19 Possible Questions That Your Tax Preparer Ought to Ask Regarding Foreign Accounts and Assets

Foodman CPAs & Advisors
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Many Taxpayers with international entanglements seek the assistance of tax return preparers without U.S. international tax reporting experience.  Because US International tax reporting is complicated and often overwhelming for US Taxpayers, international tax specialist CPA is the appropriate choice for the work. When an inappropriate US international income tax compliance preparer is not hired, the RIGHT QUESTIONS are not asked; leading to unfortunate consequences. 
 

Expect these types of questions from an international tax specialist:

  1. What is your total US source income and total foreign source income? (Whether your foreign source income is tax exempt in a foreign country, or it was already taxed in that country, it is nevertheless reportable on your US Income Tax Return.  This includes capital gains, interest income, dividend income or any other type of income). 
  2. Any ownership, joint ownership, or signature authority over a foreign bank account or group of accounts that had more than $10,000.00, in the aggregate, at any point in time on any day of the year?
  3. Any ownership in any foreign assets even if not a signatory on bank account of those foreign assets?
  4. Any ownership of foreign real estate?
  5. Any ownership or an interest in a foreign corporation or business that in turn own owns real estate?
  6. Any ownership in a foreign business or foreign corporation or foreign partnership?
  7. Any ownership in a foreign trust? 
  8. Any ownership in a PFIC (Passive Foreign Investment Company)?
  9. Any ownership in a foreign mutual fund or foreign holding company?
  10. Receipt of a gift from Non-US individual or from a foreign corporation?
  11. Receipt of a foreign trust distribution?
  12. Longevity of foreign bank accounts?
  13. Source of funds for foreign bank accounts?
  14. Have foreign bank accounts or the income produced by them ever been reported to IRS?
  15. Have any foreign bank accounts been inherited?
  16. Any usage or active management of the funds in the foreign accounts?
  17. Title on the accounts?  Nominal owner versus beneficial owner?
  18. Has another tax return preparer asked these types of questions?
  19. Is an attorney, CPA, or another professional service provider aware of the foreign accounts?

Taxpayers with foreign accounts, income and business structures have reporting responsibilities

IRS is focused on international US Taxpayer non-compliance and has the ability to detect non-compliance via required official information exchanges.  Taxpayers need to ensure that they are obtaining the right type of tax advice to help avoid the financial, reputational, and family costs on international non-compliance. 

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