FBAR help - only just found out about it (student loan money)

A little knowledge is a dangerous thing, as they say.

I've only just found out about the FBAR.  I've been living in the UK as a student full time since 2006 (aside from three months in 2007 when i went home for the whole summer), and filed tax returns for both 2010 and 2009, the years where I earned income in the UK.  All my living money comes through US student loans, and they are delivered to me more or less at once (the installment plan has changed somewhat over the years - I usually ended up with £4k-£6k deposited into my UK account three times a year during the academic year).  Because the disbursement dates are quite close together, this often gave me quite a bit of cash, occasionally for several months on end (well over the $10k threshold), but it was to last all year for living expenses.

When I earned money in the UK, it was at a level well below the point where one pays Federal tax, though I filed returns both years through H&R Block, and I pay UK tax as well (though they are refunded as I am still well within my personal allowance).

I called up the IRS in London today to ask if student loan monies are considered for the FBAR and the person said they are not (the key word being loan, according to him, as its money I spend but not 'mine', per say), but I just want to check that this has been found to be the case for others. 

To say I'm slightly terrified would be putting it mildly.  I am more than happy to report amounts and pay whatever taxes are needed - but I seriously never even heard about this until this morning.

Thanks in advance.

Did you 'phone the special FBAR helpline? Have you got the agent's name and badge number and a recording of the call?

Color me clueless - I just called the number on the London IRS website and went through the voice menu and got a real person eventually.  What is the number for this magical specific helpline you speak of?

Don't panic! - it looks like there's a solution to your problem in the works. See

http://www.theglobeandmail.com/report-on-business/us-taxman-to-go-easy-on-american-residents-in-canada/article2257395/

I think it likely that this would be worldwide solution - not just Canada.

Thanks for that.  It makes me feel (marginally!) better!  As far as I know I owe no taxes, so hopefully I fall into that same category.  It would be very not cool to owe upwards of $40k because of bank accounts containing student loan money that I didn't even know I had to report.  It would be interesting to see where they think they'd find the money, though.

I did finally find the helpline phone number and spoke to someone there who actually didn't know what to make of my case (that or their computer wasn't responding, one), and so I sent an email to the IRS email listed on the FBAR site.  Hopefully the news won't be all bad.

I'm glad I've heard about this - bit seriously, how are we meant to find out?  I literally only found out here today while scanning forums.  No one had ever mentioned anything to me - not my university (who I would expect to know these things - ha!), nor the person who used to handle US loan money (he used to be an accountant and deal with a lot of expats), nor my accountant. It took a random Google search.  If I hadn't gotten married, I would never have known.  I hate to think what it could be like for people who haven't filed taxes for years or have huge legititmate investments who simply never hear about it...

I between this and the spouse visa application, I think it's fair to say my nerves are going to be absolutely shot for a while.  O, and I have a PhD viva in January.  Someone wake me up when it's all over...

Thanks for posting about this.  I'll be filing taxes for the first time after having lived in the UK for the past year and some.  I had never heard of this FBAR thing and glad you posted!

Do I essentially just send the FBAR from at the same time that I file my taxes?  I'm assuming I'd include my Current Account, Savings Account, and our Joint Current Account.  But, DB isn't a USC, and isn't my Spouse. The forms seem to only consider Spouses (and not long term other halves)...but...will he have to sign off on anything for this? Or would I not have to declare the joint account because it's not between spouses, and he's not a USC??  It's really only there for us to pay the rent/household bills.

As the saying goes, it may be that the purpose of your life is to serve as a warning to others. (hopefully not- but glad its helped someone).

That being said, I'm still working on figuring out what I need to do about all this, so sadly I cannot be of further help.

I called up the IRS in London today to ask if student loan monies are considered for the FBAR and the person said they are not (the key word being loan, according to him, as its money I spend but not 'mine', per say), but I just want to check that this has been found to be the case for others.

Refer to the IRS website:

"United States persons are required to file an FBAR if:

• The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
• The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported."

There are a few exceptions to the filing requirement, but for FBAR purposes, the value of the account is the value as reported on your bank statement. The IRS has given no indication in writing that they will make an exception if part of your account balance consists of money that is not yours. Therefore it would be advisable to file the FBAR.

