Notes

Reporting Foreign Real Estate Rental Income
This form is due by 15th day of the 3rd month after the end of the trust’s tax year. U.S. citizens and U.S. residents who are the tax owners of a Foreign Disregarded Entity are responsible for filing Form 8858, Information Return of U.S. U.S. persons with assets located outside the United States may be subject to additional reporting.

Starting in tax year 2013, the form had to be filed by any individual who had a PFIC value that exceeds the specific exemption/exclusion amounts. The U.S Government takes a very heavy hand against taxpayers on issues involving the reporting of foreign mutual funds.

If you are out of compliance for failing to report foreign assets to the IRS, IRS Offshore Voluntary Disclosure is one of the best and safest methods for getting back into compliance. Finally, do keep in mind that the value of these specified foreign (non-Canadian) properties need to be reported both in Canadian dollars and in the foreign currency. The exchange rate to be used to convert from the foreign currency to Canadian dollars should be based on the exchange rate in effect at the time of the transaction. That is, at the time the income was received from the property, or the exchange rate on the date the property was purchased. For income received from the specified foreign property an average exchange rate may be used.

However, while you should be careful with your FBAR filing, do not let the process intimidate you. Consider consulting a tax expert, especially one with experience in international tax compliance. It is also worth noting that the due date for the FBAR recently changed. The term “offshore accounts” is often used as shorthand to suggest that such account holders are trying to dodge tax responsibilities.

Individuals can file the form electronically for the 2014 taxation year. The T1135 for a corporation cannot yet be filed electronically with the tax return, but must be sent by mail. It can be attached to the tax return or partnership information return, and mailed to your tax centre, or can be mailed separately to the Ottawa Technology Centre. Individuals can file the form electronically for the 2015 taxation year.

The tax calculation on unreported PFIC income is both onerous and complicated. Expats with foreign real estate rental income are required to report their rental income as part of their worldwide income on form 1040. Previously, the form was only filed if income was actually received.

In addition, the revised form seeks information on first year of receipt of FDI/ODI and disinvestment. The foreign asset reporting requirement extends to trusts outside India where the ROR is a trustee, a settlor or a beneficiary. As with bank accounts, details for each investment and/ or investment account needs to be reported separately. Schedule FA also specifically requires reporting of details in relation to bank accounts where the individual has a signing authority. The reporting requirement for bank accounts include name and address of the bank, account number, name of the account holder, date of opening, peak balance during the year and interest earned.

Owning shares of a passive foreign investment company, or PFIC, subjects U.S. taxpayers to a complicated set of rules enacted in the 1980s in order to eliminate beneficial tax treatment for certain offshore investments. Under the current rules, in most cases PFIC distributions are taxed as ordinary income, rather than as long-term capital gains or dividends.

Judging by the sheer number of questions on the Intuit website regarding foreign interest income this amendment would be time well spent. Again, thanks to TTML for the helpful clarification and explanation. A trust is a collection of assets that are handled by a third party, the “trustee,” whose objective is to manage the assets on behalf of the trust fund’s beneficiary. The difference between a domestic trust and a foreign trust is that a foreign trust is neither under the jurisdiction of a U.S. court, nor do U.S. persons control major decisions about the trust. Further, a domestic trust can become a foreign trust after its establishment.

(I suspect that what the wording meant to say is "later" in a different section, not in the current 1099INT section). Even the "learn more" link for 1099INT does not mention that foreign interest income should be input in this section.

The 1099INT section has a graphic image of the top of a 1099INT form as well as questions about various boxes on the 1099INT form, all of which creates the impression that without a 1099INT you are in the wrong place. The other alternative was to assume that foreign interest income might be input into the field for "foreign accounts" but again the TT software does not allow you to do this . The easy solution would be to amend the wording on the 1099INT page to state that even without a 1099INT, foreign interest income should be added in this section. It seems quite simple to correct this (time consuming!) impression with a few extra words or some additional info in the "learn more" link.

This is because the IRS wants to make sure they get their chance to tax the foreign mutual fund in accordance with the PFIC anti-deferral of tax regime. A foreign trust with a U.S. owner must file Form 3520-A, Annual Information Return of Foreign Trust With a U.S.

Can something be done to amend the TT software to remove the confusing and misleading language? When entering interest income the website says that if you have interest from something else - which would clearly seem to include foreign interest which is not on a 1099INT - it will be added later. Despite this statement, the software does not provide the option to add foreign interest later.

Previously, he worked in the corporate accounting department at Motorola where he oversaw financial reporting and tax preparation for the firm’s mobile division of Eastern Europe. The form will seek investor-wise direct investment and other financial details on fiscal year basis as hitherto, where all reporting entities are required to provide information on FATS related variables .

Curious about how the recent Tax Cuts and Jobs Act of 2017 impacts FBAR? Largely, foreign reporting requirements remain unchanged, despite tax reform. Kunal helped us with a successful streamlined filing disclosure of foreign assets. He came across as very knowledgeable and answered all our questions…He was efficient and quick in completing the process after we had put together all our documentation.

Peak balance refers to the maximum account balance during the year and not the balance at the end of the year. Even where an ROR does not have any taxable income in India, a tax filing requirement arises if the individual has any assets outside of India. Foreign financial accounts maintained on a United States military banking facility. in which the U.S. person has a greater than 50% direct or indirect present beneficial interest in the trust’s assets, or receives 50% of the income. While the Foreign Account Tax Compliance Act has provided U.S. persons with foreign assets guidance on how to get compliant with the IRS since 2009, the Treasury Department has demanded their compliance via the Banking Secrecy Act since 1970.

that resource In addition to the penalties already discussed, if you fail to file Form 8938, fail to report an asset, or have an underpayment of tax, you may be subject to criminal penalties. Do all of these foreign account disclosure rules and regulations seem unnecessarily burdensome or duplicative? However, these same rules and regulations define the present state of "foreign" account disclosure and reporting required, as a function of United States law. Passive Foreign Investment Companies sound like an exotic and highly specialized investment and it’s easy to assume that you don’t own any. However, this conclusion would be a mistake as PFICs include hedge funds, money market accounts, mutual funds, private equity funds and a long list of other foreign investments.
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