There are times when I understand what the IRS is trying to do and then there is the rest of the time.
We – both as a firm and a profession – are attempting to educate our clients in the area of foreign bank accounts and also foreign assets. Our government wants to know if you have signature authority over a foreign account. I assume this is a need for both income reporting and also criminal investigation.
With the numerous employees that come to this area from all over the world – not to mention how close we are to Canada, this reporting requirement is coming into play relatively often.
Knowing if you have a foreign bank account seems pretty straight forward. I have some money – and it’s in a foreign account – right?? What many clients forget to report are accounts that they have signature authority over. Many clients are listed on their parents account as a signer so that if anything happen to them, checks could be written. Even though the money is not theirs, these accounts are reportable.
Canadian citizens who live in the US and have RRSP accounts (similar to our IRA’s) forget that these accounts need to be reported each year.
The IRS now has a new form which details out all foreign assets that a taxpayer has. In addition, if you have a foreign trust – or hold foreign real estate in a trust – or receive significant funds as a gift from a foreign person, these are all reportable transactions and the penalties for not reporting run in the tens of thousands of dollars.
I realize that humor was missing from this blog – and I always try to find the funny side of everything. It was hard to do with this subject. We want to be sure our clients are not caught unaware of these requirements and that we have done everything we can to educate them on the rules.
I’ll try to find a lighter topic for next time – my beautiful wife always gives me ideas.
Thanks for listening and I will talk at you next week.