CPF and interest income - taxable as earned in the US?

[sundaymorningstaple]

For the Schedule B, Yes.
For the others I guess it depend on the quantums. If the interest is above 1500/year, I'd say yes to all three to be on the safe side. It's better than getting caught betwixt a rock & a hard place if you were required to file and did not (neither general any tax liability, but both carry onerous penalties for willful non-filing. Read carefully the posts by GSM8 and Maneo and take some time to try to digest the links. Then you have to follow your own conscious. I'm filling all even thought my quantums are below the threshhold required as I just don't trust them.

[CLNorth]

When reporting CPF annual interest in schedule B, what should I fill for payer ID? Don't think CPF Board has payer ID with USA IRS......

[Strong Eagle]

When reporting CPF annual interest in schedule B, what should I fill for payer ID? Don't think CPF Board has payer ID with USA IRS......

A really great reason to not fill it in.

[sundaymorningstaple]

When reporting CPF annual interest in schedule B, what should I fill for payer ID? Don't think CPF Board has payer ID with USA IRS......

A really great reason to not fill it in.

A possibility, but they have enough information already if you are paid by IR8A and you submit a copy with your 1040 to support your salary claim. You NRIC number is also your tax number and your CPF reference number and it's found on the top of the IR8A. Remember what Dirty Harry said. "Well, do you feel lucky? I can't remember if I fired 5 shots or 6." Remember, if you are a PR or dual citizen, you have to contribute CPF if you are an employee. They will know that much. If you have FIN number you wont be paying into CPF anyway. But yeah, the interest is a gamble.

[maneo]

When reporting CPF annual interest in schedule B, what should I fill for payer ID? Don't think CPF Board has payer ID with USA IRS......

I just enter "Central Provident Fund" for payer name, same as what my former tax accountant used to do.

It doesn't matter if the institution has a payer ID or not.
You're overseas.
The IRS will just be happy that you're actually reporting it.
It's no big deal.

There's no 1099-INT form being sent to the IRS.

However, year-end bank balances will be sent to the SG government, which will then share this with the US Treasury as part of the FATCA IGA.

[GSM8]

However, year-end bank balances will be sent to the SG government, which will then share this with the US Treasury as part of the FATCA IGA.

As seen from a separate thread, CPF and similar organizations will not have to FATCA report to US Treasury per IGA, but that likely does not absolve the individual of their own responsibility to do so under current FinCEN and IRS regulations.
http://forum.singaporeexpats.com/viewtopic.php?t=106274" onclick="window.open(this.href);return false;

[maneo]

As seen from a separate thread, CPF and similar organizations will not have to FATCA report to US Treasury per IGA, but that likely does not absolve the individual of their own responsibility to do so under current FinCEN and IRS regulations.
http://forum.singaporeexpats.com/viewtopic.php?t=106274" onclick="window.open(this.href);return false;

I checked again with the Senior BSA (Bank Secrecy Act) Tax Law Specialist in the Treasury Dept's FinCEN BSA Compliance Department ( FBARQUESTIONS{at}irs.gov ).

Regarding my query about whether, due to the Singapore-US IGA (“Agreement”) signed 9 Dec 2014, "CPF account balances no longer need to be included in the FinCEN 144 (FBAR) and Form 8938 filings," their reply was:

"This 'Agreement' that you reference in your e-mail below is specific to FATCA only and is not considered for the FBAR. Tax treaties do not apply to the FBAR.
"The Singapore Central Provident Fund account is reportable on the FBAR."

So, yes, "CPF... will not have to FATCA report to US Treasury per IGA, but that ... does not absolve the individual of their own responsibility to do so under current FinCEN and IRS regulations."
As SMS says, you have to follow your own conscience.

[maneo]

It seems that FBAR (FinCEN 114) reporting and IRS Form 8938 reporting have different requirements.

http://www.irs.gov/Businesses/Compariso ... quirements

For Form 8938, which is due with the tax return (for those taking advantage of the automatic 2 month extension to 15 June), accounts not included in the Inter-Governmental Agreement (IGA) need not be reported:

For taxable years beginning on or before December 12, 2014, if the jurisdiction in which a financial account is maintained has an IGA in effect, or is treated as having a Model 1 IGA ... in effect, on or before the last day of the taxpayer's taxable year,
retirement and pension accounts, non-retirement savings accounts, and accounts satisfying conditions similar to those described in 1.1471-5(b)(2)(i) that are excluded from the definition of financial account in such IGA
are not required to be reported on Form 8938.

