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GSM8 wrote:My interpretation of these 2 links would be that regardless of exemption from FATCA reporting provisions for the "sovereign operator" of CPF, the individual's requirement to file FBAR, form 8938, and report annual "as accrued" CPF interest on 1040 remains.
I concur, at least that is the reasoning why I'm reporting it. I'll probably continue to leave it on the 8938 and FBAR as well. That way I should still be in compliance.
CPF works out like a 401k plan for most nationalities except US - thanks to citizenship based taxation. In fact, apart from being liable for tax on the employer's contribution to CPF, the employee's contribution must also be excluded from foreign earned income exclusion FEIE (and is thus one is subject to the full marginal tax rate on their own contributions to CPF)
http://www.irs.gov/pub/lanoa/pmta00173_6973.pdf
I'm missing something here. With 8 or 9 tabs open with various code links and the various links you started me with, as far as I can discern, the employee's contribution is still considered Earned Income but the Employer's contribution has to be excluded from the FEIE, thereby making it liable for the full marginal tax rate as the employer's contributions are not actually Earned Income at all. this would then make a maximum of an additional $9,630 dollars income excluded from FEIE and subject to full marginal tax rates.
[ max contributions for CPF are based on an income cap of 5000/mo with the employer's share being 17% or 850/month x 15 mos max or SGD 12,750 / 1.3242 (ex.com 31/12/14) or USD 9,628.45 taxed at full marginal rates]
In spite of that, there is also reduction in benefits for past SS tax contributions, due to Windfall Elimination Provision
http://www.ssa.gov/pubs/EN-05-10045.pdf
Yeah, that one sucks.
I've posted on this forum in the past, about how I felt CBT is unethical and unfair. I've also, in personal capacity, raised the issue with AmCham in Singapore, international organizations like American Citizens Abroad, and written to my congressman. Encouragingly, our perspective is being heard and I believe it helps to write in personally. For those interested, this weblink lists recent developments and some interim proposals (including recognition of foreign retirement plans on par with what's available to Americans living in America) that fall short of RBT.
https://americansabroad.org/issues/taxation/
Employer's contribution being considered taxable income that is not excludable under FEIE, as you noted, can be logically argued (although CBT that makes this a moot point in the first place, remains IMO unreasonablesundaymorningstaple wrote:GSM8 wrote: CPF works out like a 401k plan for most nationalities except US - thanks to citizenship based taxation. In fact, apart from being liable for tax on the employer's contribution to CPF, the employee's contribution must also be excluded from foreign earned income exclusion FEIE (and is thus one is subject to the full marginal tax rate on their own contributions to CPF)
http://www.irs.gov/pub/lanoa/pmta00173_6973.pdf
I'm missing something here. With 8 or 9 tabs open with various code links and the various links you started me with, as far as I can discern, the employee's contribution is still considered Earned Income but the Employer's contribution has to be excluded from the FEIE, thereby making it liable for the full marginal tax rate as the employer's contributions are not actually Earned Income at all. this would then make a maximum of an additional $9,630 dollars income excluded from FEIE and subject to full marginal tax rates.
[ max contributions for CPF are based on an income cap of 5000/mo with the employer's share being 17% or 850/month x 15 mos max or SGD 12,750 / 1.3242 (ex.com 31/12/14) or USD 9,628.45 taxed at full marginal rates]
). You may not need to file Form 8938.Adyth wrote:Hi! Thanks for the response.
I can still kind of understand if the interest income is taxable as earned, but having to report my CPF balances to FinCen and on Form 8938 surprises me. Per the Singapore-US IGA and the IRAS e-tax compliance guides (see links below), it appears CPF investment accounts at least are not defined as "financial accounts" under FATCA and the CPF is non-reporting. If the CPF investments accounts are not financial accounts, I can't imagine why the other ordinary/special etc accounts would be financial accounts that are reportable? Again, reporting versus taxable is different, but I don't see why we would have to fill 8938 or FBAR if they are not considered "financial accounts".
Thoughts?
https://www.iras.gov.sg/irashome/upload ... re_IGA.pdf
- See pages 45-46 Appendix Section V.A.4
https://www.iras.gov.sg/irasHome/upload ... 0FATCA.pdf
- See pages 40-41 Section 7.3.1., especially example 2.