Did you 'phone the special FBAR helpline? Have you got the agent's name and badge number and a recording of the call?

+1 - the advice you got from the agent doesn't sound right, so if you choose to rely on it, at least ensure your contact with the IRS is thoroughly documented, as guya rightly suggests.

I have since spoke to both the FBAR hotline (they hqd no idea, just sent me to the email address). I called the IRS in London again yesterday, managed to speak with the same guy, and clarified a few issues.  Apparently he misunderstood me and thought that the cash was somehow held by the university, not in a checking and savings account in my name (me, not make sense while scared out of my mind? Never!).  He confirmed that I do need to an FBAR after all (and for all the previous years). I mention I was terrified about being hit with huge penalty fees, but he said if I explained the situation as I had to him, it certainly didn't sound like I had any intention of evading reportage or taxation or anything. Furthermore, as 'normal people' are not really the target of this, it is highly unlikely I'd get anything more than a slap on the wrist (his exact words were 'you are a very small fish in a very big pond').  Hopefully this is true, and hopefully the fact I'm a student and have acted swiftly to correct things will weigh somewhat in my favor as well.

I have also emailed the FBAR contact email on Monday, but haven't heard back yet.

Its going to take me a little while to get the forms filled out, though - I don't have all my statements from the last five years anymore, and my bank only goes back about 18 months with online statements.  And then of course the sitting down and going through it all. I'll have to add a few sentences in my letter about how I apologize for the fact I was unable to send out the documents for a good week and a half, as I do not have the cash to employ an accountant or solicitor to do this for me.

Quick query - its just the forms and the letter I need to send, correct? Not like all my bank statements, right?

Also, am I right in thinking this should have no real bearing on my impending spouse visa application? (considering I applied for and received a student visa while an account had been and was well over the threshold, I should think not).

So have you now got an IRS name and badge number you can quote in your reasonable cause letter?

As I mentioned in my last post, I rang the London IRS back the next day and explained the situation more fully and was told that I do indeed to file an FBAR.  Apparently when I first explained the situation, it sounded like one of the exception cases.  Upon further review, it is not. Fair enough - I can really explain things in a round about way when I'm stressed, and therefore I'm glad I checked things out.

Is there really any need to ring back and ask for a badge number now that information has been clarified/ corrected?

I haven't had the chance to sit down and do the paperwork for this yet - I'm hoping they don't expect me to be able and churn out this stuff the next day, especially when it involves hunting down fairly old statements. I will do so in the next week or so when I actually have time (I can't imagine they would take issue with a couple of weeks between discovery and sending things in - a few months, maybe, but less than a month?).

I never did receive an email back from the address I sent my inquiry to, though. Strange.

When you file the FBAR late you need to attach a letter explaining the reason for your initial failure to file. The point of the letter is to prove to the IRS that your late filing was due to "reasonable cause" - if you can do this, the IRS will not penalise you, assuming you have no unpaid taxes. Your letter will be strengthened if you can quote the identifying details for the IRS official who may have initially misled you, and the specific details from those conversations. It would be worth calling back to try and obtain the badge number and the gentleman's name.

... The guy at the IRS didn't mislead me, however. I only even found out about the requirement last Monday, and rang them afterwards.  There was maybe 20 hours of confusion there... I don't think that would count at all, and I wouldnt attempt to pin it on someone who misunderstood me in the first instance who immediately retracted his previous advice when given better and more complete information. 

You may wish to mention the conversations with your IRS agent by way of saying that he advised you to file so now you are filing. However, the decisions about how to make your case are entirely yours - write the letter in whatever way you feel best shows reasonable cause.

Not to scare you too much, but the IRS hasn't been lenient on the small fish regarding FBARs. Have a read of this thread on BritishExpats:

http://britishexpats.com/forum/showthread.php?t=690216

And this article here:
http://www.reuters.com/article/2011/12/09/uk-usa-taxes-foreign-idUSLNE7B801I20111209

Prepare yourself for the worst is all I can say.