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MEXLAW > MexLaw  > Americans with Mexican Investments, Do You Know About Form 8938?

Americans with Mexican Investments, Do You Know About Form 8938?

U.S. citizens and resident aliens are required by law to report any worldwide income, including any income from foreign trusts and foreign bank and securities accounts.

These laws also require all non-US financial institutions to report the identities and assets of any US citizen to the US treasury.

Form 8938, is a Statement of Specified Foreign Financial Assets

This form is used to report foreign financial assets if the total value of all the foreign financial assets in which you have an interest in exceeds the reporting threshold. U.S. taxpayers living in the US and holding specified foreign financial assets with an aggregate value over $50,000 must attach Form 8938 to their annual income tax return reporting these assets.

Higher asset thresholds will apply to US citizens who file a joint tax return or who reside abroad.

You are not required to submit form 8938 if you own foreign real estate held directly in your name or foreign real estate held through a foreign entity. Meaning, a personal residence or a rental property does not need to be reported.

The foreign entity is a specified foreign financial asset, and its maximum value includes the value of the real estate. But if it is held indirectly through a foreign corporation, then you will need to submit the Form 8938. You must report it even if it is only a holding company and there is no income tax owed you will be penalized if it is not reported.

Valuables such as Art, Antiques, Jewelry, Vehicles, Gold and other Precious Metals do not need to be reported on Form 8938.

Situations where a US citizen is required to submit form 8938 include:

*Note, although these assets are reported on other forms you are still required to file form 8858.

  • Foreign securities or stocks not held in a financial account.
  • Foreign partnership interests.
  • Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor.
  • Foreign issued life insurance or annuity contract with a cash-value, speak to an accountant for specific rules.
  • Non-American hedge funds and foreign private equity funds.
  • Interest in a foreign retirement plan or deferred compensation plan.

These are only a few examples and do not comprise an exclusive list of assets to be reported.

Statement of Specified Foreign Financial Assets and Americans Living Abroad.

If you are a US citizen but your tax home is a foreign country, and you are a resident of that foreign country, or you are living abroad for an uninterrupted period that includes the tax year. OR

You are US citizen or resident, who was physically residing in a foreign country at least 330 days throughout the tax year.

As a taxpayer who is living abroad, you are required to file Form 8938 if:

  • You file as Single and the total value of your specified foreign assets is more than $200,000 on the final day of the tax year or more than $300,000 at any time during the year; OR
  • You file as Married/filing a joint return and the value of your specified foreign asset is more than $400,000 on the final day of the tax year or more than $600,000 at any time during the year.

The income tax filing deadline will be extended until June 15, 2017, for Americans living or working abroad, But since Tax payments are due on April 18, interest will apply to any payment received after that date.

If you did not include form 8938 in your income tax return, you should file Form 1040X, Amended U.S. Individual Income Tax Return, with your Form 8938 attached.

Any income received or deductible expenses paid in foreign currency must be converted and reported in U.S. dollars. And any payments must be made to the IRS must be in USD.

Refer to the IRS link regarding information about Form 8938