries the NRA, if my client acquires 1 share of stock of Entity A (let's assume 1 share is .01% of the stock), wouldn't category 4 be triggered? I'm asking this since the 5471 instructions say the following:

"A category 4 or 5 filer does not have to file Form 5471 if the shareholder:

1. Does not own a direct or indirect interest in the foreign corporation and 2. Is required to file Form 5471 solely because of constructive ownership from a nonresident alien."

Category 5 deals with CFCs and Entity A would not be a CFC since attribution rules for NRAs do not apply.

However category 4 I assue would be triggered since the NRA controls Entity A and the exeption above does not apply if my client acquires any stock.

Is this acccurate? Note that my email address is

- John Carpenter

Tax2011v10 03:55, 12 February 2011 (UTC)

Hi Lizzit,

Thanks for your input. I have just posted somemore questions the Grantor Trust or not discussion forum. Your contributions have led me to more reading, but I am still struggling on the validity of the arrangement.



Quick question for a 2009 Non-Resident Canadian Return

Can you please give me contact info so we don't have to go through this clunky talk channel? Randy Peters, 67 Pine St, Ste 2, Bangor, ME 04401 207-990-1249

Hi Lizzit:

I have a dual status client age 65 that has always lived in the UK. His father was US and he has a US passport. He has no SSN or ITIN.

He purchased some rental property here in SW Florida last year and received a 1099 for the rental property. I posted a question on Tax Almanac about how to file his taxes and Joan McHugh responded. I just spoke with her and it appears I am out of my league on this one as he may have had to been filing US taxes for his whole life. She suggested you may be able to help.

My name is Rick Donner CPA, tel. 239-590-9144 and my email is I go by rickcpa1 on Tax Almanac.

US taxation of UK Stakeholder Pension / SIPP

Many thanks Lizzit for your helpful response. One follow-up if I may: on the no treaty claim scenario, paying US tax on dividends & capital gains as they arise: when selling SIPP shares and withdrawing funds at retirement, can the UK tax paid on SIPP withdrawals offset the US tax on gains through foreign tax credits (ie, same FTC baskets)? taxalm at quidnut dot com

ckp Ckp 12:52, 12 July 2011 (UTC) ckp

Hello Lizzit.

Thank you very much for responding to my questions about my client who inherited Canadian mineral rights in 2010. Very helpful.

Yes, if you could give me the contact number for the person who does Canadian tax returns, I would appreciate it.

Say, while I am at it, can you recommend any really good CPE out there that will help me learn the trust and estate tax return business? After 25 years of being on my own, I have little exposure to this area of practice, and recently I have gotten several engagements. I am not quite grasping the accounting income versus trust income versus taxable income concepts. Thanks.

And again, thank you for taking the time to respond to me recently!

Hi Lizzit, Do you know if they would impose penalties on the estate (bank account) of a deceased UK citizen/US resident who never filed taxes in USA to report interest?

I love your messages!!!!

But you need to leave your name and contact details for me to respond. Otherwise, I can only reply here and hope that you come back and read it. And do give a heading/subject, because that delineates your query from all the others.

Re: "Do you know if they would impose penalties on the estate (bank account) of a deceased UK citizen/US resident who never filed taxes in USA to report interest?"

Sure as shooting, they have the ability to. However, all they need to do to get the penalties removed is to file a 1040 for each unfiled year of which the IRS is aware to resolve the back tax issues.

Easy peasy lemon squeezy.

Yours, Lizzit

How to determine who sent you a message

People really should do things the right way (click the easy link to add a new message, and add the four tildes at the end)... but in case they don't, you can click the "history" tab to see who sent what message. It should be in about the center of your screen, at the top of the page. It'll link you back to their user pages and user history - which lets you see, for example, that the latest question you received is from a brand new user who probably isn't even a tax pro (since the first thing you see, now, when you set up a new user name, is the info on how and why to add your tax experience to your user page.

Hope that helps.

Trillium 00:14, 18 November 2011 (UTC)

2011 OVDI Optout..


I filed under OVDI 2011 and so far have filed back taxes and interest etc. My situation is I inherited assets in India and they were not repatriable to the US. I was filing taxes in India but did not realize the filing requirements here. None of the income was sourced from US and all of it was declared and taxed in India (through because of the tax rates and how capital gains are taxed), there was taxes due in the US that had not been paid.

