I have a client who came to me after filing her 2014 tax returns and wanted to discuss some tax matters for the year ahead. In doing so, she mentioned that two years ago she transferred $200K to a bank account in Peru as she travels there frequently and has a special needs child that gets some specific treatment. Subsequently she mentioned that in 2014 she wired a substantial part of the $200K back to the U.S. but lost a good bit on the foreign currency conversion. My thoughts are that we need to amend the 2013 return to file Form 8938, Statement of Specified Foreign Financial Assets. Then for 2014, amend it to reflect the capital loss on the foreign currency conversion. For 2014, no need for the Form 8938 as it is now below the $50K required reporting threshold. Does this sound accurate? Any insights much appreciated.
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"The hardest thing in the world to understand is the income tax" - Albert Einstein -
Form 8938 Needed For 2014 and FBARs
Agreed mostly with your plan of action. However;
1. She will need to do a FBAR for 2013 (was due June 30, 2014) and a FBAR for 2014 (due June 30, 2015).
2. A form 8938 will be required for 2014 because the balance exceeded $75,000 at any time in 2014, see page 2 of 8938 instructions.
3. As she is not in compliance with her FATCA reporting requirements I suggest you review the following page to see the correct way for her to become compliant without exposing her to significant penalties.
Particularly look at the "Your Offshore Compliance Options" section.
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