Reporting Foreign Pensions
Reporting Foreign Pensions: With tax season just around the corner, one of the more common questions we receive involves the reporting of foreign pensions on the FBAR, FATCA (Foreign Account Tax Compliance Act) Form 8938, and the U.S. tax return in general, and what happens if the IRS learns you are non-compliant.
Let’s go through some of the basics of reporting foreign pensions to the Internal Revenue Service.
FBAR & Foreign Pensions
Foreign pensions are reported on the FBAR.
The FBAR is the Foreign Bank and Financial Account Reporting form otherwise known as FinCEN Form 114.
Whether it is your Australian Superannuation, Singaporean CPF, Malaysian EPF, Indian EPF, or UK pension plans, they are foreign pensions which are reportable on the FBAR.
It does not matter if you had these accounts before you became a U.S. person, or if you are not receiving any distributions — or making any contributions at this time.
From the IRS’ perspective, any foreign account that you own or have an interest in is reportable — including foreign pension plans.
The FBAR is due at the same time your tax return is due and is an automatic extension through October (this may change in the future).
FATCA Form 8938 & Foreign Pension
Unlike the FBAR which is an electronic form filed directly with FinCEN (even though the Internal Revenue Service is tasked with the enforcement), the FATCA form 8938 is filed as part of your tax return, and submitted directly to the IRS.
While the FBAR & 8938 forms are similar, they are not mutually exclusive from each other and a person may have to file either or both of the forms.
Also, unlike the FBAR, there are different threshold requirements for filing, depending on whether the account holder is filing separate, single or joint – and whether or not the father is a US resident or foreign resident.
*In general, the 8938 has substantially more requirements for information dislcosure, such as annual income (parsed out by category)
Foreign Pension & Form 3520/3520-A
Foreign pensions are technically considered foreign trusts.
Presumably, the IRS was not thinking about foreign pensions when they promulgated the rules regarding Forms 3520/3520-A and foreign trust reporting.
Still, a foreign pension maybe considered a trust, and sometimes may have a reporting requirement.
In 2020, the Internal Revenue Service released Revenue Procedure 2020–17, which impacts the reporting of certain tax-deferred employment and non-employment for trusts on form 3520.
Form 8621 & Foreign Pension
Form 8621 refers to passive foreign investment companies (aka PFICs).
Depending on the type of foreign pension, the status of the investments, and the value of the funds and other PFICs will determine whether a Form 8621 may be required.
Our FBAR Lawyers Represent Clients Worldwide
Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
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Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.