December 4, 2015 | Volume 13, Issue 7 | 800.756.2772
As you may be aware, the US Treasury requires the reporting of Specified Foreign Financial Assets on Form 8938 if the value of these assets exceeds the threshold amount ($100,000 for a married couple). The list of the assets to be reported is quite extensive.
For taxable years beginning on or after January 01, 2016, California now conforms to the Foreign Account Tax Compliance Act (FATCA) and requires Form 8938 to be filed with the California return.
The federal Form 8938 will need to be filed by all individuals who are required to file California returns, not just California residents.
Non-filing comes at a heavy cost as the penalty is a hefty $10,000, similar to the Federal amount of $10,000. The penalty may be abated for reasonable cause, which is a difficult test to meet.
In most cases, California requires the Federal return to be attached to the California return; if the Federal return includes Form 8938, it will satisfy this requirement (i.e. it is not necessary to prepare an additional California form in this case).
Currently, there is no separate designated form for California; RINA will continue to monitor whether the Franchise Tax Board does release its own version of Form 8938.
In order to meet these comprehensive filing requirements each year, we ask that you please be sure to advise us of ownership of foreign assets.
Should you have any questions, please discuss this with your RINA representative.