Previously, we have look at the tax treaty tiebreaker and how it relates to taxation of Subpart F and PFIC income as well as eligibility for streamlined offshore procedures. This is another in a series of posts on the tax treaty tiebreaker (which is a standard provision in most U.S. tax treaties).
Tag Archive for Form 8938
US taxpayers face horrendous fines for failing to accurately report foreign financial assets on the annual 1040 tax return using form 8938. The fines range from 50%-125% of the asset value every year not accurately reported. This is very serious stuff.
One individual pointed out that the IRS has a document called “Question & Answers on Form 8938” which says that ownership of “foreign real estate is not is not a specified foreign financial asset required to be reported on form 8938.” While this is narrowly true, it is dangerously misleading. Here’s why.
There is a lot of attention these days on big companies (Apple, Google, General Electric, Facebook and others) stashing their earnings overseas in what are considered tax havens to avoid paying U.S. taxes on their corporate income. Some international tax reform proposals have been suggested as to how to get the corporation to either bring this stash back into the U.S. by way of a “repatriation holiday” or “deemed repatriation” or ending the system of tax deferrals. Read more
The context: Form 8938 was created by the IRS to meet the reporting requirements mandated by Internal Revenue Code S. 6038D. S. 6038D was mandated by S. 511 of the HIRE Act.
Over the past several, years, the U.S. government has signed intergovernmental agreements (IGAs) with dozens of partner countries (83 altogether at latest count), which are designed to promote the implementation of the FATCA law requiring financial institutions (mainly banks and investment houses) outside the U.S. to report information on financial accounts held by their U.S. customers to the IRS.
Ancient Greek thinker Heraclitus is famous, at least in some circles, for his rather perplexing observation that “the only constant in the universe is change.” Murphy’s Law, a much more familiar axiom, states that “if anything can go wrong, it will.” If these two phrases are combined into some sort of latter-day Frankenstein’s monster of philosophy, you may get something like “change never happens as quickly as you want it to happen.”
Dodd-Frank, the massive 2010 financial reform law which Republicans and their banker allies have taken a blood oath to dismantle while Democrats and their consumer advocate allies have been known to worship with wave offerings, is a good example. Five years after its passage, the law is still only about 50 percent implemented. That’s good news for some people, and bad news for others. Read more
If you are a regular reader of my blog ~ you know the tax geek that I am, I write a lot about tax compliance for foreign bank account holders and the effect of the FATCA. FATCA stands for Foreign Account Tax Compliance Act. Calling a spade a “large digging instrument”, we know this law is one-sided and forces other countries to enforce US tax laws. And if they fail to comply, they are effectively locked out of US markets and the US dollar ~ the “world currency” for now.
Countries that sign the FATCA Agreement or Inter Governmental Agreement (IGA) are considered tax compliant. This means the banks/ foreign financial institutions (FFI) in these countries send information as demanded by the IRS to their own tax authorities which is then shared with the IRS. This is “Model 1”. Read more
Taxpayers With Foreign Assets May Have FBAR And FATCA Filing Requirements In June
WASHINGTON—The Internal Revenue Service today reminded all taxpayers with an FBAR filing requirement to report their foreign assets by the June 30 deadline. FBAR filings have risen dramatically in recent years as FATCA phases in and other international compliance efforts have raised awareness among taxpayers with offshore assets.
The IRS encourages taxpayers with foreign assets, even relatively small amounts, to check if they have a filing requirement. Separately, certain taxpayers living abroad may also have to file the FATCA-related Form 8938 with their tax returns by the June 15 Read more
WASHINGTON — The Internal Revenue Service reminded U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2014, that they may have a U.S. tax liability and a filing requirement in 2015.
Most People Abroad Need to File
A filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the foreign earned income exclusion or the foreign tax credit , that substantially reduce or eliminate their U.S. tax liability. These tax benefits are not automatic and are only available if an eligible taxpayer files a U.S. income tax return.
The filing deadline is Monday, June 15, 2015, for U.S. citizens and resident aliens whose Read more
The National Taxpayer Advocate suggested to the Internal Revenue Service to reduce the duplicate foreign asset reporting requirements created by the Foreign Account Tax Compliance Act. The Taxpayer Advocate Service (TAS) is your voice at the IRS. Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights.
April 13, 2015 the National Taxpayer Advocate stated in Recommendations for Published Guidance under IRC §§ 60380 and 1471: Eliminate Duplicative Reporting of Assets on the FATCA Form 8938 if the Asset is Reported or Reflected on the FBAR (FinCEN Report 114) and Exclude Financial Accounts Maintained by a Financial Institution in the Country of Which the U.S. Person is a Bona Fide Resident from FATCA Reporting: Read more
Most of us remember the good old days of the 1990s – a seemingly decisive victory in the First Persian Gulf War, the dot-com bubble that transformed computer geeks into nouveau riche millionaires, and a string of world championships that made the New York Yankees appear seemingly unbeatable. President Bill Clinton did a good job of manning the wheel during most of the decade, although truth be told, almost anyone can sail a ship when the seas are calm and a gentle but steady breeze is filling the sails.
Mr. Clinton did have his shortcomings, most notably his interaction with a certain intern which led to. . . well, we’ll skip all the sordid details. He was certainly not the first President to behave in such a manner, and he will not be the last one, but he was the only one to be caught in such a dramatic fashion. After he appeared before a federal grand jury, Read more
This time of the Tax Season is always interesting, most of my clients who have easy returns and get refunds have already filed their taxes, so now is the time when I become the deliverer of bad news.
So staying in the spirit of the tax season, I deliver the latest changes to the Form 8938 with a huge spoonful of sugar! If you need to know if the Form 8938 thresholds apply to you, read my blog-post here.
The latest release from the Internal Revenue Service on the 10th of March, 2015 incorporated into the Form 8938 instructions for reporting requirements made under the Final Regulations for § 6038D of the Internal Revenue Code. It also contains additional Read more