Successfully transferred money from Philippines to USA

[Adventine 3,201]

I asked this question some time back and the unanimous response was to do a wire transfer. However, there wasn't much info available on the detailed process (requirements, fees, etc). I'm sharing my experience here so that others can benefit.

 

Wire transfers from PHP to USD (BDO - Banco de Oro) 

***Also known as telegraphic transfer

 

Requirements:

• Personal appearance at the Philippine branch of account
• Original green card and passport
• Flight booking showing return date to US
• US bank account info (full bank name, SWIFT code, bank address, bank account number)
• Important:
  • Names on PH and US bank accounts must match exactly.
  • Before initiating the process at your PH bank, reconfirm the wire transfer instructions with your US bank. For example, my US bank account is in Memphis TN, but the bank's headquarters is in a different city. The correct international wire transfer instructions contain the bank's HQ address, not my branch of account. My bank also changed its name. The correct wire transfer instructions still indicated the bank's previous name. 

 

Exchange rate:

• Dependent on the bank's internal rate. They used a different exchange rate that is not publicly available on the BDO website. 

 

Fees:

Both my PH and US banks charged fees to process the wire transfer.

 

BDO:

• DST (documentary stamp tax) - dependent on the amount transferred
• Service charge: PHP 500
• Wire transfer fee: USD 25

 

My US bank:

• Wire transfer fee: USD 15

 

Turnaround time:

• I processed the transfer during PHL banking hours and later that evening, the money was already in my US account. I estimate the money arrived in my US bank account in approx. 12 hours.

 

Conclusion:

• The process was very easy, apart from having to physically show up at my PH bank.
• It helped a great deal that I'm a longtime BDO client and that the funds were clearly my savings accumulated over many years. The bank manager didn't ask any questions apart from why I was transferring the money. A simple "I've immigrated to the US" was enough. Without this kind of relationship, the BDO staff would likely have asked more questions.

 

 

Edited May 2, 2022 by Adventine

[Palawan 131]

You get the right account and have enough money in the bank your US bank will waive transfer fees.

[ekim 10]

Is the wire transfer a taxable event? Will the bank report it to the IRS?

[Adventine 3,201]

4 minutes ago, ekim said:

Is the wire transfer a taxable event? Will the bank report it to the IRS?

 

It's a taxable event for the BIR (PH Bureau of Internal Revenue) and there's no way around it because the PH bank will deduct DST (documentary stamp tax) automatically when they initiate the wire transfer.

 

FATCA rules require PH banks to report bank accounts held by US citizens and LPRs to the US government. US citizens and residents also have an obligation to report their foreign bank accounts through FBAR. Source here.

 

Typically, US citizens and LPRs are taxed on their worldwide income. Ask a CPA for professional advice on how to properly file taxes on foreign income.

[ekim 10]

1 minute ago, Adventine said:

 

It's a taxable event for the BIR (PH Bureau of Internal Revenue) and there's no way around it because the PH bank will deduct DST (documentary stamp tax) automatically when they initiate the wire transfer.

 

FATCA rules require PH banks to report bank accounts held by US citizens and LPRs to the US government. US citizens and residents also have an obligation to report their foreign bank accounts through FBAR. Source here.

 

Typically, US citizens and LPRs are taxed on their worldwide income. Ask a CPA for professional advice on how to properly file taxes on foreign income.

Thanks for the reply.

[seekingthetruth 1,248]

29 minutes ago, ekim said:

Is the wire transfer a taxable event? Will the bank report it to the IRS?

 

19 minutes ago, Adventine said:

 

It's a taxable event for the BIR (PH Bureau of Internal Revenue) and there's no way around it because the PH bank will deduct DST (documentary stamp tax) automatically when they initiate the wire transfer.

 

FATCA rules require PH banks to report bank accounts held by US citizens and LPRs to the US government. US citizens and residents also have an obligation to report their foreign bank accounts through FBAR. Source here.

 

Typically, US citizens and LPRs are taxed on their worldwide income. Ask a CPA for professional advice on how to properly file taxes on foreign income.

Thanks for the information.  I might need to do this one of these days.

 

A transfer is not a taxable event.  If the transfer is comprised of income you made in the Philippines, you should have reported it on your annual tax returns.

