# Form 8938 and real assets



## Ccecil (Jun 1, 2015)

I have been reading the instructions for form 8938 and got very confused about reporting real estate and rental property! I understood that if one have rental property abroad it does not qualify as a foreign asset that needs to be reported? Thank for any help!


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## ForeignBody (Oct 20, 2011)

"foreign real estate held directly" is not reportable. See this:

Comparison of Form 8938 and FBAR Requirements


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## Ccecil (Jun 1, 2015)

Hi! I read the comparison of form 8938 and FBAR and still not totally clear about what real estate to report . If one receives rental income from the property, do I need to report on 8938? Thanks again for your help.


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## Bevdeforges (Nov 16, 2007)

Ccecil said:


> Hi! I read the comparison of form 8938 and FBAR and still not totally clear about what real estate to report . If one receives rental income from the property, do I need to report on 8938? Thanks again for your help.


You don't need to report the property itself, but you do need to report the income from the property.
Cheers,
Bev


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## Ccecil (Jun 1, 2015)

This would be the first time dealing with rental income from abroad. I so far understood that the rental property does not have to be reported on form 8938 but the rental income I must fill schedule E? Is there a threshold for foreigners on the rental income ? Thanks again for all your help.


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## Bevdeforges (Nov 16, 2007)

The threshold (for all filers) depends on your filing status (i.e. married filing joint, married filing separately, single or head of household) and age. You are supposed to report your worldwide income - salary, rental, whatever - and the threshold applies to gross income before any deductions or exemptions. 

The chart for 2014 filing thresholds is here:
Publication 554 (2014), Tax Guide for Seniors
Cheers,
Bev


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## Ccecil (Jun 1, 2015)

First of all, I would like to thank u for all your prompt replies. I was born in Brazil and moved to the States when my parents divorced and have been back to Brazil for twenty years . I have been paper filing my 1040's every year even though my income falls below the threshold for single filers. I have learned this week by reading the expat forum that I should not have been filing as single because I got married a few years ago with a Brazilian and should have been filing as married filing separately and spouse could have written NRA!!! I never knew that because they asked for social security number! I have been at home raising my daughter who has a U.S. Citizenship. I would to know which tax software is the better ones for helping me step by step on the 8938 forms so I can better I understand what is what. I have income from rental property in Brazil and my husband added me as co-owner in his flower business which does not generate income for me because all goes back to purchasing more goods. I would like advice on the best software for me to start understanding the tax system!


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## Bevdeforges (Nov 16, 2007)

You have to be careful with the tax software because there are only a few of them that can correctly handle foreign addresses and some of the other "peculiarities" of filing from overseas.

OK, I've used TaxAct successfully - and the advantage is that there is a freebie version you can use online or download. Others on the forum have reported that TaxSlayer also has a free version that will handle all the necessary forms. Best thing to do is to try out the free versions and see how you like them. Then, if you think you need something more, you can look into getting the paid version of whichever one you prefer. (Or not. I've found the free version perfectly adequate - though I have more experience of doing my own taxes over time.)

Don't get too worried about being the co-owner of your husband's business. If it doesn't generate any income for you, you can probably just leave it off altogether unless the business is formally incorporated and worth quite a bit. The reporting requirements are for "certain foreign corporations" and small family businesses generally don't qualify (for IRS purposes) as "corporations." 
Cheers,
Bev


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## Ccecil (Jun 1, 2015)

Thanks a million for your advices and I have been doing some homework myself and after reading so much I will put on practice and use the software . I have one more question that I have learned that before I filled as single which is not correct because I am married to a Brazilian . I just realized how the threshold for reporting income as married and filing separately is under USD 4.000 and as single is double that. Having a child who has a SS raises this threshold? Thanks again for your answers.


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## Ccecil (Jun 1, 2015)

One last piece of information that I am confused is that a small family owned business does not for sure not fall under a corporation but it falls under what category under IRS terms. The flower shop is managed by my husband and two employees.


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## Bevdeforges (Nov 16, 2007)

You certainly would not be the first foreign resident to have filed as single rather than married filing separately. If it makes no difference for the amount of tax you ultimately owed, then I'd just correct the matter going forward (i.e. file as married filing separately next time you file).

If it's more than the filing threshold, you may want to consider filing an amended return (1040X). 

But for the family business, if you're not drawing any salary, and your ownership interest is less than the FATCA reporting threshold (i.e. $200,000) I'd just not bother with it. If you draw a salary, you should list the business as your employer and declare your salary. 
Cheers,
Bev


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## Ccecil (Jun 1, 2015)

Thanks for your help again. Changing my filing status will not change my return so I will move forward . I wanted to clarify about the family business because I am not sure what category under specific foreign entity asset it falls under so I wanted to know its family business will be included in the ( $ 200,000) threshold or not so I will be always looking to be under threshold. Is there a threshold for declaring a foreign salary ? Or just the married filing separately threshold of $4,000?
I understood there is a high deduction for form 2555 income abroad . It is just so many paperwork !!


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## Ccecil (Jun 1, 2015)

Have done some more reading and I am still confused between I what category a company that sells flowers or any other goods with two employees is under what business category. Since my husband put my name as the co-owner would that be a partnership?


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## Ccecil (Jun 1, 2015)

Joint ownership with a spouse who is not a specified individual or someone other than a spouse. I read this part of the rule for 8938 and I am not sure if I understood correctly that a U.S. Citizens who have a property with a not specified individual which I understood as a non-US Citizen must report the property as if the sole owner! How can one own something it did not pay for it all !!


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## Bevdeforges (Nov 16, 2007)

The key thing with the business is precisely how it is set up. Do you have a partnership agreement with your husband? Then it is a partnership. Is it registered in some manner with the Brazilian administration? (Sorry I don't know the business entities in Brazil.) According to the instructions for form 8832, a business in Brazil is only considered a "corporation" for US purposes if it's a Sociedad anonima.

The key threshold for you is the $4000 filing threshold for filing married, filing separately - and that refers only to income, not assets or financial interests you hold. 
Cheers,
Bev


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## Ccecil (Jun 1, 2015)

Thanks once again for your input! It greatly helps when it is hard even to find a list of CPA to help u sort questions about US and Brazilian rules. I will check further the terms and will keep updated . I am under the ( $200,000) threshold even if my husband company is what the IRS considers a corporation but I am confused now about the other rule which I read that U.S. citizens jointly owning with a spouse who is not a specified individual assets then the whole asset is considered owned by the U S Citizen??? I read this on the instructions for form 8938 ! Can u help me clarify this statement because then ones threshold has to be added to the spouse !! Thanks


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