Reference

Glossary

Plain-English definitions of the IRS forms, elections, and tax concepts US expats run into. Every entry links to deeper context and the related terms you usually encounter together.

• Bona fide residence test

  One of the two ways to qualify for the FEIE: being a genuine resident of a foreign country for an uninterrupted period that includes a full tax year.

• FATCA (Foreign Account Tax Compliance Act)

  The 2010 law behind two separate things: foreign banks reporting US account holders, and US persons filing Form 8938.

• FBAR (FinCEN Form 114)

  An annual report of foreign financial accounts whose aggregate value exceeded $10,000 at any point during the year.

• FEIE (Foreign Earned Income Exclusion, Form 2555)

  Excludes up to a per-year cap of foreign-earned income (and a housing amount) from US federal tax — bona fide residence or physical presence required.

• Foreign tax credit carryover

  Unused foreign tax credit carries back one year and forward ten — but only within the same income category.

• Form 14653

  The non-wilfulness certification that carries the Streamlined Foreign Offshore Procedure — signed under penalties of perjury.

• Form 2350

  A special extension for expats who need more time to meet the FEIE residence or presence test — not a general extension.

• Form 3520

  Reports foreign trust transactions and large gifts or bequests from foreign persons. It is an information return, not a tax.

• Form 3520-A

  The annual return of a foreign trust with a US owner — due 15 March, and the owner is on the hook if the trust does not file it.

• Form 4868

  Extends the filing deadline to 15 October. It does not extend the deadline to pay.

• Form 5471

  Information return for US persons who are officers, directors or shareholders of a foreign corporation — including a one-person consulting company.

• Form 8621

  The IRS information return used for PFIC reporting. A separate form is generally prepared for each PFIC with a reporting trigger in the filing year, subject to the instructions and applicable exceptions.

• Form 8833 (treaty-based return position disclosure)

  Discloses that you are taking a treaty position that overrides or modifies a provision of US tax law.

• Form 8854 (expatriation statement)

  Filed when you renounce US citizenship or give up a long-term green card — it determines whether you are a covered expatriate.

• Form 8858

  Information return for foreign disregarded entities and foreign branches — including, easily missed, an unincorporated business abroad.

• Form 8865

  The partnership counterpart to Form 5471 — for US persons with an interest in a foreign partnership.

• Form 8938 (FATCA)

  IRS report of specified foreign financial assets filed with your 1040 — threshold-driven, separate from FBAR.

• Form 926

  Reports a transfer of property by a US person to a foreign corporation — including capitalising your own company abroad.

• Form W-8BEN

  The certificate of foreign status — which means a US citizen must never sign one.

• Form W-9

  Given to a payer, not the IRS — it certifies that you are a US person and states your taxpayer ID.

• FTC (Foreign Tax Credit, Form 1116)

  Dollar-for-dollar credit (up to a per-category limit) for income tax paid to a foreign country.

• Income Tax Treaty

  Bilateral agreement between the US and another country that allocates taxing rights and provides relief from double taxation.

• ITIN (Individual Taxpayer Identification Number)

  A US tax ID for someone who must appear on a US return but cannot get a Social Security number — typically a non-US spouse or dependent.

• Mark-to-Market (MtM) election under §1296

  A PFIC election available only for publicly-traded PFICs — taxes annual fair-value change as ordinary income.

• PFIC (Passive Foreign Investment Company)

  A non-US pooled investment vehicle (most foreign mutual funds and ETFs) the IRS treats with a punitive default tax regime under IRC §1291.

• Physical presence test

  The other route to the FEIE, and a pure day count: 330 full days in a foreign country within any 12 consecutive months.

• QEF (Qualified Electing Fund) election

  A PFIC election that taxes you currently on your pro-rata share of the fund's earnings — avoiding the §1291 regime.

• Section 1291 (PFIC excess-distribution regime)

  The punitive default regime that applies to a PFIC when no QEF or mark-to-market election is in place.

• Streamlined Foreign Offshore Procedure

  IRS procedure for non-wilful US persons abroad to come into compliance: three years of returns + six years of FBAR.

• Totalization agreement

  A bilateral social-security treaty that stops the same earnings being taxed for social security in two countries.

• Treaty tie-breaker

  The cascade in a treaty's residence article that assigns a dual-resident individual to one country.

Missing a term? Check the help center or email us — we add entries from real customer questions.