Overseas assets exceeding US$50,000 must be declared

> Overseas assets exceeding US$50,000 must be declared. In response to the "fat coffee clause" that has been a hot topic among Chinese people, accountant Li Xinzhong held a meeting at the North American Chinese Accountants Association on the 29th...

Overseas assets exceeding US$50,000 must be declared. Regarding the "fat coffee clause" that has become a hot topic among Chinese people, accountant Li Xinzhong pointed out at the year-end tax lecture held by the Chinese Accountants Association of North America on the 29th that this clause is actually the "Foreign Account Tax Compliance Act" (FATCA) passed by the US government last year. Due to considerable foreign resistance, this law has postponed the effective date for all overseas financial institutions investing in the United States to report overseas American accounts to the U.S. government from 2013 to 2014. However, it is still required that when the income tax filing deadline is April 15 next year, if overseas accounts and assets exceed US$50,000, they must be reported together with the tax form. Li Xinzhong said that the IRS has developed a draft form 8938 for this reporting requirement. Although it is not the final version, it is still of reference value because those who meet the requirements can start collecting information. According to the draft, all single or married individuals who live in the United States but file income taxes separately must file Form 8938 if their overseas accounts and assets exceed $50,000 at the end of December 31, or if their overseas accounts and assets exceed $100,000 at any time throughout the year. The same taxpayers who live abroad must also report if their overseas accounts and assets exceed 200,000 yuan at the end of the year, or if they exceed 400,000 yuan at a certain time throughout the year. Married people who file income taxes jointly must also declare if they live in the United States and their overseas accounts and assets exceed $100,000 at the end of the year, or exceed $200,000 at some time throughout the year. If they live abroad, their assets exceed $400,000 at the end of the year, or exceed $600,000 at some time throughout the year. Li Xinzhong said that the fat coffee provisions are different from the Foreign Bank & Financial Account Report Act (FBAR) that took effect in the 1970s. The latter stipulates that as long as the maximum total value of a taxpayer's financial account in an overseas bank or securities company in the previous year exceeds 10,000 yuan, he must fill out another form TDF90-22.1 and report to the Ministry of Finance before June 30 of the following year. The scope of overseas assets that must be reported under the FAQ provisions is wider than that of FBAR, including overseas company shares, partnership gains, overseas trust accounts or inheritance trusts in which taxpayers are beneficiaries, but does not include real estate. For taxpayers who file Form 8938 under the FAQ provisions, it is likely that they will still need to file Form TDF90-22.1 under certain circumstances. If a taxpayer's deposit in a bank in Taiwan exceeds 110,000 yuan at the end of the year, both forms must be reported. Shi Qixiang, president of the Chinese Accountants Association of North America, pointed out that the fat coffee clause is included in the Hiring Incentives to Restore Employment (HIRE) signed into law by President Obama on March 18 last year. Since the implementation of the Employment Incentive Law requires money, the government has made additional provisions to increase tax revenue. The smartest thing about the IRS is that it tries to avoid sovereignty disputes, avoids dealing with foreign governments’ ministries of foreign affairs and ministries of finance, and directly negotiates with financial institutions that have investments in the United States. But from various indications, foreign governments seem unwilling to cooperate. However, Shi Qixiang said that if foreign financial institutions want to do business in the United States, it is difficult not to buy into it, otherwise 30% of the interest, dividends and other income generated from investments in the United States will be withheld.