visacats

Forgot I'd started this thread. I moved to the US in 2023, so I'm now looking at my first year of filing US taxes. Nightmare. Basically, I have found that searching for this tends to bring up accountancy websites who form an opinion that Kiwisaver is a foreign trust and 3520 and/or 3520A must be filed. In addition, the funds that Kiwisaver invests in may be considered PFICs triggering form 8621, which looks like a complicated form to complete and may also mean that Kiwisaver gains are taxed punitively. It appears that the IRS created an exemption for forms 3520/3520a for foreign trusts that are formed for the purpose of retirement saving. See section 5.03 of Rev. Proc 2020-17 https://www.irs.gov/pub/irs-drop/rp-20-17.pdf. However, it appears that Kiwisaver does not technically meet all of those criteria, as (1) there is not a contribution limit that I'm aware of and (2) individuals can make contributions from non-employment sources. So it appears Kiwisaver does not match the criteria of 5.03(3) and 5.04(4). There are good examples of this type of analysis here: https://www.nzustax.com/lets-take-a-deep-dive-into-kiwisaver/ and here https://cloudtax.co.nz/articles/10/08/20/kiwisaver-and-us-tax But these articles are all written by people who want expat business, and in my view there's a clear motivation for them to explain how complicated things are in order to encourage people to use their services. Part of the claim is that the US-NZ tax treaty does not deal with Kiwisaver. But I think it does. Looking at the US-NZ tax treaty for pensions, it says: -- https://www.irs.gov/pub/irs-trty/newzld.pdf So what's the definition of a pension? In 2008 the US-NZ tax treaty was updated to with a new protocol, which includes a definition of pensions: -- https://home.treasury.gov/system/files/131/Treaty-NewZealand-Protocol-12-1-2008.pdf There is an additional technical explanation document which was published alongside the 2008 protocol, which states: -- https://home.treasury.gov/system/files/131/Treaty-NewZealand-Protocol-TE-11-6-2009.pdf So my read of this is: 1. pension funds established in a state (NZ or US) are only taxable in the state (as per 1982 tax treaty) 2. Kiwisaver is explicitly defined as a pension fund in the 2008 protocol and technical explanation documents. Seems pretty clear to me. At the moment, although I am still researching this, I am intending to declare my Kiwisaver on FBAR and form 8938 (so I will still be fully disclosing my global financial position) but not complete forms 3520/3520 or go down the 8621 PFIC rabbit hole because I believe the US-NZ tax treaty explicitly protects Kiwisaver from taxation by the US.

Hi, I have an old Kiwisaver account which is not currently receiving any contributions. I am looking to emigrate to the US later this year with a green card. It looks like the filing of this under US taxes could be complicated - does anyone here have previous experience of filing US taxes with an open Kiwisaver? How did you do it? Obviously the other option is to close it, with the forfeiture of previous government contributions (and anyway I may as yet end up back in NZ one day).