IRS Issues New Form For Reporting Foreign Financial Assets
Posted 1-6-2012 | By Sue Weiskopf-Larson | Download Article
The IRS released a new form (Form 8938) for reporting foreign financial assets for the 2011 tax year. The form is intended to improve tax compliance by U.S. taxpayers who hold offshore financial accounts. The new Form 8938 filing requirement does not preempt the existing requirement to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
Unless an exception applies, you must file Form 8938 if you are a "specified person" that has an interest in "specified foreign financial assets" and the value of those assets is more than the "applicable reporting threshold". Specified persons include U.S. citizens and residents, nonresidents who file joint tax returns, and certain nonresidents who live in American Samoa or Puerto Rico. Specified foreign financial assets generally include 1) financial accounts maintained by a foreign financial institution, and 2) other foreign financial assets held for investment that aren't in an account in a U.S. or foreign financial institution, such as an interest in a foreign entity. The applicable reporting threshold ranges from $50,000 on the last day of the tax year (or $75,000 at any time during the tax year) to $400,000 on the last day of the tax year (or $600,000 at any time during the year) and is determined based on your filing status and whether you live in the United States or abroad.
The Form 8938 filing requirement currently applies only to individual taxpayers, but certain domestic entities are expected to be added for 2012.
If you have any foreign financial assets that may need to be reported, it is important to take the time to determine whether you need to file Form 8938, Statement of Specified Foreign Financial Assets or Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, because failure to file can trigger substantial penalties.
For more information, please contact Sue Weiskopf-Larson, MBT, CPA, at sweiskopf@hlbtr.com or 651-407-5893.