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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29778
Experience:  Taxes, Immigration, Labor Relations
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What are the reporting obligations for a US resident that has

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What are the reporting obligations for a US resident that has an offshore company in the British Virgin Islands that has an account with substantial financial assets? Is there any penalty for not doing so? What are the IRC sections that state so?

LEV : Hi and welcome to Just Answer!What are the reporting obligations for a US resident that has an offshore company in the British Virgin Islands that has an account with substantial financial assets? First of all - all income should be reported on the tax return. If the same income is subject of foreign income taxes - the foreign tax credit may be claimed - thus effectively will avoid double taxation of the same income.
LEV : (2) The fact of having financial accounts in a foreign country is reported on separate forms - that is for reporting purposes only and there is no additional tax liability in connection with that reporting. The possible penalty for not reporting is up to $10,000.
LEV : the TD f 90is FBAR form - it is required for all years in which the total value of your foreign accounts was above $10,000. This form is sent separately from your tax return. Form 8938 reporting applies for specified foreign financial assets in which the taxpayer has an interest in taxable years starting after March 18, 2010. For most individual taxpayers, this means they will start filing Form 8938 with their 2011 income tax return.
Customer: Income has not been reported for years. The offshore account is under the name of the offshore company, not the US person.
Customer: Is it the same case?
LEV : US citizens and residents who are officers, directors, or shareholders in certain foreign corporations are responsible for filing Form 5471 Information Return of U.S. Persons With Respect to Certain Foreign Corporations. The form and attached schedules are used to satisfy the reporting requirements under sections 6038 and 6046 of the Internal Revenue Code. - http://www.irs.gov/file_source/pub/irs-pdf/f5471.pdf
Customer: Ok, so ther eis work to do
Customer: thank you.
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