Steven J. Fromm, Philadelphia Tax Attorney offers the following are foreign tax preparation services:
A U.S. person is required to disclose any financial interests in, signature authority or other authority over foreign financial accounts or financial assets if the aggregate value of the accounts exceed $10,000 at any time during the calendar year under 31 CFR regulation 1010.350.
The information is reported electronically on FinCEN Report 114 (commonly referred to as an FBAR) through the Treasury’s Financial Crimes Enforcement Network (FinCEN) BSA E-Filing System.
It is important to understand that the filing of the FBAR does not relieve the taxpayer from the filing requirement of filing Form 8938 to report specified foreign financial assets.
For a more detailed discussion please read Foreign Bank Account Reporting (FBAR)
Under the Foreign Account Tax Compliance Act (FATCA), an individual is required to disclosure his or her interest in specified foreign financial assets during the year if the aggregate value exceeds an applicable threshold amount. These threshold amounts vary depending upon the taxpayers filing status.
This filing requirement also applies to any domestic entity that is “formed or availed of” for purposes of holding, directly or indirectly, specified foreign assets.
The filing of the Form 8938 does not relieve the taxpayer from the filing requirement of having to file an FBAR return if required.
For more insights into this area please read When Do I Need to File IRS Form 8938, Statement of Specified Foreign Financial Assets?
A taxpayer may be required to file both an FBAR and Form 8938 to report the same information on certain foreign accounts.
Remember that the FBAR is not filed with a taxpayer’s individual return, while the Form 8938 is filed with an individual’s tax return.
The IRS offers various remedial programs to help taxpayers to correct their failures to file these forms and to pay any income taxes associated with the failure to report foreign taxable income on their US tax returns.
Basically, there are two remedial programs that taxpayers may consider. One program is the Offshore Voluntary Disclosure Initiative (OVDI) which should be considered when foreign reporting violations are severe and significant. For more details, please read Foreign Offshore Accounts: IRS Third Amnesty Program.
The second program is called the Streamlined Foreign Offshore Procedure offered to both US citizens living in the United States and those living abroad. These two programs are similar but not identical. For a discussion of the streamlined program for those US citizens living abroad, please read US Citizens Living Outside America: Streamlined Foreign Offshore Procedure Offers Tax and Compliance Relief
Our firm has extensive experience in assisting clients with these remedial programs and bringing them into full compliance with all laws.
Our firm frequently assists taxpayers with the tax preparation of their tax returns when dealing with various foreign tax implications and compliance requirements.
For an tax guide for foreign nationals please read Foreign Nationals: US Income Taxes
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