Wanted to see your opinion on chances on opt out. If you are available for consultation, I would like to talk to you. Please let me know. My email is


Badjate 01:27, 22 December 2011 (UTC)


Need Help with a Client for FBAR issues

Lizz I have a client who never filed FBAR but had sent money to parents in India (obviously after tax, he is w2 income guy) for last 10 years in a bank account so they can take it out when needed. This bank gave him minimal interest which would not add up to $500 in last 6 years (he only has last 6 years statements). Now he got scared of this new law and wrote to IRS disclosing this account as it has over $30k in that account. The bank in India never issues any 1099 so he never declared but it never occurred to him that it might be an issue. Now he got a letter from DOT (criminal Investigation) that voluntary disclosure has been preliminary accepted subject to provide further information. He is worried about 20% penalty as the tax on interest income will be negligible. What is the best next step. Should he file amended returns for last 6 years and add interest on schedule B and pay the interest and that is it or there is something else needs to be done.

Plus, can I represent him on this matter as an EA or he needs an attorney. Any advice is appreciated. My email address is

the country is sri lanka.


Thanks for the response. I would never take on something like this ever....I do not have a death wish! If they move forward with this, I will include your contact information as a potential resource. Thank you, JAD 19:13, 27 February 2012 (UTC)

Can you help?

I have an individual client (US citizen and resident) who is married to Frank, a German resident and citizen. Frank plans on moving to the US in a few years and recently applied for and received a green card. He works full-time for the German postal service and spent 48 days during 2011 in the US. We now have issues with US taxation intertwined with immigration.

Do you work in this area? If you do, how could we work together on this?

My Tax Almanac user name is Growthguy2 13:44, 3 March 2012 (UTC) and email address is


Don James

Lizzit, would you be kind enough to call me at 732 525-1170, or better yet provide a phone number where I can call you. Appreciate all the help you provided but after getting clarification from my tax client concerning her move back to the States, the situation is not as originally presented. I'd like to engage your services for a paid review of the return I prepared but would initially like to spend no more than 5 minutes on the phone with you concerning same. Please let me know if you're interested. Thanks. FSC 23:33, 20 March 2012 (UTC)


Lizzit, I don't think my earlier private message to you followed Almanac's proper protocol, so I'm resending. By way of explanatory background, you provided me some very useful info when I did an earlier post about this client a few weeks ago.. the title should you search was CANADIAN (NON EMPLOYEE FOR U.S. COMPANY). Anyway here's my earlier message to you again.

"Would you be kind enough to call me at 732 525-1170, or better yet provide a phone number where I can call you. Appreciate all the help you provided but after getting clarification from my tax client concerning her move back to the States, the situation is not as originally presented. I'd like to engage your services for a paid review of the return I prepared but would initially like to spend no more than 5 minutes on the phone with you concerning same. Please let me know if you're interested. Thanks. FSC 23:33, 20 March 2012 (UTC)"

Lizzit, would you be kind enough to call me at 732 525-1170, or better yet provide a phone number where I can call you. I'd like to engage your services for a paid review of a return I prepared. Please let me know if you're interested. Alos, how can i contact you. tried unsuccessfully several times back in march. Thanks. FSC 23:33, 20 March 2012 (UTC) FSC 19:01, 31 May 2012 (UTC)

New FBAR Rules for Expats

I am sure that you have seen the new rules that were announced on Wednesday. If not, check out my post.

You Are Too Clever by Half

Liz, very impressive. You saw my dilemma immediately. The client wants OVDI and has already set aside the funds and hedged the Euros. If I talk him out of it and lose, I may find myself is neck-deep hot water. In addition, my gut tells me that the facts here are not favorable. The client knew of his filing obligation and was aware that there are penalties for not filing. It helps that I have been able to reduce his tax liability to zero for all years in question, but that may not be enough.

The fact that he had a kid, moved twice and changed jobs twice, not to mention working 70 weeks, makes me sympathetic. However, we have all seen IRS agents who luxuriate in Schadenfruede. Thanks for your insight.

Question from Neil on OVDI

From researching the forum it appears that you have considerable experience with FBAR. I have a client whom recently disclosed to me that he has two bank accounts in Germany with a combined balance of approximately $200k. In researching is does not appear that he qualifies for the reduced penalty and would be subject the 27.5% penalty. The funds were gifts from his parents over his life time so the tax was paid on the deposits to the account, however he did not report the interest income.

