DO YOU HOLD ASSETS IN FOREING COUNTRIES?
ARE YOU A US RESIDENT OR CITIZEN LIVING ABROAD?
YOU NEED TO UNDERSTAND YOUR TAX OBLIGATIONS
-Raquel Hickey, Hickey&Hickey Accountant Consultants
In this global age that we live in, more and more of us find ourselves, investors in foreign companies or properties or embarking on exciting international ventures of our own. Oftentimes we do so without considering what the financial implications are or worse assuming that if it’s outside the U.S. it doesn’t factor in our lives or taxes here. It is important to know what is and what is not the case with regards to foreign assets.
Your Accountant or Tax preparer has probably asked you if you had any assets or income from foreign Countries and that is because there is a FATCA compliance obligation.
FATCA is the Foreign Account Tax Compliance Act and it requires:
- Due to International Agreement it is required for all foreign Banks and Financial Institutions to identify US person’s account holders and disclose this information to the US.
- US persons owning these accounts or assets must:
- Report the following:
- Bank Accounts
- Investment Accounts
- Mutual Funds
- Retirement Accounts & Pensions
- Securities and other brokerage accounts
- Debit Cards & Prepaid Credit Cards
- Life Insurances & Annuities having cash value
- Report accounts greater than $50,000 on form 8938 with their income tax
- Non compliance carries 40% Tax penalty
- Understatement of assets 25% penalty of the Gross income
- Report accounts exceeding $10,000 directly to de the Department of Treasury on form 90-22.1
It is important to know:
- That if you paid tax on your Foreign Assets you may qualify for a foreign tax credit using form 1116 with your income tax return.
- The IRS is currently conducting an “Offshore Voluntary Disclosure Initiative” for people who have not reported previously.
This is just a brief overview regarding international assets, should you have anymore questions regarding your international holdings and what effects they have on your taxes and finances, please feel free to contact Hickey&Hickey Accountant Consultants. We are here to help by providing financial information for Individuals and Small Business. Email us today at firstname.lastname@example.org or by phone (516)998-7410