New Form 8938 Rules and Foreign Financial Accounts

Posted by: Joel    Posted Date: Tue, 05/28/2013 - 10:35am

Categories: Taxes

Foreign Financial AccountEven though some of these are already reported elsewhere, the new form doesn't come as a surprise to those who have followed the recent progress of the TDF or F-BAR.

While some people believe that this is a trend that indicates further government control over investments, other professionals feel that it may actually work towards the advantage of taxpayers.

The new Form 8938 asks more extensive questions about people's assets. This may not be a simple instance of duplicate filing. Many believe that it is an effort by the U.S. government to create a more comprehensive database of taxpayer assets.

New Reporting Criteria

The new Form 8938 applies to a wide range of people, including U.S. citizens, non-residents and green-card holders. It asks them to report their foreign accounts and gold if they own more than the threshold values of $50,000 for single individuals or $100,000 for married couples. These limits are also quadrupled for single and married people living offshore, many of whom do so to protect their assets.

The types of assets that must be reported on this new form include foreign stocks, asset-protecting international business companies, life insurance, brokerage account funds and other financial products commonly held by expatriates and domestic investors.

Some legal advisors believe that this step is a precursor to future tax requirements that will demand information on things such as property owned in one's own name, considering that the TDF or F-BAR's previous expansion may have led into this new reporting standard.

Do the New Standards Actually Favor Investors?

Other financial advisors think that these new limits and filing rules are just a way of maintaining tax compliance. They argue that if assets are more widely known, then balance sheet changes can be investigated to make sure that capital gains tax was paid on sales.

In addition, people who report their assets with greater accuracy may not run into as much trouble claiming long-term capital gains eligibility. If their assets were not previously disclosed, the IRS may not accept their claims that they should pay capital gains taxes instead of regular income tax.

Some tax preparers believe that auditors and tax officials simply want to get more people in the habit of disclosing their information. Along with Amnesty Programs, foreign financial account reporting may simply make it easier for an increased number of taxpayers to become compliant and ease the workload on audit staff.

At Nagel Law, we have the diversified expertise to create a stable offshore plan to protect your assets. We utilize many pecuniary strategies to protect your estate. Contact us today to discuss your financial options.