Recently on our International Tax Blog we have been discussing foreign account reporting requirements as they relate to the FBAR and Form 8938. This week, we will look at the fictional case of Lauren, who enjoys investing in foreign stocks.
Lauren is an unmarried U.S. citizen and is very interested in investing in stocks. She invests in U.S. stocks but also enjoys investing in stocks of businesses in other countries. Lauren enjoys it so much that she does not have a brokerage account handling her investments. Instead, she prefers to watch the markets and buy what she thinks is a good investment. To date, Lauren has not sold any of the stocks she has purchased, because she is hoping international markets will cause stock prices to increase so that she can use the proceeds from the stock sales to supplement her retirement income.
The highest value of Lauren’s foreign stocks during the year was $84,000 USD. Therefore, she must report her stocks on Form 8938 since it is over the filing threshold for a single U.S. citizen-—$50,000 on the last day of the year or $75,000 at any time during the year (as discussed in our first blog in this series). However, because the stocks were held directly and not in a brokerage account, they are not required to be reported on the FBAR.
If you have any questions regarding foreign reporting and foreign filing requirements, please reach out to us with any questions.