International Tax Reporting

Question 1

FATCA- What it stands for and what it is

Answer 1

Foreign Account Tax Compliance Act

Made sure anyone who was born, had a business, held address, had an American phone number, received money from the US would be deemed a US person and be identified by foreign banks. Foreign banks then had the responsibility of reporting those “US” persons to the IRS- (FBAR) including name, account number, and highest value during the year

Question 2

FBAR

Answer 2

FOREIGN BANK AND FINANCIAL REPORTING

Part of the government requirement to report where taxpayers hold bank accounts that contain at least $10,000 in assets abroad

Question 3

CRS

Answer 3

COMMON REPORTING STANDARDS- inspired by FATCA

Question 4

Foreign Financial Institution failure to comply with FATCA

Answer 4

Foreign Institutions who do not comply with FATCA would be subject to a 30% withholding tax on all US-sourced payments.

Question 5

Who must file FATCA

Answer 5

The from is 8938 and any US persons residing in the United States who hold a total of $50,000 on the last day of the year in foreign accounts must report. OR anyone who held at least $75,000 throughout the year. If a US person resides OUTSIDE the amount must be reported at $ 200,000-year-end or $300,000 value during the year

Question 6

PFICS

Answer 6

PASSIVE FOREIGN INVESTMENT COMPANY

A company that 75% of Income earned is Investment Income

or

50% or more of the company’s assets are investment-based which mean they produce dividend, interest, and Capital Gain income

Question 7

FITC & form to file

Answer 7

Foreign Income Tax Credit- Avoid double taxation on income tax paid to another country. FIled using form 1116.

If income is high enough though taxation is based on the higher rate.

Question 8

Penalty for failure to comply with 8938

Answer 8

$10,000 USD fine that may grow to $50,000

Question 9

2019 tax return changes

Answer 9

1. No longer penalized at the federal level for lack of health insurance. DC, New Jersey & Massachusetts are the only states who have mandates in place for 2019 that would enforce penalties
2. Schedule A medical expenses will go back to 10%

Question 10

FIRTPA- process, form, and explanation

Answer 10

Foreign Investment In Real Property Tax
When a foreign individual (non-US Citizen, non-greencard holder) sells property owned in the US, the buyer must withhold typically 15% of the selling price to remit for property tax. If the buyer signs an affidavit saying they plan to reside at the property and not use it for rent within the next 2 years- they do not need to withhold the 15%.

IF the property is selling between 300,000-1,000,000 and the buyer plans to reside there 10% instead of 15% needs to be withheld

IF the selling price is about 1,000,000 automatic 15% withholding needs to remit to the IRS by the buyer

Question 11

FIRPTA can also apply to

Answer 11

A sole member LLC foreign or domestic, qualified investment entities, fiduciary of certain trust/ estates

Question 12

FORM 8288

Answer 12

The withholding form serves to collect the tax owed by the seller. Used to report and transmit amount