For those with fideicomisos, Form 3520a, Annual Information Return of Foreign Trust With a U.S. Owner, is due on or before March 15. If you don't have enough time left to get it together, you can consider filing Form 7004, to request an extension of time for filing Form 3520a. (Not a bad idea, if you're dealing with this for the first time!) Form 7004 can be filled out online, and filed electronically. See the IRS website for additional details.
FYI: I am looking on Turbotax Premier 2011 edition and with respect to foreign real estate this is the info they are using as a guide to reporting foreign real estate: There are two types of foreign financial assets: 1) foreign financial accounts; and 2) what the IRS calls "other foreign financial assets." A foreign financial account is any depository, custodial or securities account (bank account, savings account, mutual funds, etc.) maintained by a foreign financial institution, including institutions organized under the laws of a U.S. possession. Other foreign financial assets include any of the following that are held for investment and not held in an account maintained by a financial institution: - Stock or securities issued by someone other than a U.S. person - Any interest in a foreign entity, including foreign pension plans, trusts, estates, corporations, partnerships, options and other derivative instruments, debt instruments, interest rate and other swaps or similar agreements - Any financial instrument or contract that has an issuer or counterparty that is other than a U.S. person Note: Real estate located in a foreign country is not considered a foreign financial asset. Who needs to report foreign financial assets? Due to a new IRS requirement, this info gets reported on Form 8938 (Statement of Specified Foreign Financial Assets), which is required only when the value of specified foreign financial assets is over a certain amount. You'll need to report these assets and file Form 8938 if any of the following are true: - If you are living in the U.S. and are not married filing a joint return, you should file Form 8938 if the total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. - If you are living in the U.S. and are married filing a joint return, you should file Form 8938 if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year. - If you are living abroad and are not married filing a joint return, you should file Form 8938 if the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year. - If you are living abroad and are married filing a joint return, you should file Form 8938 if the total value of your specified foreign financial assets is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the tax year. If you are required to file Form 8938 but do not file a complete and correct Form 8938 by the due date of your federal income tax return (including extensions), you may be subject to a penalty of $10,000. Continuing failure to file Form 8938 could result in additional penalties up to $50,000. See the instructions for Form 8938 for more information.
Do US citizens need to pay taxes to the US even when living outside the country?? Sounds a bit harsh.
It may be harsh but that is the law. Regrettably ALL US Citizens are responsible for reporting income to the IRS no matter where they live or where they have earned that income.
There's plenty to think about all right, Gabesz. In addition to the reporting requirements represented by Form 3520a, which I spoke of, and form 8938, which you called attention to, there are Forms 3520, and TD F 90-22.1 to consider. The only one of these with the March 15 filing deadline is Form 3520a.
The particular reports under discussion on this thread actually don't have anything to do with living and working outside the U.S. They pertain to certain types of investments, trusts and bank accounts U.S. citizens may have, abroad. Self reporting, reinforced with criminal and civil penalties, is the main way the government is informed about their existence. Willful failure to file these reports is subject to draconian penalties, if imposed. And, Rawkus, Gabesz is right, the US purports to tax the world wide income of its citizens, unlike many other developed nations; but, does allow a certain amount of earned income to escape taxation through the "foreign earned income exclusion".
form 8938 is not required for a property trust in Mexico, in fact this year I am not even filing the 3520A
What's made you think you may not need to file this year, Steve? Can you point us to a place in the IRS website where a change in the requirements has been made, or noted, if that's why you don't think you'll be filing Form 3520a? _________________ The filing requirements for each of the forms mentioned, so far on this thread, differ, as do the dates they are due, and where they are to be filed. Those with an interest can find the details in the IRS website. www.irs.gov
V after filing it for the past few years my accountant and I decided it is not necessary and the IRS did not design this form to find trust similar in nature for what these trusts are. My accountant called the IRS last week regarding the 8938 and 3520a requirements, and they are just as confused as everyone else. It appears to us the reporting requirement was meant for those who have income generating trusts outside of the USA and who were not reporting the income. Now personally I have rental income but that is all reported on Schedule C I cannot 100% for sure tell you if it is required or not, but nobody at the IRS can tell us either.
