Foreign Assets that must be reported to the US Tax Department

What and When Foreign Assets must be reported to the IRS under FATCA

Under provisions of The Foreign Account Tax Compliance Act (FATCA) If they live in the United States, US citizens & green Card holders who are single or file separately from their spouse, are required to report on Form 8938 foreign financial assets with an aggregate value of more than $50,000. If they live abroad US citizens & green Card holders who are single or file separately from their spouse, are required to report on Form 8938 foreign financial assets with an aggregate value of more than $200,000. If filing jointly with their spouse, the thresholds mentioned above are doubled.

Who is considered to live abroad?

An Individual is considered to live abroad if he/she is a U.S. citizen whose tax home is in a foreign country and they have been present in a foreign country or countries for at least 330 days out of a consecutive 12-month period.

US Taxpayers living abroad

US tax payers who must file an income tax return are required to also file Form 8938 if: Total value of their [married filling joint return] specified foreign financial assets is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.  These thresholds apply even if only one spouse resides abroad. If not a married person filing a joint income tax return, then the total value of their specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year

US Taxpayers living in the United States

US tax payers who must file a tax return are required to file Form 8938 if: Total value of their [married filling joint return] specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the year. If not a married and the total value of their specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the year

What are specified foreign financial assets?

Specified foreign financial assets include: Savings, deposit, checking and brokerage accounts held with a foreign financial institution; (ex: bank accounts held in India) Stock or securities issued by a foreign corporation A note, bond or debenture issued by a foreign person A partnership interest in a foreign partnership An interest in a foreign retirement plan, pension, or deferred compensation plan Interest in a foreign-issued insurance contract or annuity with a cash-surrender value The above list is not a complete list as many other assets could also be considered specified financial assets and subject to IRS reporting requirements. Please check with a tax advisor familiar with US taxation for up to date information and tax advice that would help keep you in compliance of US tax reporting and filing requirements.

What are NOT specified foreign financial assets?

The IRS has indicated that certain assets are not considered specified foreign financial assets and therefore do not have to be reported. These include: Foreign real estate such as your personal property in India that may be used as a residence or as a rental property. This is conditional upon this type of personal property should NOT be held through a foreign entity, such as a corporation, partnership, trust or estate. Property owned directly by an individual is fine.  Foreign currency [not held in a bank account or with any type of financial institution] Directly held shares of a U.S. mutual fund that owns foreign stocks and securities; Financial account maintained by a U.S. financial institution that holds foreign stock and securities such as 401(k) retirement plans, U.S. mutual fund accounts or brokerage accounts maintained by U.S. financial institutions.  Safe deposit box Payments such as foreign equivalent of Social Security Assets such as art, antiques, jewelry, cars and other collectibles held directly Readers should check with their tax advisors for a complete list of not specified foreign financial assets.

Penalty for noncompliance with Form 8938 reporting

Those who fail to file Form 8938 when required to do so may be subject to penalties. A $10,000 failure to file penalty as well as an additional penalty of up to $50,000 for continued failure to file after IRS notification can be levied. Other penalties may also be accessed depending on the circumstances.
Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com
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Foreign Assets that must be

reported to the US Tax

Department

What and When Foreign Assets must be

reported to the IRS under FATCA

Under provisions of The Foreign Account Tax Compliance Act (FATCA) If they live in the United States, US citizens & green Card holders who are single or file separately from their spouse, are required to report on Form 8938 foreign financial assets with an aggregate value of more than $50,000. If they live abroad US citizens & green Card holders who are single or file separately from their spouse, are required to report on Form 8938 foreign financial assets with an aggregate value of more than $200,000. If filing jointly with their spouse, the thresholds mentioned above are doubled.

Who is considered to live abroad?

An Individual is considered to live abroad if he/she is a U.S. citizen whose tax home is in a foreign country and they have been present in a foreign country or countries for at least 330 days out of a consecutive 12- month period.

US Taxpayers living abroad

US tax payers who must file an income tax return are required to also file Form 8938 if: Total value of their [married filling joint return] specified foreign financial assets is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.  These thresholds apply even if only one spouse resides abroad. If not a married person filing a joint income tax return, then the total value of their specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year

US Taxpayers living in the United

States

US tax payers who must file a tax return are required to file Form 8938 if: Total value of their [married filling joint return] specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the year. If not a married and the total value of their specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the year

What are specified foreign financial

assets?

Specified foreign financial assets include: Savings, deposit, checking and brokerage accounts held with a foreign financial institution; (ex: bank accounts held in India) Stock or securities issued by a foreign corporation A note, bond or debenture issued by a foreign person A partnership interest in a foreign partnership An interest in a foreign retirement plan, pension, or deferred compensation plan Interest in a foreign-issued insurance contract or annuity with a cash-surrender value The above list is not a complete list as many other assets could also be considered specified financial assets and subject to IRS reporting requirements. Please check with a tax advisor familiar with US taxation for up to date information and tax advice that would help keep you in compliance of US tax reporting and filing requirements.

What are NOT specified foreign

financial assets?

The IRS has indicated that certain assets are not considered specified foreign financial assets and therefore do not have to be reported. These include: Foreign real estate such as your personal property in India that may be used as a residence or as a rental property. This is conditional upon this type of personal property should NOT be held through a foreign entity, such as a corporation, partnership, trust or estate. Property owned directly by an individual is fine.  Foreign currency [not held in a bank account or with any type of financial institution] Directly held shares of a U.S. mutual fund that owns foreign stocks and securities; Financial account maintained by a U.S. financial institution that holds foreign stock and securities such as 401(k) retirement plans, U.S. mutual fund accounts or brokerage accounts maintained by U.S. financial institutions.  Safe deposit box Payments such as foreign equivalent of Social Security Assets such as art, antiques, jewelry, cars and other collectibles held directly Readers should check with their tax advisors for a complete list of not specified foreign financial assets.

Penalty for noncompliance with

Form 8938 reporting

Those who fail to file Form 8938 when required to do so may be subject to penalties. A $10,000 failure to file penalty as well as an additional penalty of up to $50,000 for continued failure to file after IRS notification can be levied. Other penalties may also be accessed depending on the circumstances.
A Book for NRIs PIO & OCI Information at your fingertips!
Available worldwide from Amazon
the nri guide Information, tips & guide for non-resident Indians to help them understand and deal with several issues in India
Free delivery with Amazon Prime