FBAR Tax & PFIC 8621 Tax Forms Explained
What Is A FBAR And Who Needs To File One?
An FBAR form must be filed by all U.S. citizens, residents, corporations, partnerships, limited liability companies, trusts, and estates. The purpose of an FBAR is to notify a financial interest in a bank account including any type of authority over a financial account which is located outside the United States i.e. in the UK or any other country. Further information will be required before submitting the FBAR US tax form.
What Is Meant By PFIC Or Passive Foreign Investment Company?
PFIC (passive foreign investment company) is a corporation based overseas that exhibits either one of following two characteristics in regards to income or assets:
- An organisation’s gross income must be at least 75% passive, meaning derived from investments or other sources apart from regular business operations.
- Investments comprise at least half of the company’s assets and produce income through earned interest, dividends, or capital gains.
What Is The PFIC Tax Form 8621?
A shareholder of a passive foreign investment company or a qualified electing fund needs to file Form 8621 – please see above.
What Does Country Of Domicile Mean?
Domicile refers to the place where you maintain a permanent residence. In other words, your country of domicile is where you permanently reside. When you intend to remain in this place indefinitely, it becomes your domicile and you become its domiciliary.
What Is A US Expat?
American citizens who move and plan to stay in another country are called expats.
What Is The Equivalent Of The IRS In England?
The British equivalent of the Internal Revenue Service (IRS) is the HM Revenue & Customs (HMRC). The HMRC ensures that the taxation system is implemented and enforced effectively.
HMRC Or Her Majesty’s Revenue & Collections Is The Authority That Handles Tax Returns For The United Kingdom.
Xerxes Associates LLP work closely with US and UK expats from all different backgrounds, circumstances and occupations as well as high-net worth individuals in order to help them through the complexities of US and UK tax compliance requirements (tax imposed on expatriates). If you have a query or would like a friendly no obligation chat about your requirements then please get in touch and we shall be happy to assist you.
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