Originally Posted by Damage
Great. Thank you for your reply.
In our situation, the house in Taiwan is under my wife's name. Furthermore, when we sell the house, the money from the sale will go into my wife's account in Taiwan. Then, we will transfer that money (around 250K) to my account in the US.
In our situation, the house in Taiwan is under my wife's name.=======>>Aaslongas you guys file your US return as MFJ by treating your Taiwanese spouse as a US resident( what I mean is that UNLESS she is treated as a US resident, you can not exclude the gain on sale of her home in Taiwan), then, to exclude the gain on sale of your residence, both the ownership and use tests that you have to satisfy.
Ownership test: During the 5 year period ending on the date of the sale your spouse owned the home for at least 2 years; Use Test: During that 5 year period, your spouse AND you lived in the home as your/her main home, and during the 2 year period ending on the date of the sale, you didn't exclude gain from sale of another home.You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale.
There are certain additional requirements you must meet to qualify for the $500K exclusion as MFJ filer. Namely, you must be able to show that all of the following are true: you are married and file a joint return for the year; either you or your spouse meets the ownership test( in your case yur spouse meets the test);BOTH you and your spouse meet the use test, and during the 2-year period ending on the date of the sale, neither you or your spouse excluded gain from the sale of another home.If either spouse does not satisfy all these requirements, the exclusion is figured separately for each spouse as if you were not married. This means you can each qualify for up to a $250K exclusion instead of $500K. For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property.
Furthermore, when we sell the house, the money from the sale will go into my wife's account in Taiwan. Then, we will transfer that money (around 250K) to my account in the US=======>>No problem as the money is not a gift from a non US resident overseas but it is money for you / your spouse. As said, you donot need to file form 3520; BUT remember, once your spouse( aslongas she is treated as a US resident through the marriage with you , a US person) deposits the money in a bank in Taiwan, then as a US resident for tax purposes, she needs to file form FBAR, TD F 90.22-4 as the aggregate value of all foreign financial accounts exceeded $10K at any time during the calendar year reported, in your case in 2015. However, if you / your spouse have multiple bank accounts with balances under $10K, you still may be required to file aslongas the combined amount exceeds $10K. for example, you/ ypur spouse have resided in taiwan for multiple years and have three bank accounts in taiwan. One is your checking account, which has a balance of the Euro equivalent of $3K. One is your savings account, which has a balance of the Euro equivalent of $7K. Lastly, you have an investment account that you deposit into monthly, with a current balance of $5K. When you total these three accounts together, the total is $15K. For that reason, all three accounts (as well as any other foreign accounts) must be reported on the FBAR by june 30th;This form is to be completed online and filed electronically to the US Department of the Treasury by the 30th of June of every year, 2016 in your case. No extensions.
Note; Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10Kper violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100K or 50 percent of the balance in the account at the time of the violation, for each violation.
however your bank in US will automatically report the money transferred into yur bank acunt in US to IRS as the amount exceeds $10K;I mean your bank in US will automatically do the reporting for the transaction over $10K. You will not get into trouble just because you wired large sum of money to yourm bank in US. However, US government is closely watching large transaction of money from outside of the country and depending on where the money is from, i.e., money laundering/ drug money or terror related money or etc ) As for IRS, assuming you are US citizen, there is nothing to file. As a matter of fact, when you open an investment account, the investment companies will gather your information and you can be assured they will take care of passing on every bit of information about your money from overseas to the proper authority,i.e, your bank acct in US or etc.