- 1 Offshore Tax Consultant (IRS)
- 2 IRS Foreign Tax & Reporting is Complex
- 3 IRS Foreign Tax and Reporting
- 4 Which Foreign Investments are Reportable?
- 5 What Foreign Investments are Not “Currently” Reported
- 6 U.S. Tax & Foreign Investments
- 7 What if You Are Out of IRS Offshore Compliance?
- 8 Golding & Golding, A PLC
Offshore Tax Consultant – International Tax Services | IRS Offshore
Offshore Tax Consultant (IRS)
As you journey through Google, you will come across lots of misinformation. This is exacerbated by aggressive tax attorneys, self-proclaimed “experts,” and even non-attorneys posing as licensed tax attorneys – trying to get you to part with your money.
Before diving into one rabbit hole after the next, it is important that you understand the basics of the IRS, Foreign Investments, U.S. Tax and Offshore Reporting.
IRS Foreign Tax & Reporting is Complex
Some rules may seem simple (Foreign Dividends) until you learn your foreign dividend is generated from a PFIC (Passive Foreign Investment Company) of which you never made an election – and have been receiving excess distributions.
Suddenly your 15% or 20% foreign qualified dividend is now taxed at 37% plus daily interest from the inception of your PFIC status.
IRS Foreign Tax and Reporting
If you are a U.S. person, you have to file an annual U.S. Tax Return.
But, even if you do not meet the threshold requirements for filing a tax return in a tax year — you still may have to report various international reporting forms.
For example, if you are a U.S. Person, even if you do not have to file a tax return, you may still have to file an FBAR, Form 3520-A Form 3520, Form 5471 and Form 8865 (list not exhaustive)
*FATCA Form 8938 is only required when you have to actually file a tax return.
Which Foreign Investments are Reportable?
There are many different types of reportable foreign investments. Some of these include:
- Mutual Funds
- Stock Accounts
- Pension Accounts
- Foreign Life Insurance
What Foreign Investments are Not “Currently” Reported
The most common type of non-FBAR or FATCA reported investment is real estate (with restrictions). For example, an individual who owns foreign real estate does not report individually owned real estate.
Conversely, when a person has interest in a REIT, Foreign Business or otherwise owns real estate in a foreign entity – they will generally have a reporting requirement.
U.S. Tax & Foreign Investments
U.S. Tax on Foreign Investments is very complicated. With the recent enactment of the TCJA, the IRS has significantly expanded international tax requirements.
Generally, you have to pay tax on income that is distributed to you. And, you also have to pay tax on accrued, non-distributed income, unless it is in a retirement account (restrictions & limitations apply)
Some key takeaways:
- You may have had to pay a one-time Transition on Tax on Accumulated E&P in 2017 (Fiscal Year permitting)
- You may have an ongoing Subpart F Income requirement.
- You may have an ongoing GILTI Tax requirement
What if You Are Out of IRS Offshore Compliance?
It is human nature to want to avoid making a proactive submission to a government agency such as the IRS before the IRS ever discovers the non-compliance. But, typically that is best path forward.
Moreover, if you realize you are out of compliance and begin researching online, you may begin to feel as though it is hopeless. Some of these attorneys and CPAs make it appear that everyone with unreported assets or income is going to be severely penalized and shipped off to prison.
That is simply not the case.
You have options, and depending on the facts and circumstances of your situation, your options may include the streamlined program, reasonable cause, or the delinquency procedures – which may result in significantly reduced fines and penalties (and may even receive a penalty waiver).
Golding & Golding, A PLC
We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.
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Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.