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Q747. When must Indian bank accounts & Property be declared to IRS . . .
Question: Sir As per current laws in U S A (Internal Revenue Services) those holding foreign accounts and property in foreign lands are to declare same. My son in law – a U S Citizen is having an N R O account in India with income generated from investments in mutual funds. This is very small amount not within the limit for income tax in India. However should he declare to I R S this NRO bank account? What about property? He has few plots invested on in India. Kindly elaborate on this aspect Thanks & regards Ravi Answer: You are right in stating that IRS requires declaration of foreign held property and foreign bank accounts from US Citizens. However, there are some exceptions. Here are a few points that may be of interest to some readers:Requirement to declare bank accounts held in India for US citizens & Residents
1. Foreign bank accounts are reportable to the IRS if the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported. o Aggregate refers to total. If a person has three foreign accounts with say $3500 in each account, then the total amount is over $10,000 and such bank accounts must be reported. 2. Keep in mind that any foreign bank account that has more than $10,000 in it even for a short duration of time for example on any one day of the year, then such a bank account must be reported on US Treasury, I believe on Form TD F 90-22.1. 3. Financial account held at a U.S. branch of a foreign financial institution is not reportable.Foreign bank account reporting may be exempt but Income must still be reported
4. If a foreign bank account holder does not meet the reporting threshold of $10,000 and is exempt from reporting the foreign bank account. He/She must still report the income from the account. For example interest income. This should be be reported regardless of the amount to avoid problems in the future.Reporting foreign real estate to IRS
Foreign financial assets are generally reported on form 8938 to the IRS. 5. Foreign real estate held directly is not reportable to the IRS. 6. If the foreign property owned is held in an offshore trust or foreign corporation, then shares in such an entity have to be reportedForeign Mutual Funds
7. Foreign mutual funds are Reportable on Form 8938 to IRS Perhaps your son in law should check with his accountant and file his US returns with his/her guidance.
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RI Information
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educating and connecting Indians across the globe . . . by Virendar Chand
NriInformation Questions &Answers
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RI Information
Informing
educating and connecting Indians across the globe
© Copyright 2006 Nriinformation.com
Q747. When must Indian bank
accounts & Property be declared
to IRS . . .
Question: Sir As per current laws in U S A (Internal Revenue Services) those holding foreign accounts and property in foreign lands are to declare same. My son in law – a U S Citizen is having an N R O account in India with income generated from investments in mutual funds. This is very small amount not within the limit for income tax in India. However should he declare to I R S this NRO bank account? What about property? He has few plots invested on in India. Kindly elaborate on this aspect Thanks & regards Ravi Answer: You are right in stating that IRS requires declaration of foreign held property and foreign bank accounts from US Citizens. However, there are some exceptions. Here are a few points that may be of interest to some readers: Requirement to declare bank accountsheld in India for US citizens &
Residents
1. Foreign bank accounts are reportable to the IRS if the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported. o Aggregate refers to total. If a person has three foreign accounts with say $3500 in each account, then the total amount is over $10,000 and such bank accounts must be reported. 2. Keep in mind that any foreign bank account that has more than $10,000 in it even for a short duration of time for example on any one day of the year, then such a bank account must be reported on US Treasury, I believe on Form TD F 90-22.1. 3. Financial account held at a U.S. branch of a foreign financial institution is not reportable. Foreign bank account reporting maybe exempt but Income must still be
reported
4. If a foreign bank account holder does not meet the reporting threshold of $10,000 and is exempt from reporting the foreign bank account. He/She must still report the income from the account. For example interest income. This should be be reported regardless of the amount to avoid problems in the future.Reporting foreign real estate to IRS
Foreign financial assets are generally reported on form 8938 to the IRS. 5. Foreign real estate held directly is not reportable to the IRS. 6. If the foreign property owned is held in an offshore trust or foreign corporation, then shares in such an entity have to be reportedForeign Mutual Funds
7. Foreign mutual funds are Reportable on Form 8938 to IRS Perhaps your son in law should check with his accountant and file his US returns with his/her guidance.
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