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Old 08.10.2016, 00:29
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Should 3rd pillar investments be taxed in the US?

I have heard conflicting ideas on this. I believe it all depends on the interpretation of a vaguely worded US tax law. Unfortunately, my current US tax advisor is of the philosophy that I should declare what I placed in my 3rd pillar account as income. Conveniently, everything is ready JUST in time for the foreign-dwelling US tax deadline which would make switching tax preparers difficult. What are you all being told on this issue?

To clarify, this does not involved cashing in on the 3rd pillar. I made the maximum amount in 2015 as I was told it was tax-free but have now been told I need to cough up the tax money to be paid ASAP...

Luckily my CLN came through in March.
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Old 08.10.2016, 00:54
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Re: Should 3rd pillar investments be taxed in the US?

AFAIK you neither pillar 3a nor pillar 2 are tax deductable from US taxes. So pillar 3a was never a good idea to do for you in the first place - whatever you saved on Swiss taxes, you'll just pay to the US.
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Old 08.10.2016, 00:56
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Re: Should 3rd pillar investments be taxed in the US?

This thread also mentions filing it on the FBAR (assuming the amount is high enough). The deadline for that was June:

https://www.englishforum.ch/finance-...-us-taxes.html
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Old 08.10.2016, 09:02
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Re: Should 3rd pillar investments be taxed in the US?

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AFAIK you neither pillar 3a nor pillar 2 are tax deductable from US taxes. So pillar 3a was never a good idea to do for you in the first place - whatever you saved on Swiss taxes, you'll just pay to the US.
Depends on how much you earn and can write off, I never had to pay any US tax, just fill out forms.

No need to declare it as income, it already is part of your salary. What you do on Swiss taxes is deduct it, you can't do that on US taxes/

Tom
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Old 08.10.2016, 12:11
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Re: Should 3rd pillar investments be taxed in the US?

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I have heard conflicting ideas on this. I believe it all depends on the interpretation of a vaguely worded US tax law. Unfortunately, my current US tax advisor is of the philosophy that I should declare what I placed in my 3rd pillar account as income. Conveniently, everything is ready JUST in time for the foreign-dwelling US tax deadline which would make switching tax preparers difficult. What are you all being told on this issue?

To clarify, this does not involved cashing in on the 3rd pillar. I made the maximum amount in 2015 as I was told it was tax-free but have now been told I need to cough up the tax money to be paid ASAP...

Luckily my CLN came through in March.
Kind of confused as to what exactly is the problem. Can you give more detail?
Basically US Fed Tax is just on income. Not assets!
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Old 08.10.2016, 14:18
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Re: Should 3rd pillar investments be taxed in the US?

The op is trying to shield income from taxes by taking a 3rd pillar. Only Swiss taxes are saved that money is taxed as income and n the US
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Old 08.10.2016, 14:25
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Re: Should 3rd pillar investments be taxed in the US?

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The op is trying to shield income from taxes by taking a 3rd pillar. Only Swiss taxes are saved that money is taxed as income and n the US
Yes! I know! But she may be covered by the 100K exclusion.
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Old 08.10.2016, 16:55
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Re: Should 3rd pillar investments be taxed in the US?

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Depends on how much you earn and can write off, I never had to pay any US tax, just fill out forms.
If you're one of the lucky few whose US taxes are lower than swiss, then sure it can make sense. But normally you pay more taxes to the US, so it doesn't make sense to optimize your Swiss taxes - you'll still be paying same amount to Switzerland + US (thanks to double tax treaties). Just more of taxes will go to the US for financing god knows what than to local swiss schools etc.
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Old 08.10.2016, 21:18
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Re: Should 3rd pillar investments be taxed in the US?

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If you're one of the lucky few whose US taxes are lower than swiss, then sure it can make sense. But normally you pay more taxes to the US, so it doesn't make sense to optimize your Swiss taxes - you'll still be paying same amount to Switzerland + US
No, you can use the FEIE rather than the tax credit as well as the housing exclusion.

My US taxes were always zero as an expat.

Tom
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Old 16.03.2021, 11:54
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Re: Should 3rd pillar investments be taxed in the US?

I'm reviving this thread...

I just learned that I probably should have reported my pillar 3a using form 8621, because it might be a PFIC-- (but as a financial idiot, I actually don't know) Of course, it's impossible to know without paying an arm and a leg for a tax advisor. Does anyone have any real experience with this? My income isn't high enough for me to actually pay tax to the IRS-- I always get off with the Foriegn Income Exclusion or the Foriegn Tax Credit.
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Old 16.03.2021, 15:46
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Re: Should 3rd pillar investments be taxed in the US?

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I'm reviving this thread...

I just learned that I probably should have reported my pillar 3a using form 8621, because it might be a PFIC-- (but as a financial idiot, I actually don't know) Of course, it's impossible to know without paying an arm and a leg for a tax advisor. Does anyone have any real experience with this? My income isn't high enough for me to actually pay tax to the IRS-- I always get off with the Foriegn Income Exclusion or the Foriegn Tax Credit.
Believe form 8939 is the one to use. More important is to report it also on the FBAR.
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Old 16.03.2021, 16:29
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Re: Should 3rd pillar investments be taxed in the US?

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Believe form 8939 is the one to use. More important is to report it also on the FBAR.

Yes, those two obligations are clear. It's the additional form for foreign investments I'm worried about, that I don't understand if a Pillar 3a is considered a PFIC or not.
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Old 16.03.2021, 17:05
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Re: Should 3rd pillar investments be taxed in the US?

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Yes, those two obligations are clear. It's the additional form for foreign investments I'm worried about, that I don't understand if a Pillar 3a is considered a PFIC or not.
In general, assume not!
But the 3a provider or good tax service (like greenback) should be able to answer the question.
My accountant, nor any previous one, has ever used or even mentioned this form.
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Old 08.09.2021, 23:21
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Re: Should 3rd pillar investments be taxed in the US?

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Yes, those two obligations are clear. It's the additional form for foreign investments I'm worried about, that I don't understand if a Pillar 3a is considered a PFIC or not.
3rd Pillar pension in itself isn't a PFIC. It's the investment in the 3rd pillar which could be a compliance problem for US taxes. If you hold foreign mutual stock or bond funds as investment, they almost invariably are PFICs and should be avoided if you are US person. However, cash or individual stock shares or bonds (not pooled or mutual) can be held in 3rd pillar without compliance issues.
Same goes for normal non-US domiciled investment accounts - if US tax person, suggest avoid compliance headache of holding any PFIC mutual funds.
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