[kelvinfrog]

Hey, I know the contribution by your employer and interest earned in the CPF will be taxed. Is the tax rate for the gain from CPF same as the usual federal income tax? Also, do you pay tax when you withdraw your money (like coming back to the U.S) or you need to pay tax every year? One last question, can you withdraw all the CPF money when you leave your job and go back to US? Thanks. The US taxation is so complicated!!

[BBCWatcher]

Hey, I know the contribution by your employer and interest earned in the CPF will be taxed.

And the general consensus, per the latest word (from long ago) direct from the IRS, is that the employer's CPF contributions are sadly not excludable via the Foreign Earned Income Exclusion/Foreign Housing Exclusion (IRS Form 2555 or 2555-EZ). Your contributions are, up to FEIE/FHE limits of course. The employer's contributions are "constructively received" when made, so they're taxable income in each/every year made.

Be sure to adjust your estimated tax payments if necessary to account for this new stream of income.

Is the tax rate for the gain from CPF same as the usual federal income tax?

Yes, assuming you keep all your CPF funds in "traditional" CPF, which I strongly recommend. Then CPF is basically like a bank paying 4+% interest for U.S. tax purposes, and you declare the interest as income each year, on IRS Form 1040 (or 1040A) Schedule B. Of course this interest is not earned income, so it cannot be subject to the Self-Employment Tax nor can it be excluded (FEIE/FHE). It is subject to the Net Investment Income Tax (IRS Form 8960) if you have relatively high (or higher) income.

CPF allows you to allocate some of your funds to local investments. I don't recommend doing that since those Singaporean investment products are most probably classified as PFICs for U.S. tax purposes. That means you would need to make mark-to-market elections on them (IRS Form 8621), which is at least complicated. I'd stick with traditional CPF, especially in today's low inflation/low interest rate world, and allocate as much as you can into traditional CPF SA.

Also, do you pay tax when you withdraw your money (like coming back to the U.S) or you need to pay tax every year?

According to general consensus, every year. The income is "constructively received" when the interest is credited to your CPF account, so that's when it's taxable. That's probably not a bad thing, though, especially if the interest income slides under your U.S. tax return's exemptions, deductions, and credits (i.e. taxed at 0%). That approach also arguably helps reduce some exchange rate risk.

One last question, can you withdraw all the CPF money when you leave your job and go back to US?

Yes, but only if you first terminate your Singapore Permanent Residence status or renounce your Singaporean citizenship, as applicable. If you don't do that, you must wait until you can make qualified/permitted withdrawals (retirement age). However, in my view you should ponder very carefully whether you should prematurely withdraw funds from a AAA-rated government account paying a minimum of over 4% (CPF SA) on funds that can be withdrawn on demand, at any time. That's a very high yielding savings account! Unless you need the funds for a kidney transplant to survive (literally or figuratively), I would let them ride straight into retirement and then withdraw the funds at least relatively slowly in equal or near-equal Singapore dollar increments (for foreign exchange reasons). That said, I'd probably start tapping CPF funds if I needed them before tapping U.S. Social Security (which you can delay up to age 70 for a higher monthly benefit, a very wise delay if you can and if you're healthy) and before tapping U.S. tax-advantaged retirement savings, particularly before tapping Roth IRAs and Roth 401(k)s.

You didn't ask, but it's an interesting question whether your CPF account is reportable on FinCEN Form 114 and IRS Form 8938. (Most U.S. persons living overseas -- and many U.S. persons living in the U.S. -- meet the threshold to file FinCEN Form 114. IRS Form 8938 is less common since the filing threshold is higher, but it is possible, especially with a decent sized CPF account.) It's best to err on the side of caution and report your CPF account, in my view. The general consensus seems to be it's reportable on these forms.