Numbers to Know – 8938, 8621, 5471, 3520

Dec 1, 2015

There are many IRS forms that taxpayers need to be aware of particularly when filing overseas with additional expatriate reporting requirements. These include Form 8938 (FATCA); Form 8621 (PFIC); Form 5471 (certain Foreign Corporations); Form 3520 (Foreign Trust).


Foreign Account Tax Compliance Act (FATCA) The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 to help the IRS enforce U.S. tax reporting by individuals with offshore accounts. Under FATCA, U.S. taxpayers with foreign financial accounts above certain thresholds are required to report those accounts on Form 8938 as a part of the annual federal income tax return. FATCA also places a requirement on the foreign financial institutions to report financial accounts held by U.S. taxpayers directly to the IRS.


Foreign Corporations and Foreign Trusts If you are a U.S. citizen or U.S. lawful permanent resident (green card holder) and you are a shareholder in a foreign corporation or trust, then further reporting obligations to the IRS are relevant. This applies to any owner of an Israeli corporation if the ownership percentage is 10% or greater. Reporting requirements include (but are not limited to) filing a complete and accurate IRS form 5471. Failure to comply can result is penalties of $10,000 per year. See IRS instructions to form 5471 for full details on penalties.

  1. Do you (and/or your spouse if relevant) have 10% or more ownership in any non-USA corporation?
  2. Have you received any distributions from any non-USA trust fund?

If the answer to any of these questions is “yes”, you may need to file a Form 5471 or Form 3520.


Passive Foreign Investment Company (PFIC) A passive Foreign Investment Company (PFIC) is a foreign-based corporation that has one of the following:

  1. At least 75% of the corporation’s income is passive income
  2. At least 50% of the corporation’s assets are investments (generate interest, dividends or capital gains)

The most common forms of PFICs are foreign-based mutual funds, partnerships and other shared investment vehicles that have at least one U.S. shareholder. PFIC investors are typically required to pay income tax on distributions as well as appreciated share values, even if capital gains tax rates would usually apply.

If any of these forms are relevant for you, it is best to speak directly with our office for further guidance.



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