With respect to your foreign stock and FBAR (FinCen Form 114) reporting requirements, these are different than those of the FATCA (IRS Form 8938) reporting requirements.
Before we discuss the differences between these two disclosure requirements, though, we wish to clarify what Form 8938 and FinCen Form 114 are, in
general. We will then
address the specific matter of your foreign stock.
Under current United States law, there are certain foreign
financial account reporting requirements that US taxpayers must meet annually, in
addition to filing a primary tax return (Form 1040, etc.)
In fact, there are two
separate disclosure forms that may be required; each also has different
reporting rules. One is known as IRS Form 8938, and can be
attached to the relevant yearly Form 1040 tax return. The other is FinCen
Form 114, which can only be filed via the internet. The following
Internal Revenue Service webpage describes them in some detail, and provides
their dollar value reporting levels:
https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
Form 8938 is included in
TurboTax; FinCen Form 114 is not, and you may need to access that reporting
webpage separately, if your foreign financial assets total over the
limit(s). Note that you can get to the FinCen reporting internet site
through the above IRS link.
With respect to your foreign stock, determining the
reporting requirements for it are dependent on the value of the stock itself,
and how you "hold" it (
i.e., registered to you as an individual shareholder, or held by a brokerage firm or other financial institution).
If
you hold your foreign stock in an account with a US
brokerage firm (or bank or institution), then you do not have a
reportable foreign financial asset, according to the rules, either under FBAR or FATCA.
If
you hold the stock as an asset in a brokerage account you keep overseas,
in a foreign country, then it becomes a reportable financial asset
(along with all other investment holdings in the account), under FBAR and FATCA.
If you
own the foreign stock as a direct shareholder, and you don't have the shares
"on deposit" with a US brokerage firm, then the stock does
become a reportable foreign asset for purposes of IRS Form 8938 (FATCA) . . .
but not for Treasury Department Form FinCen 114 (FBAR).
All of the rules are further subject to asset value tests, such that even if disclosure reporting would otherwise be required due to the nature of the asset, if the US dollar amount of the account or asset at issue (
e.g. stock) falls below the filing threshold, then IRS Form 8938 and / or FinCen Form 114 would not be required.
Once again, you can confirm those facts, as well as the filing thresholds for each disclosure form, directly from the IRS.gov website above.
Do all of these foreign account disclosure rules and regulations seem
unnecessarily burdensome or duplicative? If so, it's not just your
imagination. We would tend to agree with that assessment. However,
these same rules and regulations define the present state of "foreign"
account disclosure and reporting required, as a function of United
States law.
We at TurboTax do not write the tax code; although we do our best to help our customers successfully navigate it.
Thank you for asking this important question.
