U. S. Taxpayers With Foreign Assets Have Filing Obligations
The IRS continues to remind taxpayer of their foreign asset filing obligations. The obligations apply to U.S. citizens, resident aliens, including those with dual citizenship, and those living abroad. In fact, the filing deadline for certain U.S. citizens and resident aliens living abroad is June 16, 2014.
U.S. Federal laws require that taxpayers report foreign income. The form to report foreign income is Schedule B of Form 1040. This applies to all worldwide income, including foreign trust income, income from foreign bank account and income from foreign securities. In addition to Schedule B, certain taxpayers may also have to include with their tax return Form 8938 Statement of Foreign Financial Assets.
When completing Schedule B of Form 1040, taxpayers are asked the country origin of the foreign income. This is important to know because the IRS has been aggressively pressuring banks and securities companies in foreign countries to more rigorously disclose the income paid to U.S. citizens.
Another reporting obligation applies to taxpayers with foreign assets with an aggregate value exceeding $10,000. In this case taxpayers are required to electronically file Form 114 (Report of Foreign Bank and Financial Accounts) with the Treasury Department’s Financial Crimes Enforcement Network. The fact that this form must be filed with a part of the Treasury tasked with pursuing financial tax crimes is a clear message that the IRS is serious about making sure taxpayers meet their foreign income and asset reporting obligations.
If you have foreign income or assets and want to make sure you’re meeting the reporting obligations required of you by the IRS then schedule your free consultation by calling (480) 888-7111 [or submit a web request here].