Foreign Investments

Virtually any investment made outside the United States will have a U.S. disclosure and/or U.S. income tax implication. Proactive planning can help minimize disclosure and income tax requirements.

Considering...	Potential U.S. disclosure requirements	Potential U.S. income tax effects
opening a bank account?	Foreign Bank Account Report (FBAR) Form 8938, Statement of Specified Foreign Financial Assets	Income earned from the account is taxable
starting/participating in a pension?	Foreign Bank Account Report (FBAR) Form 8938, Statement of Specified Foreign Financial Assets Form 3520, Annual Return to Report Transactions with Foreign Trusts Form 3520-A, Annual Information Return of a Foreign Trust with a U.S. Owner Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company	Contributions made by you to the pension may not be tax-deductible Contributions made by your employer to the pension may be taxable income Earnings of the pension may be taxable to you Distributions from the pension may be taxable to you Certain investments of the pension may be subject to a punitive tax scheme
opening an investment account?	Foreign Bank Account Report (FBAR) Form 8938, Statement of Specified Foreign Financial Assets Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company	Income earned from the account is taxable Gains made on the sale of the investment is taxable Certain investments of the pension may be subject to a punitive tax scheme
starting a new business?	Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations Form 8865, Return of U.S. Persons, with Respect to Certain Foreign Partnerships Form 8858, Information Return of U.S. Persons with Respect to Foreign Disregarded Entities Form 8938, Statement of Specified Foreign Financial Assets	Depending on your ownership interest and how the business is structured, the net income of the business may be taxable Depending on how the business is structured, the net income of the business may be subject to U.S. self-employment tax
purchasing shares of a company?	Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations Form 8858, Information Return of U.S. Persons with Respect to Foreign Disregarded Entities Form 8938, Statement of Specified Foreign Financial Assets	Dividends earned are taxable income Depending on your ownership interest and how the business is structured, the net income of the business may be taxable
transferring assets to a foreign corporation?	Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation	Transfer to a foreign corporation may result in taxable income
purchasing a partnership interest?	Form 8865, Return of U.S. Persons, with Respect to Certain Foreign Partnerships Form 8858, Information Return of U.S. Persons with Respect to Foreign Disregarded Entities Form 8938, Statement of Specified Foreign Financial Assets	Transactions between you and the partnership may cause taxable income Your pro-rata share of the partnership income be taxable
purchasing a life insurance policy?	Form 720, Quarterly Federal Excise Tax Return Form 8938, Statement of Specified Foreign Financial Assets Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company	Excise tax may be due on the premiums Policy likely does not meet U.S. requirements for insurance, and therefore may be treated as an investment instead of an insurance policy
loaning money to someone?	Form 8938, Statement of Specified Foreign Financial Assets	Interest is reportable as income
giving a gift to someone?	Form 709, United States Gift Tax Return	Gift may be taxable, as donor has the reporting and tax obiligation
creating a foreign trust?	Form 3520, Annual Return to Report Transactions with Foreign Trusts Form 3520-A, Annual Information Return of a Foreign Trust with a U.S. Owner Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company	Earnings of the trust may be taxable income, even if not distributed to you Certain investments of the pension may be subject to a punitive tax scheme
transferring property (money or other) to a foreign trust?	Form 3520, Annual Return to Report Transactions with Foreign Trusts Form 3520-A, Annual Information Return of a Foreign Trust with a U.S. Owner
receiving a distribution (money or other) from a foreign trust?	Form 3520, Annual Return to Report Transactions with Foreign Trusts Form 3520-A, Annual Information Return of a Foreign Trust with a U.S. Owner	Distribution may be taxable income
receiving a gift/inheritance from a non-U.S. person?	Form 3520, Annual Return to Report Transactions with Foreign Trusts	Income generated from the gift is taxable income
purchasing/selling your home?	None	Sale of primary residence may result in taxable income
purchasing rental/investment property?	None	Income from property is taxable income

Proactive Planning to minimize unwanted surprises

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