 

You are required to file FBAR if the total of your foreign bank accounts goes over $10,000.

 

The IRS might flag you up for further investigation if you transfer a large amount and it is not easy to see where the money came from, like income on your tax return.

 

Here is a scenario I have talked to my CPA about.  Say I bought my house (with wife) here in the Philippines for 100k USD.  I now sell it for 200K USD.  I will put that sale and capital gain on my tax return.  Then when and if I transfer the money to the U.S., I would put the reason as sale of house, etc.

[ekim 10]

@Adventine @seekingthetruth Any input on this scenario:

 

AIA Philam Life insurance policy in the Philippines with surrender cash value of less than $1,000 USD. I believe it is not required to report it to FBAR since it doesn't meet the treshold.

 

This year, it has a benefit payout of less than $10,000 (no payout in prior years) and the only feasible way to claim the benefit is via wire transfer from Phil AIA/Bank to the US Bank account. I believe this need to be reported in the income tax return but not in FBAR. Am I correct? And do I need to report it in succedding years even though there is no payout?

 

Thanks.

[Adventine 3,201]

@ekim I am not a CPA. On its own, the insurance policy doesn't look like it needs to be reported by FBAR, but if it's the kind of insurance policy that has an investment component, you have to be sure that the maximum value of the investment component didn't exceed USD 10k at any time during the year. If it did, you have to file FBAR. 

 

The benefit payout, no matter what the amount, definitely has to be reported on your income tax return.

 

Also, the 10k FBAR ceiling refers to "the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported." For example, if you have 3 accounts with a value of USD 1k + 5k + 5k each (meaning USD 11k total across all the accounts), then you have to file FBAR.

 

Again, I am not a CPA and it's best to consult one in this scenario.

[seekingthetruth 1,248]

20 minutes ago, ekim said:

@Adventine @seekingthetruth Any input on this scenario:

 

AIA Philam Life insurance policy in the Philippines with surrender cash value of less than $1,000 USD. I believe it is not required to report it to FBAR since it doesn't meet the treshold.

 

This year, it has a benefit payout of less than $10,000 (no payout in prior years) and the only feasible way to claim the benefit is via wire transfer from Phil AIA/Bank to the US Bank account. I believe this need to be reported in the income tax return but not in FBAR. Am I correct? And do I need to report it in succedding years even though there is no payout?

 

Thanks.

That is very complex.  I think insurance sometimes has different tax handling when there is a payout.  Being a Philippine insurance company makes it more complex.

 

Not quite following you at "This year, it has a benefit payout of less than $10,000".  Someone died and you are the beneficiary?  Like I said, a payout might have different tax handling than regular income.

[ekim 10]

@Adventine @seekingthetruth

 

Thanks for the input. To add, the insurance policy don't have an investment attached to it. No dividends as well. It is a very old plan that does not exist anymore in new offerings.

 

Regarding the payout benefit, I was also surprised about it as I don't remember anything about it 20 years ago when I sign up for it. No one died and I never filed any claim ever since and I am not a beneficiary. It was communicated to me by the AIA representative after paying off the premium for 20 years and the amount was calculated after that. They said I am entitled to receive this insurance benefit. Looks like a one time payoff and this is not a surrender cash value. I will try to dig the policy documents but I can't even search the plan online.

 

I don't have any account in the Philippines and won't be able to visit soon so the only way to claim the benefit is via international wire transfer. I can't authorize someone to claim it. Just trying to figure out the tax implication without spending much hiring a CPA since the amount is small to warrant it.

Edited May 3, 2022 by ekim

[Carpe Vinum 2,327]

8 hours ago, Adventine said:

 

It's a taxable event for the BIR (PH Bureau of Internal Revenue) and there's no way around it because the PH bank will deduct DST (documentary stamp tax) automatically when they initiate the wire transfer.

 

FATCA rules require PH banks to report bank accounts held by US citizens and LPRs to the US government. US citizens and residents also have an obligation to report their foreign bank accounts through FBAR. Source here.

 

Typically, US citizens and LPRs are taxed on their worldwide income. Ask a CPA for professional advice on how to properly file taxes on foreign income.

My wife just opened an account at BPI as an LPR in her married name during her last trip. She had to fill out and submit a W-9 when opening the account.