Schedule B is mandatory if you have any foreign account -



Dave,

This kept being rejected by centa.com when I sent it
from my account , so I asked a
friend to send it from his account.  

Here it is:

Yes, the general requirements for a person to use
Schedule B are listed at the top of the instructions,
but, as with most tax rules, there are exceptions.
This exception is shown at the BOTTOM of the
instruction page
(http://www.irs.gov/pub/irs-pdf/i1040sa.pdf below the
final TIP box) and it says to answer NO to the
question of whether the filer has a foreign bank
account if "the combined value of the accounts was
$10,000 or less during the whole year."
 
I think what you have written is that, in effect, a
person who has only $10 in a Canadian bank would have
to file Form B and answer yes to question 7a, but that
is contrary to the IRS instructions. 
 
The H&R Block "Tax Cut" program does not select
Schedule B or check the YES box unless the $10,000
threshold is reached. (I tried it out to see, by
answering YES to foreign account, but NO to $10,000 or
more.) 
 
Doing a Google search on "SCHEDULE B" "FOREIGN
ACCOUNT" "7a", I find many articles stating that 7a
only applies to accounts of $10,000 or more.
 
Examples:
 
http://bankrate.com:
 
"Line 7a is straightforward. Basically, if you had a
foreign account, check "Yes" here. Even if you did
have such an account, the IRS says you can check "No"
if the average balance in the account was less than
$10,000 during the whole year." 

http://www.rpifs.com/AICPA/form1040b.htm:
 
"...the answer to question 7a only applies where the
total of all foreign accounts exceeds $10,000 at any
time in the taxable year."
 
Do you still say that ALL persons who have to file
U.S. taxes and have a Canadian account have to file
Schedule B and check YES to question 7a? 
 
Regards,
 
Fxxxxxxx


--------------------------------------------------------------------------------
david ingram replies:
I NEVER EVER SAID THAT!

I challenge you to show me where I said that a person with 'any' foreign account had to check off yes to question 7a.  You only have to say yes to 7(a) if the combined totals of all foreign financial accounts was over $10,000 US at ANY ONE TIME in 2007.  Because of the change in the exchange rate in 2007, if you had $9,500 Canadian in the account at the end of 2007 when the rate was 1.10 Cdn to a US dollar, you would have to say yes. evn if the rate dropped back to 99 cents.

What I said and still say is that you have to file Schedule B if you have a foreign account whether it is in England, Spain, Iraq or Switzerland.   In other words, if you have foreign accounts and they were always less than a total of $10,000 US in 2007, you have to answer "NO" to question 7a on Schedule B but YOU HAVE TO FILE SCHEDULE B..

Of course, if you have $10.00, 100, 1,000, 10,000 or 100,000 in an RRSP, you have to answer "yes" to question 8 and fill in the 8891. 
 
And, if you had $10,000 in an RRSP, you would also be answering yes to 7(a).

And, if you are the contributor to a child's RESP, that adds to the amount for $10,000 and requires the filing of a 3520 because RESP accounts are NOT covered by the form 8891.

If you did not have 'any' other accounts but had put $1,000 into a grandson's RESP which you were the siggning authority over, you would check NO to question 7a, leave 7b blank and say yes to question 8 and then fill in form 3520.

Your own question answers your own question. 

The top says file the form if you have a foreign account or were the grantor of a foreign trust - the bottom says answer no if the total is less than  $10,000.  Tell me where it says you do not have to file the form if the answer is 'no'.  You have missed the point that the IRS WANT S the 'no' answer in writing IF you have a foreign account.  I was also told by the Treasury rep that there is a  penalty for not filing Schedule B if you have a foreign account  by the way but I do not know where it is or how much it is and don't care.

For those who don't have schedule B handy, you can find it at: http://www.irs.gov/pub/irs-pdf/f1040sab.pdf

-----------------------------------------------------

The older bit is here.

Date: Mon, 11 Feb 2008 00:44:49 -0800
From: taxman@centa.com
Subject: Schedule B if you have a foreign account
To: fxxxxxxxxxxxxxxx


XXXXXXX wrote: 

BLU115-W16C96EC329AC4C1D5D30C8CD290@phx.gbl>

David,
 
In case you find this amongst the spam, I have a
comment about reporting interest on Schedule B. 
 
You state: 

"AND, they also made the point that everyone with
foreign accounts MUST file schedule B, even if there
is no earnings form the accounts."

But...the Schedule B instructions state that it is not
necessary to answer YES on Schedule B if an account is
less than $10,000.  So, when you tell people to file
Schedule B, shouldn't you add "if any of your accounts
have been worth at least $10,000 anytime during the
year"?  
 
Schedule B, part III instructions are here: 
 
http://www.irs.gov/pub/irs-pdf/i1040sa.pdf 
 

-----------------------------------
david ingram replies:

The instructions for who must file a Schedule B (top
right hand side of page B-1) that you sent clearly
state that Schedule B must be filed if you have a
foreign account.


• You had over $1,500 of taxable interest.
• Any of the Special Rules listed in the instructions
for line 1 apply to you.
• You are claiming the exclusion of interest from
series EE or I U.S. savings bonds issued after 1989.
• You had over $1,500 of ordinary dividends. 
• You received ordinary dividends as a nominee.
• You had a foreign account or you received a
distribution from, or were a grantor of, or transferor
to, a foreign trust. 
   Part III of the schedule has questions about
foreign accounts and trusts. 


- 
On February 11, 2008, David Ingram wrote:

It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. 
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However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. For the last two weeks, I have just found out that my own email notes to myself have been spammed out and as an example, as I wrote this on Dec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unread messages, my deleted box has 16645 I have actually looked at and deleted and I have actually answered 1234 email questions for clients and strangers without sending a bill.  I have also put aside 847 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to 48 hours, it is likely lost in space.  You can try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.  david ingram expert  US Canada Canadian American  Mexican Income Tax  service and help.
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Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST if in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.
$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,200 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has recieved as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 
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