Catherine M. Censullo, CPA

One Minute Tax Tip


1.  Did you know that you must disclose any financial interest in or signature authority over any foreign financial account, including, but not limited to, bank or securities accounts, regardless of how small the balance, and regardless of whether or not they earned any income?

- Foreign financial accounts also include insurance policies and annuity contracts with cash value.
Even if the amount in the account is less than $10,000, you must still fill out Part III of Schedule B, Interest and Ordinary Dividends, and file it with your income tax return.
- Other forms such as Form 8938, Statement of Specified Foreign Financial Assets, may also be required over certain threshold amounts or in certain circumstances.

2.  Did you know that you must disclose if you are the beneficiary of a foreign estate or foreign trust?

- For instance, if you had a relative die overseas and you are a beneficiary of the estate that had any reportable accounts, you need to disclose this.

3.  Did you know that a report must be filed if you are the nominee of a foreign company employee benefit plan that holds plan assets in a foreign account?

- You may be employed by a foreign corporation even though you live and work in the United States.  Perhaps you are the participant of an employee benefit plan that holds assets in an overseas account.
- These plan assets may be registered in your name even though they are held by the trustee of the benefit plan.  
- A Report of Foreign Bank and Financial Accounts will need to be filed for these benefit plan assets if your share of the assets meets or exceeds $10,000.

4.  Did you know that you must file a report if you are a U.S. citizen living abroad regardless of how long you have been living overseas and even if you have dual citizenship?

- You may not be aware of the fact that the U.S. is trying to force other countries to hunt down its tax cheats.  Many provisions of the Foreign Account Tax Compliance Act of 2010 go into effect beginning in 2013.
- This act forces all foreign financial institutions to spend their own money to find out which of their customers are U.S. citizens and send certain information to the IRS regarding U.S. accounts to avoid withholding under FATCA.
- Foreign financial institutions (FFIs) refusing to comply will be hit with a 30% tax on certain U.S.-connected payments to non-participating FFIs and account owners unwilling to provide the required information.
- Noncompliance could become an issue.  Tax filing responsibilities do not end when you move to another country.

5.  Did you know that effective July 1, 2013, all Reports of Foreign Bank and Financial Accounts (Form TD F 90-22.1) must be filed online, including any amendments to prior year returns?

- The foreign reporting requirements are quite complex and noncompliance can be extremely costly.  
- There are many rules that apply in various situations and many filing forms that may be required.  

If you are unsure of your requirements, call the office and set up an appointment to discuss this in more detail.


Catherine M. Censullo, CPA

Images ©Encore Software, Inc., and its licensors.  All rights reserved.
Images may not be saved or downloaded and are only to be used for viewing purposes.