International Living Statement
- The following was received from International Living, promoting a subscription to their newsletter.<There are as many as six additional federal tax disclosure forms when you move abroad. While these forms usually don’t change <your U.S. income tax amount, each form carries a minimum $10,000 per year penalty if not correctly filed. If it takes a few years for <you to find out which forms you should have been filing, these penalties can quickly add up.Can anyone name all of these six forms needed. I would be interested in knowing as I would certainly not want to be responsible for a $10,000 per year penalty.Robert
- Robert, the only forms that I am aware of other then 1040 and the ususal including 1099 etc are:
5471 - which you have to file for each foreign corporation you own or are a register officer thereof.
2555 - if you are employed abroad.
TD F 90.22 - which you file with US treasury if you have more than $50,000 aggragate in foreign bank accounts.
8938 (FBAR) if your foreign financial assets exceed $200,000. I would recommend you consult a tax specialist if you have any assets over $50, 000 because under certain circumstances a house owned in a corp. may have a lower reporting threshold.
I am not aware of any other at this time but I am sure there are more.
To add to the conversation:
form 8938 is NOT an FBAR form. This form is in response to FATCA. This form requires for expats(who are considered residences or have their tax home here) living in Costa Rica to report on specified foreign assets . If you are married, the threshold is $400K as of 12/31 or $600K anytime during the year. It is half if you areunmarried. The following assets do NOT count towards this threshold - homes in your name (not a corporation), personal property (cars, jewelry, boats - all held personally, not in a corporation). This form applies to your personal returns and any US corporate returns as well. This form also applies to those living in the US and have assets in Costa Rica (although the thresholds are different)
FBAR - this was due on June 30, 2013 - there are no extensions - need to file electronically at FinCen (a division of the US Treasury). This filing is separate from your tax return. However, you MUST mark on schedule B (interest and dividends) if you HAD a foreign bank account. This does NOT mean you must file FBAR. You must file if you aggregate account was $10K at anytime during during the year.
If you have prior filings not correct because you simply omitted the information (such as a form 5471) for foreign controlled corporations, there are steps you can take to clean this up.
Regarding penalties, yes there CAN be penalties that CAN be more significant then $10K,, but generally will not be assessed unless there is an under reporting of income. So, if you own a lot/house in a CR SA and you have not declared it and there is no income from rentals etc, you can file form 5471 without the risk of penalty of $10K or criminal investigation
The same goes with late FBAR's.
Yes, these issues can be tricky and complex as each situation is different. If any of you need assistance, you may reach out to me. I am a US CPA living and working in Costa Rica. Please send me a private email to discuss these or other issues. (robert@...)
I hope this helps the readers of this clarify the realities and what is necessary.
Robert Pioso CPA CGMA