Have Foreign Assets? Check These Filing Requirements

If you own financial assets in foreign countries, you may be required to file the “Foreign Bank Account Report” (FBAR). The form is filed separately from your federal income tax return and must be received by the Treasury Department by June 30 each year. (June 28 this year since June 30 is a Sunday.)

The filing requirement applies to accounts with a combined value of $10,000 or more at any point during the calendar year. Be aware it’s the value of the accounts that matters, not how much income, if any, that you receive.

You may also have to file an FBAR if the bank or brokerage holding the account will dispose of the assets based on your signature – even if you never use this power.

In addition to your personal accounts, FBAR regulations extend to estates, trusts, corporations, partnerships, and other businesses.

If you own foreign investments, you may also have an additional federal tax filing requirement. Form 8938, “Statement of Specified Foreign Financial Assets,” is filed as part of your individual tax return. You use Form 8938 to disclose interests in certain foreign financial accounts when your ownership exceeds the reporting requirements.

What are the reporting requirements? They vary depending on where you live and your filing status. For example, say you’re married and live in the United States, and you file a joint tax return for 2012. You must include Form 8938 with your tax return when the total value of your reportable assets on the last day of 2012 was more than $100,000, or if the value exceeded $150,000 at any time during the year.

Form 8938 is attached to, and due with, your federal income tax return. If you filed an extension, you have until October 15, 2013, to complete Form 8938 for 2012.

Give us a call for assistance with your foreign asset reporting requirements.