Cosigners on foreign bank accounts: how do you handle IRS forms?
April 14, 2015 11:21 AM Subscribe
TaxFilter day continues! In 2014 my mother-in-law made my wife a cosigner on her German bank account. The account is substantial (over €100,000 but under €150,000) and, of course, we need to fill out FinCEN 114 and IRS 8398. The instructions for IRS 8398 only cover "joint" account holders in the context of marriage. How do we approach this?
Details: My mother-in-law is a German citizen, living in the US 50% of the time as a registered Alien (green card). She underwent a medical scare early last year and added my wife as a cosignatory to the savings account in case we needed to access money to help her while in hospital.
So now my wife is on the account. We need to report with FinCEN and IRS. The problem is that I get to IRS 8398 and the instructions about "Determining the Total Value of your Specified Foreign Financial Interests" say nothing about two joint owners that are not married to each other. However my wife and I are filing jointly for the rest of our 2014 return.
Since we're filing married/jointly, the IRS says the reporting threshold is >$100,000 on the last day of 2014 or >$150,000 at any time during 2014.
But I am not on the account, so my wife is acting alone here. The "joint interests" section says "If you jointly own an asset with someone else, the value that you use to determine the total value of all of your specified foreign assets depends on whether the other owner is your spouse and, if so, whether your spouse is a specified individual and whether you file a joint or separate return". But it says nothing about what to do if the other owner is NOT your spouse.
The secondary question is if making you a "cosigner" on the account is a different designation than "joint account holder". I believe they're the same for all intents and purposes, but I'm hitting some disagreement there.
Does anyone have any experience with this that they can offer here? We're happy to file whatever is necessary and aren't hiding anything or moving money back and forth. My wife is just paranoid that missing these forms will cause some seizure of the bank account and/or worse.
Details: My mother-in-law is a German citizen, living in the US 50% of the time as a registered Alien (green card). She underwent a medical scare early last year and added my wife as a cosignatory to the savings account in case we needed to access money to help her while in hospital.
So now my wife is on the account. We need to report with FinCEN and IRS. The problem is that I get to IRS 8398 and the instructions about "Determining the Total Value of your Specified Foreign Financial Interests" say nothing about two joint owners that are not married to each other. However my wife and I are filing jointly for the rest of our 2014 return.
Since we're filing married/jointly, the IRS says the reporting threshold is >$100,000 on the last day of 2014 or >$150,000 at any time during 2014.
But I am not on the account, so my wife is acting alone here. The "joint interests" section says "If you jointly own an asset with someone else, the value that you use to determine the total value of all of your specified foreign assets depends on whether the other owner is your spouse and, if so, whether your spouse is a specified individual and whether you file a joint or separate return". But it says nothing about what to do if the other owner is NOT your spouse.
The secondary question is if making you a "cosigner" on the account is a different designation than "joint account holder". I believe they're the same for all intents and purposes, but I'm hitting some disagreement there.
Does anyone have any experience with this that they can offer here? We're happy to file whatever is necessary and aren't hiding anything or moving money back and forth. My wife is just paranoid that missing these forms will cause some seizure of the bank account and/or worse.
Oh, and in case you can't get an answer before you have to file, you can file an extension (but you still have to pay any tax due by Apr 15).
I suppose you could also guess at the IRS 8398 form, and file an amended return if you get it wrong (you have until sometime in June for the FinCEN anyways). But I wouldn't do this myself, and either way I'd get a professional to look at the requirements.
posted by nat at 3:00 PM on April 14, 2015
I suppose you could also guess at the IRS 8398 form, and file an amended return if you get it wrong (you have until sometime in June for the FinCEN anyways). But I wouldn't do this myself, and either way I'd get a professional to look at the requirements.
posted by nat at 3:00 PM on April 14, 2015
Best answer: It's been a good few years but I did used to work in a German bank once upon a time. A joint bank account is not the same as being an account signatory. As signatory you just have power of attorney and can act on the account holder's behalf but it's not your money. In that case her name would not be on the bank statement for example. If this makes any difference to the IRS is another matter.
posted by koahiatamadl at 4:37 PM on April 14, 2015
posted by koahiatamadl at 4:37 PM on April 14, 2015
Response by poster: Thanks all. Yeah, this one is toughie and Mom-in-law already has an expat-friendly accountant working on the issue from her side. Looking at the 8398 vs FinCEN guidance table from the IRS it notes that a signatory needs to file the FinCEN, but not the 8398. So I punted and filed my '14 1040 and we'll amend if the accountant thinks it's necessary. I'll write you all from Gitmo if things don't turn out right.
posted by JoeZydeco at 10:11 PM on April 14, 2015
posted by JoeZydeco at 10:11 PM on April 14, 2015
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In that vein, there are several previous askme questions you might find useful (not for directly answering your question, but for finding resources on expat taxes).
posted by nat at 2:57 PM on April 14, 2015