International tax reporting in a nutshell

Your Guide to State, Local, Federal, Estate + International Taxation

international tax reporting, tax, IRSHAHA! Got you! There is no way to fit international tax reporting requirements in a nutshell or even fit it into one blog. I can, however, give you a brief run down on who must file what forms. (This list does not represent all forms for international reporting.) Let’s start with the basics. (I use “basics” loosely, because let’s be honest, if you have international reporting issues, there is nothing basic about them.)

FinCEN 114 (also known as the FBAR) – U.S. persons must file if…

  • You (U.S. person) had a *financial interest in or signature authority over at least one financial account (bank, brokerage account, etc. ) located outside of the United States; and
  • The aggregate value of all foreign financial accounts exceeded $10,000 at any given time during the calendar year reported. Yes, even if that $10,000 went in and out immediately…you have a responsibility to report it.
  • *Financial interest – U.S. person is the owner of record or holder of legal title in foreign financial institution, OR
  • Financial interest also can be any entity /U.S. person that owns directly or indirectly more than 50% of the total value of shares of stock OR more than 50% of the voting power of all shares. This includes constructive ownership, so don’t think you can get around this. It is probably best to think “control” instead of reading this word for word. After all this is just an informational report, better safe than sorry.

In summary, you should be filing FinCEN 114 if you have signature authority, own a foreign investment including, but not limited to, most foreign pensions, cash surrender value life insurance or hold stock in a foreign company through a foreign institution.

Form 8938 Statement of Specified Foreign Financial Assets – You (notice that this doesn’t say U.S. person) must file if…

  • You are a specified individual (call your accountant) or entity that has an interest in specified foreign financial assets (stock, loans, financial accounts…and YES, that means bank accounts and brokerage accounts again) and the value of those assets is more than the applicable reporting threshold (this is in total). This also applies even if the foreign investment is held by you directly.
    • Thresholds
      • Unmarried taxpayer – $50k on the last day of the tax year OR more than $75k at any time during the tax year
      • Married filing joint – Same rule, but it is $100k and $150k
      • Married filing separate – same as unmarried

Ugh! I fooled myself as well, I only got two forms down for ‘who must file’ and I have already met my personal blog length maximum (1 page). I guess I can’t even do what I said. I still have to talk about Forms 926, 8865 (which also needs SS-4 and 8832), 5471, 5713 and 8621. AND those are the only ones that jump to my head. There are many more, I’m sure. So please, if I haven’t lost you yet, check back for blogs titled: “International blog: Blog 2”, possibly 3 and if you make it, “International blog: Are we done yet?” This is just for who ‘must file requirements’!

If you find my blogs annoying or you just don’t want to read that much, please call your accountant with any foreign questions you may have and be ready to answer the questions that the accountant will ask you. The penalties for international tax reporting are no joke, so don’t hesitate…call NOW.

Chris Morrison, CPA, MAFM