- 1 October 15 Tax & Offshore Reporting Deadline
- 2 2019 International Reporting & Tax Deadline Tips
- 3 Golding & Golding, Board-Certified Tax Law Specialist Team
- 4 5 Common Pitfalls
- 5 Speak With an Experienced Offshore Disclosure Attorney Specialist
- 6 Don’t just Start “Filing Forward”
- 7 Beware of “Free” Initial Consultations
- 8 Avoid Scare Mongering Lawyers
- 9 Make You are Speaking with an “Attorney”
- 10 Common International Tax Forms You May Have Missed
- 11 FBAR (FinCEN 114)
- 12 Form 8938
- 13 Form 3520
- 14 Form 5471
- 15 Form 8621
- 16 What if I am Out of FBAR Compliance?
- 17 Interested in Filing under IRS Tax & Amnesty Procedures?
October 15 Deadline to File Taxes & International Reporting Forms
For many of our international tax clients, an otherwise uneventful tax return can turn into a very complicated IRS tax nightmare, once the individual learns that she may have to report foreign accounts, assets, investments and/or offshore income to the IRS.
If you filed for an extension, you may be approaching the October deadline.
October 15 Tax & Offshore Reporting Deadline
The IRS has several rules involving foreign and offshore investments.
It does not matter if the overseas accounts and assets were acquired before the individual became a U.S. person, and it does not matter if the income being generated abroad is tax-free in the foreign country in which the income is being generated — unless the asset or income is excluded or exempted, it must be reported.
2019 International Reporting & Tax Deadline Tips
Generally, the U.S. government requires transparency when it comes reporting of all foreign accounts, assets, investments, and income — although there are always some exceptions, exclusions and other limitations to be aware of.
Golding & Golding, Board-Certified Tax Law Specialist Team
Golding & Golding represents clients worldwide in over 70-countries exclusively in Streamlined, Offshore and IRS Voluntary Disclosure matters. We have successfully completed more than 1,000 streamlined and voluntary disclosure submissions.
- Learn more about the Board-Certified Tax Lawyer Specialist credential
- Learn more about the IRS Enrolled Agent credential
- Learn More about Golding & Golding’s Case Accomplishments
- Learn More about Golding & Golding Testimonials from prior clients
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.
5 Common Pitfalls
When a person learns they have an IRS reporting requirement for their foreign money and assets — but have been out of compliance for one or more years — they sometimes make a quick and hasty (read: bad) decision – which unnecessarily puts the taxpayer into a much worse position than she would have been in otherwise.
A few tips:
Speak With an Experienced Offshore Disclosure Attorney Specialist
If you believe you may have an offshore or foreign reporting requirement, you should speak with a board-certified tax lawyer specialist, who specializes exclusively in foreign accounts and asset reporting, so that you get an accurate lay of the land.
Don’t just Start “Filing Forward”
If you had a requirement in prior years, don’t just file going forward — since that maybe considered a quiet disclosure.
Beware of “Free” Initial Consultations
Beware of free initial consultations, and other attorneys asking you to act hastily before you have a chance to properly evaluate your reporting requirements.
Avoid Scare Mongering Lawyers
If you are afraid, you may be in a more fragile state. Don’t be fear-mongered into believing you’re automatically going to prison or being hit with “draconian” size penalties — because those types of penalties are not common for the typical individual who is noncompliant.
Make You are Speaking with an “Attorney”
Make sure the person you are speaking with is an actual attorney.
It doesn’t matter how many credentials a person has or whether they only practice exclusively in the area of federal tax law.
Unless the person you’re working with is an attorney, and There is no attorney-client privilege.
Even though an EA or CPA may represent a client in Tax Court, and before the IRS, that does not make them an “attorney.” There is no attorney-client privilege with an EA or CPA, unless they are also an attorney.
Common International Tax Forms You May Have Missed
The following is a list of the more common forms you may have missed:
FBAR (FinCEN 114)
The FBAR is used to report “Foreign Financial Accounts.” This includes investments funds, and certain foreign life insurance policies.
The threshold requirements are relatively simple. On any day of the year, if you aggregated (totaled) the maximum balances of all of your foreign accounts, does the total amount exceed $10,000 (USD)?
If it does, then you most likely have to file the form. The most important thing to remember is you do not need to have more than $10,000 in each account; rather, it is an annual aggregate total of the maximum balances of all the accounts.
This form is used to report “Specified Foreign Financial Assets.”
There are four main thresholds for individuals is as follows:.
- Single or Filing Separate (in the U.S.): $50,000/$75,000
- Married with a Joint Returns (In the U.S): $100,000/$150,000
- Single or Filing Separate (Outside the U.S.): $200,000/$300,000
- Married with a Joint Returns (Outside the U.S.): $400,000/$600,000
Form 3520 is filed when a person receives a Gift, Inheritance or Trust Distribution from a foreign person, business or trust. There are three (3) main different thresholds:
- Gift from a Foreign Person: More than $100,000.
- Gift from a Foreign Business: More than $16,076.
- Foreign Trust: Various threshold requirements involving foreign Trusts
Form 5471 is filed in any year that you have ownership interest in a foreign corporation, and meet one of the threshold requirements for filling (Categories 1-5). These are general thresholds:
- Category 1: U.S. shareholders of specified foreign corporations (SFCs) subject to the provisions of section 965.
- Category 2: Officer or Director of a foreign corporation, with a U.S. Shareholder of at least 10% ownership.
- Category 3: A person acquires stock (or additional stock) that bumps them up to 10% Shareholder.
- Category 4: Control of a foreign corporation for at least 30 days during the accounting period.
- Category 5: 10% ownership of a Controlled Foreign Corporation (CFC).
Form 8621 requires a complex analysis, beyond the scope of this article. It is required by any person with a PFIC (Passive Foreign Investment Company).
The analysis gets infinitely more complicated if a person has excess distributions. The failure to file the return may result in the statute of limitations remaining open indefinitely.
*There are some exceptions, exclusions, and limitations to filing.
What if I am Out of FBAR Compliance?
If you are out of FBAR compliance, the penalties can be severe. Therefore, you may consider entering the IRS offshore voluntary disclosure/tax amnesty, before it is too late.
Interested in Filing under IRS Tax & Amnesty Procedures?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in offshore tax and reporting amnesty. Contact our firm today for assistance with getting compliant.
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.