Form 8508-I, application for exemption from electronic filing of informational statements in PDF, Form W-8BEN-E, certificate of effective owner status for withholding and filing United States taxes (entities). The Foreign Account Tax Compliance Act (FATCA) is an important advance in the United States. UU. Efforts to combat tax evasion by the United States.
Individuals who hold accounts and other financial assets abroad. The FATCA tax return is a mandatory disclosure for people with total assets that exceed a certain threshold. FATCA also requires certain foreign financial institutions to report directly to the IRS information about financial accounts held by the U.S. Taxpayers or by foreign entities in which the U.S.
Taxpayers have a substantial ownership interest. Reporting institutions include not only banks, but also other financial institutions, such as investment entities, brokers, and certain insurance companies. Some foreign non-financial entities also have to declare some of their U.S. Therefore, if you open a new account with a foreign financial institution, it may ask you for information about your citizenship.
Specific foreign financial assets include foreign financial accounts and non-accounting foreign assets held for investments (as opposed to those held for use in a transaction or business), such as foreign stocks and securities, foreign financial instruments, and contracts with non-U.S. countries,. People and interests in foreign entities. You must determine the value of your specified foreign financial assets to find out if the total value exceeds the threshold applicable to you.
Generally, a reasonable estimate of the highest fair market value of the asset is presented during the fiscal year, but special rules apply to alleviate valuation burdens. For reporting purposes, you can rely on periodic financial statements (which are provided at least once a year) to determine the maximum value of a financial account. For a specific foreign financial asset that is not held in a financial account, you can rely on the year-end value of the asset if it reasonably approaches the maximum value of the asset during the fiscal year. Special rules also apply to declare the maximum value of a stake in a foreign trust, a foreign retirement plan, or a foreign estate.
You can determine the fair market value of a specific foreign financial asset based on publicly available information from reliable financial information sources or other verifiable sources. If information from reliable financial information sources on the fair market value of a declared asset is not available, a reasonable estimate of the fair market value will suffice for reporting purposes. Form 3520, Annual Statement to report transactions with foreign trusts and the receipt of certain foreign donations. Married individuals who file a joint income tax return for the tax year must file a single Form 8938 that reports all the specified foreign financial assets in which either spouse has an interest.
We have the experience and up-to-date knowledge of this area of the tax code to ensure that your FATCA tax return is complete, accurate and filed in a timely manner. Form 1099-R, pension distributions, annuities, retirement or profit sharing plans, IRAs, insurance contracts, etc. If you don't correctly file or declare an asset on Form 8938, the statute of limitations for the tax year is extended to three years after the time you provide the required information. For more information about the FFI List and its coordination, including holds and FATCA registration, see information on FATCA compliance.
Form W-8ECI, certified of a foreign person's statement that income is actually related to the conduct of an operation or business in the United States. We hope that the above information provides a general understanding of the FATCA and Form 8938 requirements. In this situation, identify on Form 8938 which and how many of these forms report on the specified foreign financial assets. FATCA also requires certain foreign financial institutions to report directly to the IRS information about the financial accounts of U.
A person may have to file both forms, and separate penalties may apply for not filing each form. We understand that everyone's situation is unique, and only a qualified tax professional can ensure that all requirements are met and that the form is completed correctly and filed on time. Income tax return for the year, then you don't have to file Form 8938, regardless of the value of your specified foreign financial assets. If you prove that the lack of disclosure is due to reasonable cause and not to willful negligence, no penalty will be imposed on you for not filing Form 8938.