Tag Archive for Form 8938

A Point To Ponder

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

Written by | Posted in Expatriate • FBAR • Income Tax • Tax Tips

Beyond The FBAR – Everything You Never Wanted To Know About All of The Other International Reporting Forms (But Must)

With all of the focus on FBARs and Form 8938s these days, it’s sometimes easy to forget about the other IRS international reporting forms. Below is a list of other important international reporting forms that relate to foreign asset reporting along with their penalties.

(1) Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts: Under IRC § 6048, taxpayers must report various transactions involving foreign trusts, including creation of a foreign trust by a United States person, transfers of property from a United States person to a foreign trust, and receipt of distributions from foreign trusts. This return also reports the receipt of gifts from foreign entities under IRC § 6039F. The penalty for failing to file each one of these information Read More

Written by | Posted in FBAR • International

Offshore Gold, Cash And Notes… Do You Need To Report On An FBAR And Form 8938?

The IRS has stepped up its efforts to curb non-disclosure of offshore assets and underreported income by U.S. taxpayers. Tax compliance has risen to the top of the IRS agenda, and with widely publicized alerts from the IRS, claims of ignorance of the law aren’t likely to go very far.

Contrary to popular belief, not all foreign assets owned by U.S. taxpayers must be disclosed. This blog provides guidance to U.S. taxpayers who store gold and currency cash notes abroad in private vaults – a popular investment these days considering the uncertain global economy and the sharp declined in currency values.

Let’s begin with some basics. A U.S. person must file an FBAR if that person has Read More

Written by | Posted in FBAR • IRS

Green Card Holders: Residency In Foreign Country And Treaty Benefits!

Tracking Storm Linus on the weather websites, watching the storm blow around the white stuff all day long, snow piling up 16 inches and more on it’s way, sneaking peeks at the Super Bowl while trying to write up this post- I realized how far we have come–long, long ways from being Green Card holders.

But I do remember that the transition to Green Card holder from a visa holder can be a somewhat exhilarating, somewhat frustrating journey. This process can take a long time and comes with a lot of trials and tribulations.

The tax rules for a green card holder remain fairly the same as a US citizen or a long time US resident for most purposes. The complications come into play when the Green Card Read More

Written by | Posted in FATCA • FBAR

This Just In! Final Regulations On Reporting of Foreign Specified Assets On Form 8938!

Form 8938, is the Statement of Specified Foreign Financial Assets. This form is required to be filed to remain in compliance with IRC § 6308D. You may not have known that the Internal Revenue Service hadn’t yet made the 2011 rules and regulations under this code final, comments and concerns were still being gathered.

The Internal Revenue Service on December 11th, 2014 has issued final regs that provide guidance on the requirement under Code § 6038D, for Form 8938 filers. This provides more information and clarifications on certain filers, types of assets to be reported, valuation etc.

The final regs apply for tax years ending after Dec. 19, 2011, but taxpayers may apply them Read More

Written by | Posted in FBAR • Individual • IRS • OVDP

What If I Own Real Estate In A Foreign Country? Answers Here!

There’s this question that I always get from my clients: “Do I have to report my real estate holdings in a foreign country?” To which, my answer (in true accountant style) is always: “It depends”. Let me explain further.

You may be a first generation immigrant to the US and still have strong ties to your home country; by way of family elders who live there or a strong sense that you would like to some day retire back there, where you grew up. Or you are an adventurous investor who would like to invest in a little vacation home by the beach in the Caribbean. Or you were stationed abroad through your job and loved it so much that you invested in some property there. Then this blog is for you to read! Read More

Written by | Posted in Expatriate • FATCA • FBAR • International • IRS • Real Estate

Form 8938 And Offshore Real Estate Holdings

Owning a portfolio of offshore assets can be a headache thanks to the Foreign Account Tax Compliance Act (FATCA). FATCA requires both U.S. citizens and foreigners living in the U.S. to make extensive disclosures about overseas holdings on their tax returns or face stiff penalties. Foreign financial institutions also must report more detailed information on income earned by their U.S. account holders, or face possible U.S. tax penalties.

FATCA is the culmination of a three-year campaign by Washington to combat offshore tax evasion. It has its genesis in a 2009 settlement with UBS AG where the Swiss bank agreed to turn over to the U.S. the names of more than 4,000 U.S. taxpayers with hidden offshore accounts. Read More

Written by | Posted in FATCA • International • Real Estate

Alphabet Soup For Form 8938

Overview

On March 18, 2010, the “Hiring Incentives to Restore Employment Act” or “HIRE Act” was signed into law. Section 511 of the HIRE Act created I.R.C. § 6038D. This section requires specified individual taxpayers with an interest in “specified foreign financial assets” to file Form 8938 if the aggregate value of those assets exceeds the applicable reporting threshold. The applicable reporting threshold is generally $ 50,000, but higher asset thresholds apply to U.S. taxpayers who file a joint tax return or who live abroad.

Tax practitioners dread Form 8938 in large part because it means more, and often times duplicate, reporting. For example, a taxpayer with more than $ 10,000 in an offshore account already must file a Report of Foreign Bank and Financial Accounts (FBAR) with the IRS. But in a post-Form 8938 world, that same taxpayer must file a separate Form Read More

Written by | Posted in FBAR

What Offshore Delinquent U.S. Individual Filers Need To Know! – Part 3

I understand that if my income is all from Canada I will have no U.S. tax payable, then why is the cost of the U.S. tax preparation so expensive relative to my simple Canadian T1 return?

Answer

For most U.S. persons residing in Canada, there may be no tax payable if substantially all of your income is from Canadian sources because of the foreign tax credit mechanism. The annual inflation-adjusted foreign earned income exclusion ($97,600-2013) which is a deduction in arriving at adjusted gross income on the U.S. 1040 tax return, may exclude your T4 or self-employment income from taxation. However leakage may result if income determination for U.S. tax purposes under the IRS Code and Regulations is different from Read More

Written by | Posted in Canada • FBAR • OVDP

Beyond The FBAR

Other Civil Penalties Lying In Wait For The Unwary Taxpayer With Undisclosed Offshore Assets

With all of the focus on FBAR penalties when it comes to foreign asset reporting, it’s easy to overlook the others, some of which can be just as onerous as the FBAR penalty itself. What other pestilent civil penalties are lying in wait for the unwary taxpayer who decides not to participate in one of the IRS’s voluntary disclosure programs and is subsequently audited?

I. Failure to File a Tax Return Penalty

The civil penalty applicable for failure to timely file returns is section 6651(a)(1). This Read More

Written by | Posted in FBAR • International • IRS • OVDP • Tax Fraud/Evasion/Crimes

OVDP Hotline Nixes Practical Use of New Streamlined Program

The inflexibility of the IRS in the offshore area is starting to get some professionals down. I am one of them, but there are some others voicing similar frustration.

Taxpayers and professionals alike, were very pleased when the IRS announced the new Streamlined procedures in mid-June. You can learn more about the new Procedures here.

It seemed that sensibility and reason were beginning to prevail over at the IRS! Finally, “benign actor” (as opposed to “bad actor”) taxpayers with undisclosed offshore assets, could obtain relief and come into tax compliance without driving themselves into both fiscal and physical bankruptcy. Read More

Written by | Posted in OVDP • Tax Fraud/Evasion/Crimes
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