Additional US Tax Reporting

Form 8938: ‘Statement of Specified Foreign Financial Assets’
Who Must File:
If you are not living in the US, you must be required to file Form 8938 if your foreign financial assets exceed the IRS thresholds. A foreign financial asset excludes residential property, but includes things like investment portfolios, pension funds and company bank accounts of which you have control over. Hence it is important to consider this form if you own a UK company as you may not fall below the threshold considering your personal assets alone.

When to File:
This Form is submitted with the taxpayers’ income tax return for the year.

What to Report:
The Form 8938 must report specific information relating to your Foreign Financial Assets held during the relevant tax year, including any related earnings received from each asset.

Penalties:
The IRS can enforce penalties of up to $10,000 for failure to disclose information and an additional $10,000 for each 30 days of non-filing after the IRS have issue a notice of failure to disclose, up to a maximum of $60,000.

FinCEN (FBAR) Report of Foreign Financial Accounts
Who Must File:
This form must be completed by any US person with financial accounts holding a combined balance (in all accounts) of $10,000 at any point during the tax year. This includes business accounts you may have control or hold signatory authority, so similarly to the form 8938 including business accounts could push you over the filing threshold. It also includes the same money that has been transferred between accounts.

When to File:
The filing deadline for submitting your FinCEN (FBAR) report to the Department of the Treasury is the same as the tax return. i.e. 15 April, with extensions available through October 15.

What to Report:
The FBAR must report specific information relating to your non-US accounts, including maximum account values and specific ownership.

Penalties:
Non-wilful failure to complete an FBAR can result in penalties of up to $10,000. If the IRS determines your non-compliance as wilful non-disclosure you can be fined up to $100,000 or 50% of the account balances. Criminal penalties may also apply.

We offer a free initial consultation (on a confidential basis) to fully understand your specific circumstances. Please contact Steve Healy on 020 7523 5383 or e-mail s.healy@hansensweeney.co.uk