If you are a U.S. citizen or green card holder, you must file your annual Federal income taxes even if you are the legal resident of a country overseas.
Popular IRS Tax Forms for Expats
Here is a list of IRS tax forms (along with a brief description of each form) that Expats should start to familiarize themselves with. If you plan on living the Expat lifestyle, you will be using some if not all of these tax forms regularly.
• FinCEN 114 – Report of Foreign Bank and Financial Accounts. The Report of Foreign Bank and Financial Accounts is also known as FBAR. This form came as a result of the Bank Secrecy Act. On this form, you must disclose your bank accounts, mutual funds, brokerage accounts as well as other financial related accounts to the Treasury Department while maintaining records on these accounts.
• IRS TAX FORM 2555 – Foreign Earned Income. Form 2555 attaches to Form 1040 or 1040x. It is used to claim the foreign housing exclusion, foreign housing deduction and the foreign earned income exclusion. It also covers how you can qualify for the physical presence test and the bona fide residence test.
• IRS TAX FORM 1116 – Foreign Tax Credit. If an individual, estate or trust earned income overseas and paid taxes (off of investments or earned wages), and has not already excluded the income from its federal taxes, this form might be able to help take a credit toward any U.S. taxes that might be owed to the government.
• IRS TAX FORM 8938 – Statement of Specified Foreign Financial Assets. As part of the Foreign Account Tax Compliance Act (FATCA) certain tax payers who hold assets in other countries outside of the U.S. need to report the assets. Normally, Tax Form 8938 is used for the purpose of overseas asset reporting.
• IRS TAX FORM 8621 – Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. If you are a U.S. person that is an indirect or direct shareholder of a passive foreign investment company, IRS tax form 8621 will need to be filed if you:
• Must file an annual report pursuant to section 1298f
• Are making an election reportable
• Acknowledge a financial gain on an indirect or direct disposition of Passive Foreign Investment Company (PFIC) stock
• Obtain direct or indirect distributions from a Passive Foreign Investment Company (PFIC).
• Are reporting information in regards to a section 1296 mark to market election or a Qualified Election Fund (QEF).
• IRS TAX FORM 8965 – Health Coverage Exemptions. Under the Affordable Care Act, U.S. citizens were required to carry health insurance or what is known as qualifying health coverage . However, you may qualify for an exemption if you qualify for Foreign Earned Income Exclusion (FEIE). Form 8865 is used to request the exemption.
• IRS TAX FORM 3520A – Information Return of a Foreign Trust with a U.S. Owner. If you, own any portion of a foreign trust you must file this form to provide information concerning the trust(s).
• IRS TAX FORM 3520 – Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. This IRS tax form is used to report any transactions that you might have made with foreign trusts or if you have received large gifts from foreign corporations or individuals.
• IRS TAX FORM 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations. This form is designed for U.S. residents and citizens who are shareholders, directors and officers in Controlled Foreign Corporations (CFC).
• IRS TAX FORM 8865 – Return of U.S. Persons with Respect to Certain Foreign Partnerships. A U.S. person must file this form for the reporting of:
• Controlled foreign partnerships
• Transfers to foreign partnerships
• Acquisitions, dispositions, and changes in foreign partnership interests
• IRS TAX FORM 926 – Return of a U.S. Transferor of Property to a Foreign Corporation. This form is used by domestic estates, domestic corporations, U.S. citizens, and U.S. residents to report certain transfers of property to a foreign corporation.
• Section 965 – One-Time Transition Tax for Shareholders of Foreign Corporations. Section 965 requires US tax payers who own 10% or more of a foreign corporation to pay a one time “transition” tax on untaxed foreign earnings.
There you have it. These are the most common IRS tax forms that Expatriates file each year. If you, have any questions on these tax forms be sure to contact us with your Expat questions. We are here to help.