Dual Residents Not Required to Report Some Foreign Assets

For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...

By Alison Bennett

Jan. 6 — Some dual-resident taxpayers don't have to report specified foreign financial assets on Form 8938 for 2015, the IRS said.

These taxpayers won't have to do the reporting as long as they determine their income tax liability—for all or part of the taxable year—as if they were nonresident aliens, according to the Internal Revenue Service.

The agency noted the change in the 2015 instructions for Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents, dated Jan. 4 but released Jan. 6.

IRS said in the new Form 1040NR-EZ instructions that the change regarding foreign assets was made in the 2015 instructions for Form 8938, Statement of Specified Foreign Financial Assets.

Tax Treaty Benefit Instructions

Form 8938 is used to report such items as foreign stock or securities held in an overseas financial account, foreign stock or securities not held in a financial account, and foreign mutual funds, hedge funds and private equity funds.

In other parts of the new instructions for the nonresident aliens' tax return, the IRS offered details for taxpayers who want to claim tax treaty benefits under a competent authority determination. Such taxpayers must attach a copy of the competent authority determination letter to their returns, the agency said.

This requirement can be found under Schedule OI (Other Information)—part of Form 1040NR-EZ, the IRS said.

To contact the reporter on this story: Alison Bennett in Washington at abennett@bna.com

To contact the editor responsible for this story: Brett Ferguson at bferguson@bna.com

Instructions for Form 1040NR-EZ are at https://www.irs.gov/pub/irs-pdf/i1040nre.pdf.

Form 1040NR-EZ is at https://www.irs.gov/pub/irs-pdf/f1040nre.pdf.

Instructions for Form 8938 are at https://www.irs.gov/pub/irs-pdf/i8938.pdf.

Form 8938 is at https://www.irs.gov/pub/irs-pdf/f8938.pdf.