Opening Brokerage Accounts Outside US

I think you only need to report if you have foreign assets over $10,000. This new requirement really hit our company hard, because we used to have our stock compensation plans in ADRs held at a US institution for US employees, but the company no longer has ADRs so everything was transferred to a European branch of the same company, but now a few hundred of us have to fill out an extra form, and keep track of the value of our holdings by day to see if we exceeded the $10,000 limit even for one day.

Lots of people were nervous about the increased audit risk, and come up with elaborate strategies to make sure they don't have to report. These strategies are contrary to good investment and tax planning, but they'd rather not take the chance of being audited. I took the position that I had nothing to hide, I keep good records, and if I get audited, I will get through it.

Since this is a relatively new thing, I don't think anyone will know for sure whether whatever algorithm the IRS uses for selecting taxpayers for audits will be sensitive to it.

I've been filing FBARs for years, I'm self employed, and no audit, at least so far.

If my matters, all my accounts are bank accounts, not brokerage accounts.

R's, John

I think you only need to report if you have foreign assets over $10,000. This new requirement really hit our company hard, because we used to have our stock compensation plans in ADRs held at a US institution for US employees, but the company no longer has ADRs so everything was transferred to a European branch of the same company, but now a few hundred of us have to fill out an extra form, and keep track of the value of our holdings by day to see if we exceeded the $10,000 limit even for one day.

Lots of people were nervous about the increased audit risk, and come up with elaborate strategies to make sure they don't have to report. These strategies are contrary to good investment and tax planning, but they'd rather not take the chance of being audited. I took the position that I had nothing to hide, I keep good records, and if I get audited, I will get through it.

Since this is a relatively new thing, I don't think anyone will know for sure whether whatever algorithm the IRS uses for selecting taxpayers for audits will be sensitive to it. ========================= Get the rules correctly: Bank accounts over $10,000 - FBAR This goes to FINCEN, not IRS. Non-liquid assets over $50,000 - IRS form (8938). Includes stock in foreign corps. Estates and Trusts, and gifts - IRS form 3520.

Mutual fund shareholders don't have to file for U.S. funds owning foreign property - the funds' managers file.

"D. Stussy" wrote in message news:k3if9f$dne$ snipped-for-privacy@snarked.org... "TheMightyAtlas" wrote in message The IRS has been on the warpath against any US citizen who opens a foreign account. If you correctly disclose such accounts - and if they are a minimal size relative to income and assets - does it increase your audit risk? I want to get a feel for whether the audit pain outweighs the research gain. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ While I question the value of their research, I would not let the fear of an audit influence my decision. Even if the risk of an audit did increase statistically, the chances of you being one of the people audited would still be small. On the other hand, all tax returns are at risk for an audit, but a very small percent are audited. Probabley Mitt Romney's hasn't even been audited.

Nice IRS summary table comparing FBAR and 8938 here:

So the good news is if you open up tiny accounts (say $1K each), and the total assets across all accounts is under $50K of stocks/investments, you do not need to report on 8938 at all.

The primary risk is that someday the sum of money invested across multiple accounts grows past the threshold and you fail to realize that and end up with a $10K penalty for FBAR and separate $10K penalty for 8938. So, if you are organized, probably you need to track both peak asset values and and end of year asset values, across all foreign accounts, so that you realize when that threshold is crossed. My guess is that very few people are so well organized as to realize when those moments take place.