My question is if you could refer me to an attorney or CPA that could better advise my client if he should apply for the OVDI program or should try a quiet disclosure.

Thank you for any assistance you can provide.

Neil E. 15:59, 16 November 2012 (UTC)

Probably can go quiet.

It kind of depends on stuff you didn't say. However, Really Good Accountants and Lawyers will argue his case. I'd go with either me or Casimir doesn't do prep, just represents. I do prep and represent, but only if the taxpayer is basically an honest person. The more hairy a client it is, the more I'd go to Casimir.


Thank your for the quick response.

I'm not familiar with how the Tax Almanac messages work, so if there is an easier way to communicate, please feel free to let me know.

My client is basically an honest person. He is approximately 75 years old; he left Germany about 50 years ago and came to the US. He built a successful general contracting business which is now run by his son. His parents were part owners in a furniture manufacturer in Germany and when the business did well they would deposit part of the dividends from the business into my client’s German bank account as a gift to my client. Over the year the account balance has grown to approximately $200,000.

When my client returns to visit his family in Germany, he typically withdraws funds from this account to pay for his expenses while there. The last time he was there was about two years ago and he withdrew approximately $15,000 from the account.

Unfortunately he ignored the interest income generated by the account and did not report it on his tax return.

He would be very interested in retaining your services if you think a quiet disclosure would be successful. It would be a shame if he had to pay the 27.5% penalty simply because he was unaware of the disclosure requirements.

Could you please let me know what the drawbacks of a quiet disclosure would be? I assume the IRS could still try imposing penalties for non filing? Also could you give me an idea what your fees would be for both preparing the filings and representation if necessary.

If you would like to contact me directly, my contact information is:

Neil E. Burns, CPA Hammond Traier & Burns, LLC Certified Public Accountants 155 Willowbrook Blvd Suite 350 Wayne, NJ 07470-7033 Phone (973) 492-0101 Fax (973) 492-3869 Cell (201) 803-5861

Best Regards,

Neil Burns


Lizzit, I know this is a very busy time, but would you be able to take a few minutes to look at, and perhaps add comments on, these two discussions? Thanks. Discussion:US citizen paid honorarium for speaking in Canada - Filing Requirements for Canada? Discussion:US Citizen, summer job in Canada - Lizzit you here? Podolin 14:42, 24 March 2013 (UTC)

FBAR, 3520, 3520A Australian Superannuation


I posted the following question to the board, but haven't received an responses. You seem to be one of the most knowledgeable poster on this topic and was hoping you could comment.

I am looking for input for the following situation. Australian by birth, worked there for about 10 years, contributed to Australian Superannuation fund while working there. Moved to the US in 1999. Became US Citizen several years ago.

Recently became aware of the FBAR requirements, she has the Superannuation account, the max value in any year was $32,000, she also had a bank account max value in any year of $13,000. The bank account was opened by her parents when she went to college, they would put money into the account for her and they had signature authority. When she moved to the US she removed all but about $100 from the account, she left small amount just to cover account fees while she was out of the country. When the parents realized that she wasn't moving back to Australia, they began using the bank account as if was theirs, depositing money and paying bills from it. The daughter wasn't aware of this. The bank account did earn interest, but the most in any year was $0.83. The tax on the interest would have been at most $0.21 in any year. The bank statements were sent to her parent's address.

I called the OVDP hotline and was told she did not need to enter the OVDP program, but to submit the FBARs to the address in Detroit, and note FAQ #17, and attach a note explaining why the reports were filed late. The lady indicated that the interest amount was so small it wouldn't matter.

Based on the searches I have done here, it also seems that she needs to file both the 3520 and 3520A because of the Superannuation account.

My questions:

1. Do you agree that she would be ok with not entering the OVDP, and sending in the FBARs noting FAQ #17.

2. Same question but relating to the 3520, and FAQ #18.

3. The Superannuation account statements only report beginning Investment Value for the period, ending Investment Value for the period, Number of Units, and Withdrawal Unit price for beginning of period and end of period. No interest or dividend earning are listed. Am I correct in assuming there is no taxable income from the Superannuation fund, only unrealized capital gains?

