Kenyan bank Accounts belonging to Kenyan-Americans/greencard holders to be monitored by US Gvt

Tax filing season just got more interesting now that a new law, the Federal Account Tax Compliance Act (FATCA), has kicked in. The law requires banks to report foreign accounts held by Americans. This law was aimed at preventing fat cats from cheating and transferring money overseas to avoid paying tax but it is now affecting even regular Americans living abroad, and their children.

The provisions became law in March 2010 but went into effect on October 2014.

U.S. citizens, U.S. individual residents, and a very limited number of nonresident individuals who own certain foreign financial accounts or other offshore assets (specified foreign financial assets) must report those assets.

In line with this requirement, Kenyans natives who are naturalized US citizens or are permanent residents (Green card holders) will need to report investments in Kenya if their specified foreign financial assets are more than $50,000 (Sh4.8 million) on the last day of the tax year or more than $75,000 (Sh7.2 million) at any time during the tax year.

Many Kenyans have bank accounts at home which were opened through an agent in the US and the statements actually show a US address.

The IRS is encouraging taxpayers with foreign assets, even relatively small amounts, to check if they have a filing requirement.

It is recommended that if you are not sure whether you will be required to report your assets or not, to contact a qualified tax professional in your area.

You are not required to report if the total value is at or below $50,000 at the end of the tax year, there is no reporting requirement for the year, unless the total value was more than $75,000 at any time during the tax year

To report these assets,:

  • You must use Form 8938.
  • Attach Form 8938 to the annual income tax return (usually Form 1040)
  • Taxpayers with a total value of specified foreign financial assets below a certain threshold do not have to file Form 8938
  • The threshold is higher for individuals who live outside the United States
  • Thresholds are different for married and single taxpayers
  • Taxpayers who do not have to file an income tax return for the tax year do not have to file Form 8938, regardless of the value of their specified foreign financial assets.
  • Penalties apply for failure to file accurately

Reporting Thresholds Applying to Specified Individuals

Taxpayers living in the United States. If you do not live outside the United States, you satisfy the reporting threshold discussed next that applies to you and no exception applies, file Form 8938 with your income tax return.

Unmarried taxpayers. If you are not married, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $50,000 (Sh4.8 million) on the last day of the tax year or more than $75,000 (Sh7.2 million) at any time during the tax year.

Married taxpayers filing a joint income tax return. If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.

Married taxpayers filing separate income tax returns. If you are married and file a separate income tax return from your spouse, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.

Taxpayers living outside the United States. If your tax home is in a foreign country, you meet one of the presence abroad tests described next, and no exception applies, file Form 8938 with your income tax return if you satisfy the reporting threshold discussed next that applies to you.

Unmarried taxpayers. If you are not married, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year.

Married taxpayers filing a joint income tax return. If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the tax year.

Married taxpayers filing separate income tax returns. If you are married and file a separate income tax return from your spouse, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year.

Presence abroad. You satisfy the presence abroad test if you are one of the following.

  • A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
  • A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported.

Determining the Total Value of Your Specified Foreign Financial Assets–You must figure the total value of the specified foreign financial assets in which you have an interest to determine if you satisfy the reporting threshold that applies to you. To determine if you have an interest in a specified foreign financial asset, see Interests in Specified Foreign Financial Assets, later.

Valuing specified foreign financial assets. The value of a specified foreign financial asset for purposes of determining the total value of specified foreign financial assets in which you have an interest during the tax year or on the last day of the tax year is the asset’s fair market value. For purposes of figuring the total value of specified foreign financial assets, the value of a specified foreign financial asset denominated in a foreign currency must be first determined in the foreign currency and then converted to U.S. dollars. See Foreign currency conversion in Reporting Maximum Value, later, for rules on determining and applying the appropriate foreign currency exchange rate.

Value of an interest in a foreign trust during the tax year. If you do not know or have reason to know based on readily accessible information the fair market value of your interest in a foreign trust during the tax year, the value to be included in determining the total value of your specified foreign financial assets during the tax year is the maximum value of your interest in the foreign trust. See Valuing interests in foreign trusts in Reporting Maximum Value, later, for rules on determining the maximum value of an interest in a foreign trust.

For more information visit http://www.irs.gov/pub/irs-pdf/i8938.pdf

http://www.irs.gov/Businesses/Corporations/FATCA-Information-for-Individuals

Source: Jambonewspot

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