The IRS just released a new additional foreign asset reporting form 8938 and even more thrillingly a first draft set of instructions. For many each of the 7 million US persons overseas and hundreds of thousands back home in the States this new reporting immediately represents a significant increase in annual US tax data collection and reporting and will be highly complex to understand.
Here are some highlights from a first reading of the instructions:
As for the types of accounts and assets that are reportable:
K&K Tax Group is a national tax resolution firm comprised of experienced tax attorneys, enrolled agents and tax relief professionals practicing as Tax Resolution Specialists certified by the American Society of Tax Problem Solvers (ASTPS). This is what makes us uniquely qualified to successfully solve IRS problems day in and day out. Our licensed professionals (every tax attorney, CPA and enrolled agent) must meet educational, experience and examination requirements prescribed by the ASTPS, a national, not-for-profit professional organization.
Here are some highlights from a first reading of the instructions:
- For unmarried taxpayers living in the United States, the new form must be completed if one had either more than $50,000 in foreign financial accounts on the last day of the tax year (usually December 31st) or if one had more than $100,000 at any time during the tax year. If married filing jointly, the amounts double (to $100,000/$200,000).
- Unmarried taxpayers living outside of the United States who are either bona fide residents of a foreign country or physically present abroad, must file this form if they had more than $200,000 on the last day of the tax year or more than $400,000 at any time during the tax year. If married filing jointly, the numbers increase to $400,000/$600,000.
As for the types of accounts and assets that are reportable:
- Any financial account maintained by a foreign financial institution;
- Other foreign financial assets, held for investment but not maintained by a financial institution, including stocks not issued by a US person, interests in foreign entities, and various financial instruments issued by non-US persons. The words "for investment" appear to eliminate interests in active businesses even if not reportable on any other return, but the wording is slightly unclear as drafted.
- A foreign financial institution is a non-US financial institution that is a bank (or similar entity), hold financial assets for others, and is engaged in investing, holding partnership interests, or other financial roles.
- Foreign mutual funds, foreign hedge funds, and foreign private equity funds are covered.
- Foreign pension plans are not specifically mentioned, but may well be foreign grantor or non-grantor trusts so may be covered or reportable elsewhere.
- Foreign real property is not mentioned specifically.
K&K Tax Group is a national tax resolution firm comprised of experienced tax attorneys, enrolled agents and tax relief professionals practicing as Tax Resolution Specialists certified by the American Society of Tax Problem Solvers (ASTPS). This is what makes us uniquely qualified to successfully solve IRS problems day in and day out. Our licensed professionals (every tax attorney, CPA and enrolled agent) must meet educational, experience and examination requirements prescribed by the ASTPS, a national, not-for-profit professional organization.
The information provided herein is not intended as legal, accounting, financial or any type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.
K&K Tax Group
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