Foreign Assets, Credits, Exclusions & Other Foreign Substances!

Foreign Tax Credit, Form 1116

If you paid taxes to a foreign country, you may be able to take a credit for those taxes. This occurs frequently when you own foreign stocks or bonds. If both the U.S. and a foreign country tax your income, you can claim a tax credit of the lesser of 1) the foreign tax paid, or 2) the amount of U.S. taxes that would have been levied against the income. Form 1116 is filed with your individual income tax return, Form 1040. Don’t lose out on this valuable credit.

(FBAR) FinCen Form 114, Report of Foreign Bank and Financial Accounts

If anytime during the year the maximum value of your foreign financial accounts exceeded $10,000 you must electronically file Form 114 through FinCens BSA E-Filing System by April 15^th. An extension until October 15^th is available. Penalties up to $100,000 and criminal penalties may apply.

Form 2555, Foreign Earned Income Exclusion

US citizens living abroad may qualify for an exclusion up to $104,100 (2018) of their earned income. Government (including the military) workers are excluded from this exclusion. Taxpayer must be physically present in a foreign country for at least 330 full days during any consecutive 12-month period. Form 2555 is filed with your individual income tax return, Form 1040. Don’t lose out on this valuable exclusion.

Form 8938, Statement of Specified Foreign Financial Assets

Married filing joint taxpayers living in the States must file Form 8938 if the total value of their foreign assets exceeds $100,000 on the last day of their tax year, or more than $150,000 at any time during the year. All other filers are obligated to file Form 8938 at one-half the MFJ thresholds.

Married filing joint taxpayers living outside the U.S. must file Form 8938 if total value of their foreign assets exceeds $400,000 on the last day of their tax year, or more than $600,000 at any time during the year. All other filers are obligated to file Form 8938 at one-half the MFJ thresholds.

Form 8938 is filed with your individual income tax return, Form 1040. Penalties for failure to disclose range up to $60,000 in addition to possible criminal penalties.