It is almost Income Tax filing time again, but when you think you have completed every form that the IRS wants, think again. There are just a few more plus one from Social Security.
These are the forms that the IRS and Social Security require that you complete each year if you are living abroad. Just to give you a quick review of these forms:
- IRS form 8938 is to list assets held outside of the US, this form is only required if you file a tax return.
- SS form 7162 is to update Social Security of your current status. This is required if you have informed Social Security of your move outside of the US or are receiving your Social Security payments outside of the US. This is required annually.
- IRS FBAR is required to list any bank accounts held outside of the US if at any time during the year you had an aggregate total of $10,000 in those foreign accounts. This is required annually.
A more detailed description is listed below:
- The IRS requires that Form 8938 Statement of Specified Foreign Financial Assets be completed as part of your tax return
The IRS requires that you submit Form 8938 (Statement of Specified Foreign Financial Assets) should be filed by taxpayers with specific types and amounts of foreign financial assets or foreign accounts. It is important for taxpayers to determine whether they are subject to this new requirement because the law imposes significant penalties for failing to comply.
Form 8938, the instructions, regulations implementing this new foreign asset report, and other information to help taxpayers determine if they are required to file Form 8938 is available on the web at: http://www.irs.gov/businesses/corporations/article/0,,id=236667,00.html .
- Social Security requires that you submit a completed form 7162 each year
The FEP is one of the integrity measures used by the Social Security Administration (SSA) to verify the existence and identity of beneficiaries living outside the United States. It does not apply to countries where Treasury restrictions prohibit delivery of SSA payments (see RS 02650.001C.). Contacts are made annually or biennially to help us determine if any events have occurred that affect the beneficiaries’ eligibility to benefits or their ability to handle their own funds.
- The IRS requires that the FBAR form be filed:
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
We complete these forms and have someone going back to the states take them with them to mail. Our friend Joe Tana has just mailed ours this week.