Reporting Foreign Bank Accounts, Form 90-22.1

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bigjoe123
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Joined: Tue Jun 23, 2009 11:41 pm

Reporting Foreign Bank Accounts, Form 90-22.1

Post by bigjoe123 »

I am going to file Treasury Department Form 90-22.1 for 2008 before the June 30th deadline, since the combined value of my foreign accounts exceeded $10k. I never filed Treasury Department Form 90-22.1 for 2007 although I just did the calculation and it appears they did exceed more then $10k. Just file 2008 for now or also worry about 2007?

On another note, these accounts are mutual funds and a bank account. They do not pay me dividends or any income. The mutual funds grow in value, that’s all. Do I need to report something on these accounts on my US taxes?

Thanks for your help!
testone
Posts: 92
Joined: Mon Dec 01, 2008 10:05 pm

Post by testone »

I would file Form TD F 90-22.1 for 2007 as well because the penalty for non-willful failing to file can be up to $10,000. Filing the form shows you are making a good faith effort to comply with the rules.

If the bank account has no interest income, then there is nothing to report on your Form 1040.

If the foreign mutual fund really pays no dividends, then there is no income to report. However, if dividends are being paid but are reinvested, this is considered income to you and purchases of new shares.

Also note that you will need to file Form 8621 when you do get dividends or when you sell the shares. Because foreign mutual fund are passive foreign investment companies (PFICs) gains on the sales will not qualify for long-term capital gain treatment and will be subject to an interest charge (unless you have made a mark-to-market election or a QEF election).
Alta_Al
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Joined: Thu Apr 05, 2007 12:07 am
Location: PAC West

Post by Alta_Al »

If your mutual funds are a RRSPs, you need to amend your tax returns and file the 8891. If this is the case, you may want to elect to defer the tax to avoid a dual tax situation.

If these mutual funds are not under a RRSP, then you need to look at filing the 3520. Not fun.

Good Luck,

Al
nelsona
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Post by nelsona »

There is no requirement that Cdn mutual funds held outside an RRSP be reported on Form 3520, unless these are held in another trust, such as an RESP.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
JohnSt
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Joined: Wed Mar 07, 2007 2:33 pm

Post by JohnSt »

If mutual funds are held outside of an RRSP, you should be aware of the PFIC rules (form 8621).
bruce
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Joined: Sat Apr 02, 2005 7:31 am

Post by bruce »

Don't most Cdn mutual funds distribute all their income on an annual basis? In that case, I don't think you need to file form 8621. Please correct me if I'm wrong. Thanks.
testone
Posts: 92
Joined: Mon Dec 01, 2008 10:05 pm

Post by testone »

Form 8621 should be filed in any year that you own a PFIC and the PFIC makes a distribution. The distribution may or may not be an "excess distribution" and therefore the special PFIC rules may or may not apply. However, Form 8621 should be filed in a year that a distribution is made (or in a year of gain on disposition).
bruce
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Joined: Sat Apr 02, 2005 7:31 am

Post by bruce »

I thought this was previously addressed by Nelsona. Per this link, it is my understanding that the 8621 is *not* required for most Cdn mutual funds.

[url]http://forums.serbinski.com/viewtopic.p ... light=8621[/url]

Did something change or is there a disagreement of opinion?
testone
Posts: 92
Joined: Mon Dec 01, 2008 10:05 pm

Post by testone »

My mistake. Form 8621 is not required in all cases where a distribution is made. If the distribution is an "excess distribution," then the form is required.

Most mutual funds that actually distribute all of their income annually likely do not have excess distributions. Thus, I agree that Form 8621 would not be required annual for most mutual funds that distribute all of their income annually.
JohnSt
Posts: 70
Joined: Wed Mar 07, 2007 2:33 pm

Post by JohnSt »

As far as I'm aware, it depends on the fund and the year. A fund may go X number of years with no excess distributions and then have one -- so the definition of "most" above may apply to most funds in a given year versus most funds overall. Someone more familiar with excess distribution patterns and rationales could explain this better.
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