IRS Form 1040
The fact is that if you have a bank account in your country of origin or indeed anywhere else in the world, you are legally obliged to notify the IRS or its existence by ticking the box on Schedule B of Form 1040.
Treasury Department Form 114
Furthermore, if you have or have had $10,000 in one or multiple foreign accounts at any point during the year, you have the added Foreign Bank Account Report filing requirement of FinCEN Form 114 – this requirement applies even to accounts that have simply been used to facilitate a purchase and have had funds above the threshold in them for only the briefest periods. If you pass the threshold, you must report it. The process should be relatively straightforward but, unlike in the past, it can only be performed online with the Treasury Department’s PDF template. The Treasury Department uses the same filing deadline as the IRS; you just submit by April 15 or October 15 if you are allowed an extension.
Form 8938
Most expats in the United States will have heard of The Foreign Account Tax Compliance Act (FATCA) which seeks to ensure all foreign assets of US interested individuals exceeding a certain value ($50,000 for individuals or $100,000 for couples) are reported to the IRS.
Form 8938 is an attachment to form 1040 and gives you the opportunity to report your relevant assets abroad under FATC – for example, shares, foreign accounts or foreign pensions. Exceptions include gold, silver and property that is held directly in your name (rather than in the name of an offshore company); however, beware, if your foreign property earns rental income, this will need to be reported under IRS form 1040.
It is important to understand that although there are thresholds in place for Form 8398, these may be affected by various factors, including the vagaries of currency exchange, so it is important to seek help from your adviser.
Blacktower, Structuring Your Wealth to Your Advantage
The team at Blacktower (US) LLC can help you structure your wealth and consider the impact of cross-border tax concerns on your expat financial and retirement planning.
For more information about us and how we may be able to help you achieve your financial goals, contact us today.
We are not tax advisers and independent tax advice should be sought.
The above does not constitute advice.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Investment advice and investment advisory services offered and provided through Blacktower Financial Management US, LLC. This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, tax advice, tax recommendations, investment recommendations or investment research. You should seek advice from a professional before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.