I've previously endured filing the "fbar" (Form TD F 90-22.1) and now need to venture into the new territory of Form 8938. Needless to say, I am a bit befuddled as I roam through the reporting rules.
My hope is someone has already gone down this path, and can offer me some advice.
It is clear the client WILL have to file the Form 8938, due to the amount of assets in the foreign accounts involved. The same accounts will also be listed on the Form TD F 90-22.1 which must be filed/received by June 30th. Fortunately, I have a bit more time (October 15th) for the Form 8938 input.
My fundamental question is which of the following will/will not appear on the two forms. Here we go:
1 - Client owns shares of foreign corporation XYZ which are held by a US major brokerage firm. The funds are credited to the account in $US, and the 10% UK withholding is shown on the Form 1099-DIV.
2 - Client owns shares of the same foreign corporation, which are owned outright. The funds are paid in UK ₤, and the client receives 90% of the dividends. There is no Form 1099-DIV. (I did reverse calculate the full amount received and reported same as "qualifying dividends" consistent with the US Form 1099-DIV.)
3 - Client owns several foreign bank accounts, with all assets in UK ₤. Client states these funds are used for living expenses, and that UK banks pay no interest on such accounts.
4 - Client owns a foreign investment account referred to as "ISA." Client states it is similar to a 401(k) or perhaps to an IRA. There are no specific records as to "earnings."
5 - Client owns another foreign investment account. As best I can tell, it is similar to an "in-house" mutual fund, i.e. the firm/entity regularly purchases/sells assets within the fund and its customers own a share of the underlying fund. All transactions are in UK ₤, and of course there is nothing resembling Forms 1099-DIV/INT/B, or even a K-1, issued.
So, which of the last four must appear on Form TD F 90-22.1 ?
Which of the last four must appear on Form 8938 ?
The first two items are already listed on Schedule B, and Form 1116 is in the works. How should the last three items be handled re those two forms ? And for the "income," will that likely require going through a years' worth of statements which are currently unavailable to me and are in foreign currency amounts (to include UK 10% tax when applicable) ?
As best I can tell, the underlying purpose of Form 8938 is to show on an IRS (not Treasury) form any foreign "accounts." After that, it's a matter of showing what US taxable income was created from those accounts. While the client has nothing to hide, I feel it is important not to list assets on either form when the rules might exclude that asset.
Any and all help is welcomed. As I gather more information from the client, I can work my way through the maze. Of course, the first question asked by the client was "why has this not been an issue before?" I guess it's just my luck to hit Form 8938 upon its debut.
Thanks in advance!
FE
My hope is someone has already gone down this path, and can offer me some advice.
It is clear the client WILL have to file the Form 8938, due to the amount of assets in the foreign accounts involved. The same accounts will also be listed on the Form TD F 90-22.1 which must be filed/received by June 30th. Fortunately, I have a bit more time (October 15th) for the Form 8938 input.
My fundamental question is which of the following will/will not appear on the two forms. Here we go:
1 - Client owns shares of foreign corporation XYZ which are held by a US major brokerage firm. The funds are credited to the account in $US, and the 10% UK withholding is shown on the Form 1099-DIV.
2 - Client owns shares of the same foreign corporation, which are owned outright. The funds are paid in UK ₤, and the client receives 90% of the dividends. There is no Form 1099-DIV. (I did reverse calculate the full amount received and reported same as "qualifying dividends" consistent with the US Form 1099-DIV.)
3 - Client owns several foreign bank accounts, with all assets in UK ₤. Client states these funds are used for living expenses, and that UK banks pay no interest on such accounts.
4 - Client owns a foreign investment account referred to as "ISA." Client states it is similar to a 401(k) or perhaps to an IRA. There are no specific records as to "earnings."
5 - Client owns another foreign investment account. As best I can tell, it is similar to an "in-house" mutual fund, i.e. the firm/entity regularly purchases/sells assets within the fund and its customers own a share of the underlying fund. All transactions are in UK ₤, and of course there is nothing resembling Forms 1099-DIV/INT/B, or even a K-1, issued.
So, which of the last four must appear on Form TD F 90-22.1 ?
Which of the last four must appear on Form 8938 ?
The first two items are already listed on Schedule B, and Form 1116 is in the works. How should the last three items be handled re those two forms ? And for the "income," will that likely require going through a years' worth of statements which are currently unavailable to me and are in foreign currency amounts (to include UK 10% tax when applicable) ?
As best I can tell, the underlying purpose of Form 8938 is to show on an IRS (not Treasury) form any foreign "accounts." After that, it's a matter of showing what US taxable income was created from those accounts. While the client has nothing to hide, I feel it is important not to list assets on either form when the rules might exclude that asset.
Any and all help is welcomed. As I gather more information from the client, I can work my way through the maze. Of course, the first question asked by the client was "why has this not been an issue before?" I guess it's just my luck to hit Form 8938 upon its debut.
Thanks in advance!
FE
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