U.S. Virgin Islands & Puerto Rico Reporting Requirements

U.S. persons with financial assets located within the U.S. Virgin Islands and Puerto Rico are not required to disclose these accounts on a Report of Foreign Bank and Financial Accounts (FinCEN Form 114) commonly referred to as the FBAR.

However, they may be reportable on the Statement of Specified Foreign Financial Assets (Form 8938) if you have an interest, and the aggregate value of your specified foreign financial assets is more than the reporting thresholds (that apply to you)

This includes:

• Unmarried taxpayers living in the US: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year
  
• Married taxpayers filing a joint income tax return and living in the US: The total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year
  
• Married taxpayers filing separate income tax returns and living in the US: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.
  
• Taxpayers living abroad. If you are a taxpayer living abroad, you must file if:
  • You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
  • You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.
• Specified Domestic Entities: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.

Form 8938 is part of the federal income tax return (Form 1040), and disclosure will depend on whether you must file a return. Secondly, where you reside will dictate if it is reportable.

For example, if you reside in Puerto Rico you don’t need to report your Puerto Rico accounts on Form 8938. However, if you live in Massachusetts, they are reportable. For those residing in the U.S. Virgin Islands disclosure is not required since you don’t need to file Form 1040. Ultimately, each situation should be carefully evaluated to establish the reporting obligations.

For more information on how to disclose your financial assets located in U.S. territories please contact any member of our International Tax Services Group.