Cross-border reporting is mostly an information-return problem. The tax often turns out to be manageable; the filings, deadlines and records are what create exposure, and several of them carry penalties that are unrelated to how much tax was owed.
This guide covers the foreign account and entity filings, the records behind income earned abroad, and the payments and investments that carry reporting of their own. Services depend on the firm accepting the engagement and the facts of your situation.
Foreign accounts
FBAR and Form 8938 ask for similar information under different rules, with different thresholds and different filing mechanics. Foreign bank interest and foreign pension accounts each have their own reporting path.
Foreign entities and ownership
Form 5471 for owners of foreign corporations, Form 8865 for partners in foreign partnerships, and Form 5472 for reportable transactions all depend on records kept through the year. Foreign-owned U.S. LLCs have federal filing obligations that surprise many owners.
Income earned abroad
Foreign earned income requires travel calendars and compensation records. Treaty positions need documentation. The foreign tax credit is only as good as the evidence supporting it.
Payments and investments
Payments to foreign contractors raise withholding and documentation questions, and W-8BEN and W-8BEN-E collection is a vendor control rather than a year-end task. PFIC reporting depends on investment statements and cost-basis records.
Gifts and inbound investment
Foreign gifts reported on Form 3520, and accounting records for foreign owners investing in a U.S. business, both start with contemporaneous documentation.
Leaving the U.S. tax system
Relinquishing residency or citizenship has record requirements that are best assembled well before the decision is final.
Frequently asked questions
I already file an FBAR. Do I also need Form 8938?
Possibly. They ask for similar information under different rules, with different thresholds and different filing mechanics, and one does not satisfy the other. Many taxpayers end up filing both.
I owe no tax on my foreign accounts. Is there still a risk?
Yes, and this is the point most often missed. Several of these penalties attach to the failure to file rather than to tax owed, so owing nothing offers no protection at all.
My U.S. LLC is owned from abroad. Does it file anything?
Usually yes. A foreign-owned U.S. LLC carries federal information reporting obligations that surprise many owners, including reportable-transaction records on Form 5472.
Discuss your cross-border questions
Use the free 20-minute consultation to describe the accounts, entities and countries involved, and which filings have been made. You will finish the call knowing what the work would involve and whether CPA Firm South Florida is the right firm for it.