Form 8938 - stock held on foreign stock exchange

[Kofian]

I own shares on the Australian Stock Exchange and started receiving dividends in 2024 tied to stock I received from my employer's long term incentive plan. First time and want to confirm my approach & get some answers:

1. I've created a 1099-DIV entry of $30,469 USD to match the dividend value I received from my foreign stock

2. Help with 8938 form: for the total value of the stock, I chose the highest value it hit in the year, converted into USD with the highest FX rate of the year, and it is $196,403 USD. Question: why total value since stock owned on the US stock exchange is not reported, only the dividend income received?

3. I entered the $30,469 USD dividends as a foreign financial asset. Question  Do I also need to file an FBAR? And is correct to think of this as a foreign financial asset and not a foreign financial account?

4. Items attributable to "foreign financial asset" I've referenced #1 dividends above as Form 1040, line 3b

5. I manage the stock granted from my employee plan in a MUFG website (similar to Fidelity). Question: do I also enter it as the financial foreign account with address or skip this part since it's an asset?

[pk · Accepted solution]

@Kofian , we have here at least three different items "

(a)  Dividend  income ---  you report the and get taxed on these earnings  whether  encashed / re-invested or otherwise.  This is taxable income for US purposes.

(b) Form 8938  ( FATCA form ) -- this is not a taxable  item -- just  informational.  Here you are reporting  all  "specified  Financial " assets  --- you report the actual value at the end of the year  but you use the highest value  for threshold  ( to file ).  There may be duplicate counting if you are moving monies between accounts .  It is generally looking at liquid and semi-liquid  items.

(c) FBAR  ( form 114 at FinCen.gov and On-line reporting ONLY ) -- this counts ONLY liquid assets / accounts that you own/ control or have signature authority over.  Depending on exacts facts and circumstances, you may have the same accounts reported on both FBAR and FATCA forms. 

Does this answer  your query ( and without going into specifics of your case ) ?

Do you need more on this  -- will be glad to, if you so desire -- ?

[Kofian]

Very helpful. Since securities are liquid assets and in my name, does that meet the FBAR criteria for controllable and need to report?

[pk · Accepted solution]

@Kofian , 

(a) Bank accounts  are generally considered liquid for purposes of FBAR --- not stocks/bonds etc.

(b) For 8938 -- FATCA, specified financial assets includes stocks/bonds / etc. but not real-estate .

Does that answer your query ?

Is there more I can help you with ?

[Kofian]

So, when completing the 8938, I've declared the dividends as "other financial asset". Do I also need to complete the MUFG account information which is the foreign brokerage holding the stock under "Foreign Financial Account" along with maximum value? I was able to locate the monthly statements and figure out what FX was used and the maximum value throughout 2024.

[pk]

@Kofian  recognize what the purpose of this form/FATCA  is --- be informed and enforce  taxation of Foreign accounts -- see this -->  Summary of FATCA reporting for U.S taxpayers | Internal Revenue Service

So in your case since you have reported the dividends, they would fall outside  the pure FATCA requirements  except  when you store the dividends in a foreign financial account.   But in general you are correct in your understanding.

Till next year