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kumar999

Transferring foreign money legally into US before immigrating

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I maintain a US checking account  with a  small amount  as a foreign citizen with a US visitor visa .  I plan to immigrate to US in future and I have read 

that one needs to file an FBAR ( foreign account report for > $10000 foreign money) in the first year after immigrating.  That is no problems but is it wiser

to transfer all my life's savings  in my home country ( >$ 200k)  into my existing US account before I immigrate? Will that attract any questions or issues?  Thanks.

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as long as you have the proper paper trail and pay relevant taxes on it its fine, though that amount may attract more attention than a lesser amount.

 

on what basis will you be immigrating?


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Any transaction exceeding $10,000 is required to be reported by the bank so it is possible you may get a letter asking for more details. But, these rules are to prevent money laundering and funding of terrorist organizations and they're more concerned with money going out of the country than coming in. 

 

With that being said, as long as you have documentation that is was your money, gained legitimately, it won't cause you any issue. People and businesses transfer large amounts of money around the world on a daily basis so it's not an uncommon thing! I would alert both your bank and the bank you're transferring it to and they will help guide you. 

 

You will not have to pay any tax on the money to the IRS. The IRS can only tax income and capital gains. Money that already belonged to you is not income, it is considered an asset. I would hang on to your previous bank statements and documentation of what the money was (accumulation of income, inheritance, property sold, etc,) for at least 3 years in case you ever receive a letter having to explain it. Just remember, you have absolutely nothing to worry about as long as it was your money legitimately gained.

 

 

Edited by tsabbas

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15 minutes ago, tsabbas said:

Any transaction exceeding $10,000 is required to be reported by the bank so it is possible you may get a letter asking for more details. But, these rules are to prevent money laundering and funding of terrorist organizations and they're more concerned with money going out of the country than coming in. 

 

With that being said, as long as you have documentation that is was your money, gained legitimately, it won't cause you any issue. People and businesses transfer large amounts of money around the world on a daily basis so it's not an uncommon thing! I would alert both your bank and the bank you're transferring it to and they will help guide you. 

 

You will not have to pay any tax on the money to the IRS. The IRS can only tax income and capital gains. Money that already belonged to you is not income, it is considered an asset. I would hang on to your previous bank statements and documentation of what the money was (accumulation of income, inheritance, property sold, etc,) for at least 3 years in case you ever receive a letter having to explain it. Just remember, you have absolutely nothing to worry about as long as it was your money legitimately gained.

 

 

Thank you for this post! I read this topic and started panicking because I recently transferred savings from the UK to my US account to buy a car and I wondered if there was anything I have to do, but I'll just make sure I cover my bases when I file taxes.

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I'll second the others that there's nothing to worry about here.  Only transactions exceeding $10,000 or foreign bank accounts with > $10,000 need to be reported.  The bank takes care of reporting transactions.  

 

The only thing you can do wrong is to try to send it over in multiple payments just under $10,000 to avoid the reporting requirements--that's called structuring and is sure to attract unwanted attention.


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On 1/10/2019 at 7:59 PM, AstroCanada said:

The only thing you can do wrong is to try to send it over in multiple payments just under $10,000 to avoid the reporting requirements--that's called structuring and is sure to attract unwanted attention.

My German bank has a limit on how much I can transfer in one go, maybe because THEY want to avoid the reporting. So, no choice but to do the repeated smaller amounts.

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No, with my bank it is some odd figure like 10,800 USD per transaction and day. So I can so the same today, tomorrow, the day after...

I also noticed I could not transfer more than 10,000 EUR to another account in Germany in one day (I think because of money laundry legislation) - it is in no way prohibited by law, they just don't want to file the extra report to the central bank.

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Google "step transaction."  Breaking what would be a single large transfer down into a series of smaller transfers under $10,000 to avoid bank reporting is going to look suspicious and could trigger a government investigation. 

Dennis Hastert, former Speaker of the House - 3rd in line for the US presidency, ran afoul of the step transaction.  The investigation led to something else which ended up with him in prison.  

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Yeah, this has been floating around VJ forever. In my humble opinion, rubbish. Let the government look into it. What will they find? Nothing whatsoever. Fully legal money, earned and taxed in my home country, brought into the US in increments because it technically not possible any other way (you simply CANNOT do larger amounts with my bank), so I can spend it in the US to boost their economy. If anything they should be grateful I bring it all here.

Bringing your personal money has NOTHING to do with tax fraud (neither with money laundry). They are concerned about money leaving the country and/or money not being taxed because you have it in some tax haven (which Germany certainly is not). My money is not being taxed, regardless in how many steps I bring it.

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I will second @D.Ba, it depends on the bank in terms of transferring and what they allow and what they don't. Some international banks just will not allow you to transfer such huge sums of money at once so you just have to do it in increments. Every bank is different. Yes, it will trigger reporting if it is over $10k once it arrives to the US, but if you do increments below $10k a couple of times and that's it because it's your personal savings and you're moving to another country, that doesn't mean you will automatically be seen as suspicious by every bank. It really depends on the bank, how often you do it, even what country the money comes from, tons of factors.

 

Regular transactions that are "step increments", especially done by a US government official, will surely be of extreme suspicion to banks. It's not a comparable situation to a person doing a couple of one time transactions because they move to another country. All in all, as long as you can prove that it is your money and was legally obtained, there is nothing to worry about. If it's your personal money and you can prove that, that's the thing that counts.


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I did not use my bank for transfers but an alternative transfer service. (Worldfirst - but they just quit business in the US this week)
Look into that, they have two advantages in my point of view:

  • Transparent fees (none) while my bank in Europe was not able to give me a clear statement on fees and cost, neither the exact rate of transfer.
    Their model was very straight. They show you a transfer rate, that already deducted their margin. That was what you got. No additional fee.
  • You can take advantage of course fluctuations. It worked in the way that you send them the money. Once it is on their account you can pull the trigger for the transfer anytime.
    They transfer the money and send it to an account in the target country.

Because the question came up: At least Worldfirst did the reporting as required. When initiating the transfer, I had to confirm that I am the sender and beneficiary of the transfer plus answer a question what the source of the money is. 
Furthermore they clearly stated that you will be flagged in their system if you try to do multiple transfers <$10k. 

 

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On 12/1/2018 at 6:28 AM, kumar999 said:

I have rea

that one needs to file an FBAR ( foreign account report for > $10000 foreign money) in the first year after immigrating.  That is no problems but is it wiser

 

Back to the original question..... 

Don't be afraid of FBAR. It is a simple online report for those living in the US that hold or held more than $10,000 in a foreign account anytime in the calendar year. It has nothing to do with taxes or the IRS. It also is not just the first year of immigrating. It is any year thereafter that your cumulative balances in foreign accounts exceed $10k.  I can't see any wisdom in avoiding it. It is a bit of a nothing,  so keep you money wherever you wish. 

 

If you hold over $100,000 in foreign accounts, there is also the report known as FATCA. 

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