One would think that the lump sum should be tax free upon withdrawal if paying US tax on all as-accrued interest (as SMS suggested). Alternatively, it can be taxed on withdrawal only if not paying as-earned taxes (as Adyth felt). But not both. Either way, disallowing FEIE is based on a weak argument. SSA clearly doesn't consider it an ordinary withdrawal as they curtail SS benefits citing WEP, regardless of whether the withdrawal in monthly payments or lumpsum (can't seem to find the link to that specific precedent upon cursory google search). But who is to say that IRS won't selectively pick the interpretation that's advantageous to them, by invoking the argument that CPF is a non-qualified retirement plan, therefore it's taxable again at the time of withdrawal as well. Much of this still appears to be a big grey area and no one seems willing to acknowledge the elephant in the room.sundaymorningstaple wrote:It would seem you are correct. Although as you say, the whole CBT is a crock of shit in the first place. So, do you reckon, once I retire, I'll be allowed to withdraw all my funds without tax liability? After all, I'm reporting all every year and paying full taxes on the contribution AND the interest earned? Therefore a lumpsum withdrawal shouldn't incur any tax liability at all. This could very well be a blessing in disguise? Suppose you are a PR who gives up his PR, withdraws all of his CPF and returns to the US where he continues to work. Will the lumpsum withdrawal be subject to taxes again (remember the full amount (37%) and the interest is being fully taxed as it's not excludable). This sucks for the high income earner.
Thanks for the links.Adyth wrote:Hi! Thanks for the response.
I can still kind of understand if the interest income is taxable as earned, but having to report my CPF balances to FinCen and on Form 8938 surprises me. Per the Singapore-US IGA and the IRAS e-tax compliance guides (see links below), it appears CPF investment accounts at least are not defined as "financial accounts" under FATCA and the CPF is non-reporting. If the CPF investments accounts are not financial accounts, I can't imagine why the other ordinary/special etc accounts would be financial accounts that are reportable? Again, reporting versus taxable is different, but I don't see why we would have to fill 8938 or FBAR if they are not considered "financial accounts".
Thoughts?
https://www.iras.gov.sg/irashome/upload ... re_IGA.pdf
- See pages 45-46 Appendix Section V.A.4
https://www.iras.gov.sg/irasHome/upload ... 0FATCA.pdf
- See pages 40-41 Section 7.3.1., especially example 2.
The employer's contributions ("the 16~17%") to your CPF account should also be reported as Income.sundaymorningstaple wrote:The biggest thought is I notice the second link file was published in January of this year and I'd not seen it! Prior to that, there was nothing in print specifically pointing to the CPF board so I stand corrected and am rather pissed off that I've adjusted the last 7 years return (last year) in order to get into compliance!. Fortunately, it had negligible tax impact for me, but was a pain in the arse! And now, I find I don't have to report it. However, I'm still not exempted from filing the FinCen or the 8938. I just get to leave that shit off it it now. But I have to report on the 8938 that I'm not reporting it!
I stand corrected and many thanks for you own research. Mine infor/research was outdated. I will, however, continue to report the interest as that way, if/when I bail out of here with a lump sum withdrawal, I can prove that the interest has already been reported as has 20% of the contributions (that from my own salary) therefore I should only be liable for the 16~17% employer's contributions that were not reported as Income (much like the payroll taxes in the US) on withdrawal.
As long as you have included all CPF contributions (i.e. including the employer's contribution) as gross income in each year and reported the annual CPF interest each year, you should not be liable for paying taxes again on withdrawal (checked this with a "big-4" tax accountant).GSM8 wrote:One would think that the lump sum should be tax free upon withdrawal if paying US tax on all as-accrued interest (as SMS suggested). Alternatively, it can be taxed on withdrawal only if not paying as-earned taxes (as Adyth felt). But not both. Either way, disallowing FEIE is based on a weak argument. SSA clearly doesn't consider it an ordinary withdrawal as they curtail SS benefits citing WEP, regardless of whether the withdrawal in monthly payments or lumpsum (can't seem to find the link to that specific precedent upon cursory google search). But who is to say that IRS won't selectively pick the interpretation that's advantageous to them, by invoking the argument that CPF is a non-qualified retirement plan, therefore it's taxable again at the time of withdrawal as well. Much of this still appears to be a big grey area and no one seems willing to acknowledge the elephant in the room.
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