Disclosure norm requirements in the US explained
The US tax laws require a lot of financial information in regard to your finances. There may be a situation wherein you or your family members may have direct or indirect control over a non-US corporation and you may also have holdings in it. If this is the situation then you must disclose all the details in regard to this to the US tax authorities. Â You could make use of 5471 for each foreign corporation. The financial information disclosed by you is used by the Internal Revenue Service (IRS) to determine your tax liability of any undistributed income derived from closely held non– US Corporations that earn passive income.
Apart from this in case you have any investments made in foreign partnerships or entities which are disregarded then they is to be reported by you as well. You have to report it through Form 8865 in case of your interments in foreign partnerships. Whereas use form 8858 for reporting investment in disregarded entities.
Along with this you are required to file a report of foreign bank and financial accounts if applicable. This is reported to the US Department of Treasury and falls due by the 30th June every year. This form is to be furnished if the total value of your foreign bank accounts, brokerage or RRSP accounts is over $10000. If there is violations then it would attract heavy penalties.
If you receive gifts or bequests over $100000 (One hundred Thousand) the same is to be reported by you as well. For reporting you are to make use of Form 3520. This form is to be used for any fund transfer to and from foreign trusts and estates. On the other hand form 3520 A is to be used for reporting if you are the treated as the owner or foreign grantor trust.
We hope that through this article we have been able to provide you with a basic idea about some of the disclosures required in terms of US tax laws. However for matters pertaining to taxation it is always advisable to consult a renowned Personal Tax Consultant.
