Form 8938 filing requirement

[Le_nene]

I am wondering whether I should file form 8938. This is really a question of which threshold I should follow, since I don't really know whether I live in the US or not!!

I am a green card holder since I entered the US mid October 2022 (before that, I had no US tax obligations whatsoever). Then I left the US back to Europe where I currently live on 3 December. Here are my questions:

1. Do I live inside the US or outside for tax purposes? The natural answer for me is I live outside, because I haven't fully moved back to the US. However, in 2022 I have spent in the US more than 35 days (365 minus 330), so I fail the physical presence test, and I don't really think that I am a bona-fide resident of country X in Europe because I moved there from another European country in February 2022 (so not a full tax year), and I also plan to move back to the US. So which threshold of reporting applies to me?

2. My tax obligations start mid October.  No income before is reportable to the US. Does this also apply to foreign accounts? Do I need only to consider the highest amount from mid October to 31 December to judge whether I trigger the threshold, or do I apply it for the entire year anyway? Same question goes for FBAR (which I know I will have to file because there's only one, very low, threshold!)...

3. This is a somehow related question: what address should I use on 1040? My European address or my US address? And does this have any significance as to what my tax obligations would be or whether I could claim Foreign Tax Credit? Or is this simply an address for contact if they need to reach me?

[MarilynG1]

If you are a green card holder, you are a US Resident for tax purposes.

If you had more than $10,000 as a Maximum Balance in any of your foreign accounts, you do not need to file a Form 8938 "Statement of Specified Foreign Financial Assets", which TurboTax handles. 

However, you would need to file a FinCENForm 114, which is not handled by TurboTax.  Click here to file FinCENForm 114:  https://bsaefiling.fincen.treas.gov/main.html

File your Form 1040 as directed and file the FinCENForm 114 from the above-attached link.   Also, see this for reference: Comparison of Form 8938 and FBAR Requirements.

Use an address on your Form 1040 where you can be contacted by mail by the IRS.  This does not affect whether you can claim a Foreign Tax Credit on income you report on your return on which you also paid Foreign Tax.

@Le_nene 

[Le_nene]

Thanks very much MarilynG1,

But two questions still stand:

1. Do I report my foreign accounts for the entire year, or only starting from the date I was a vreen card holder?

2. For form 8938, which threshold applies to me?I am US resident, but am I considered someone who lives in the US or lives outside the US (two different thresholds for reporting here)?

Thanks again.

[DaveF1006]

Regarding your questions:

1.  You do not need to report your specified foreign assets during the period of time you were not a green card holder. This means you would only report the highest balances between mid-October until 12/31.
2. Since you are not living in the US or wasn't on Dec 31, you would follow the threshold requirement that states  if the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year, you have  a reporting requirement.

@Le_nene 

[Le_nene]

Thanks very much Dave.

What about the FinCen FBAR? Do I report values only from mid October, or through the entirety of 2022? When I look up instructions for FBAR versus Form 8939, the latter refers to "tax year", while FBAR refers to "calendar year", hence my confusion.

It is a relief that I don't have to file 8939 as I don't pass the higher threshold. I spent hours studying that question though, and I couldn't find anything other than the bona fide or the physical presence tests to determine whether I live inside or outside the US. For my heart to be confident, could you please refer me to a resource that states/explains that "if I were outside the US on Dec 31 and was living abroad" that this is enough to determine whether I live in the US or not, irrespective of the bona fide test or the 330 days outside the US test?

Thanks very much for your reply.

[DaveF1006 · Accepted solution]

As far as the FBAR, just to be safe, i would report for the full calendar year as it states. As far as the reference source, please read the instructions for filling out form 8938. There is a section entitled Types of Reporting Thresholds on page 4. it mentions the reporting requirements for taxpayers living in the US and for Taxpayers living outside of the US. Since you spent such a brief time in the US, not living here on 12/31, and not presently living here now, i would deem you as a taxpayer not living in the US.  other than this, there is no credible reference source that narrows the definition of a taxpayer living in or outside the US.

@Le_nene 

[Le_nene]

Hello again, a year later ;D

I am asking about the presence abroad test, that determines the threshold for reporting requirement. Here is what is written in the IRS instructions:

"If your tax home is in a foreign country, you meet one of the presence abroad tests described next, and no exception applies, file Form 8938 with your income tax return if you satisfy the reporting threshold discussed next that applies to you.

Presence abroad.

You satisfy the presence abroad test if you are one of the following.

• A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.

• A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported."

Here is my situation:

1. I am a green card holder. I am not a US citizen.

2. I was not present in foreign country(ies) for at least 330 full days. (I spent in the US longer than 35 days in 2023)

3. I am a bona fide resident of a foreign country for the entirety of 2023. I am a citizen of a third country with whom the US has a tax treaty.

I would think that the thresholds for taxpayers living OUTSIDE the US apply to me. The only thing that confuses me is that, while the (330 full days abroad) test applies for US citizens and residents, the bona fide test - as written - seems to only apply to US citizens. How come? I know that green card holders can be bona fide residents of foreign countries (see instructions for Form 2555, for instance). Is the absence of "or resident" in describing the bona fide test a mistake? What should I do?

Thank you ;D