4. Do amended 1040s need to be filed to report the pennies of interest if the Superannuation account doesn't have taxable income?

5. The 3520A asks for Foreign Trust Income Statement and Balance Sheet. Where do you get this information, she has nothing that provides that information, I have searched the internet and came up with nothing.

6. The 3520A also asks for Trust documents to be submitted with the 3520A, what documents are they looking for for an Australian Superannuation account. The trustee is BT Funds Management.

Thanks for any help you can provide.

Tax Almanac name: AlBe email:

Last year 1040NR

Hi Lizzit,

I would like your expert opinion and I have asked this question in TA but I haven't received an answer. I need to finish this tax return this week so I hope you have the time to answer. Thank you in advance.

My client is married and last year he filed a normal resident 1040 MFJ and deducted two dependent kids (they all lived here in the USA in 2010, 2011 and half 2012 (they went back to Europe where they are from). I am preparing the 2012 tax return so I know I have to use the 1040NR return, with 1040 "statement". My question to you is, in the 1040 statement he will file MFS, right? And I believe he can take his kids and foreign wife as dependents to calculate the tax due, and he can claim the Child tax credit for the two kids.

I ordered material from Surgent McCoy that you recommended to another tax pro, but sadly the example was only for the first year resident and for a single guy, not the last year of residency and for a married couple with kids.

I would really appreciate your help in this matter.

Lalva 18:16, 3 June 2013 (UTC)

HMRC certificate of coverage

Hello Lizzit. Would you be able to assist a client in the UK with obtaining a certificate of coverage from the HMRC if I referred him to you? Feel free e-mail me.

Could you re-visit the COD Income at Death discussion?

I don't understand your 'one minute after death' comment. Kevinh5 14:20, 20 August 2013 (UTC)

fbar and facta

Hello Lizzit:

Client filed 6yrs (2007 thru 2012) of fbars. No income to report. Foreign assets consisted mostly of cash value insurance and a small checking account.

We will be amending the 1040 to include the life insurance cash value for years 2012 and 2011 to reflect these accounts and the small checking account on the non filed form 8938 and schedule B to reflect the yes answer (client usually does not file B because divs and interest less than $1500). Client did not have any foreign income to amend on any 1040.

Question: The facta form 8938 did not exist in 2010. Insurance is only included going forward for facta purposes from 2011 on form 8938. So, only asset foreign asset in 2010 was less than 10,000. Would you send in a footnote to IRS when you send in the 2011 and 2012 amended returns to explain why no 1040x for 2010 is not due?

Thanks! DJ


DJ, I reply to you here. Hopefully you come back and see this reply! I need your email address or your TaxAlmanac link to reply to you directly.

When you amend, include a letter requesting a Waiver of Penalty Under Reasonable Cause. It should gush with over a dozen reasons why the boo-boo happened. In the cover letter, that will cover all the wonderful reasons why the 6 years of FBARs are now being filed and the 2 years of 8938. The IRS knows the form only began in 2011. They don't expect the Schedule B to be amended for any of the years prior to 2011. This is an exemption under the CPA concept of materiality. The basic concept of materiality is "What is the lowest number before which we ought to do something?" The IRS put their own spin on it. Their version is "What is the lowest number before which we ought to be harrassing someone for mistakes they've made?" Zero is way, way, WAY below the limit. If the people owe zero tax and zero penalties for failure to file (i.e., the 2010 zero income return with just the Sch B box at the bottom unticked), the IRS won't expect them to amend just for Sch B box at the bottom. But if they owe a small amount, and you were the preparer, you ought to consider amending if the tax due is greater than, say, $10 per year. Paying shows the IRS how sincere they are which is very helpful in getting that $10,000 per 8938 penalty removed in 2011 and 2012.

feel free to email me offline: LizZ at BritishAmericanTax dot com.


End of the forum

You may have heard by now that the Tax Almanac ( ) web site forum is permanently closing its doors effective June 1. Perhaps you have seen the pink bombshell “Important Service Announcement” when logging in.

Long-time TA user ChrisV2 has volunteered to set up a new website where TA users may continue the discussion. The site is up and running now and has an active base of contributors.

We invite you to take a look and join your fellow TA refugees.

Frankly (TA member and new member of TaxProTalk)

Frankly 17:39, 3 May 2014 (UTC)

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