Questions to Include in Individual Tax Organizers

By Eileen Reichenberg Sherr, CPA, M. Tax., AICPA, Washington, DC, and Andrew M. Mattson, CPA, Mohler, Nixon & Williams, Campbell, CA

To help clients avoid possible penalties and sanctions, practitioners should ensure that the following questions are included in their customized tax software organizers for individual clients for the upcoming filing season.

Status as an Owner, Director, or Officer of a Foreign Corporation

  • Do you own, directly or indirectly, more than 10% of a foreign corporation?
  • Are you an officer or director of a foreign corporation?

Foreign Bank Accounts

Did you have an interest in or signature or other authority over a financial account in a foreign country, such as a bank account, securities account, retirement account, or other financial account? If yes, did the aggregate amount in your foreign financial account(s) exceed $10,000 at any time during the year?

Note: A “yes” answer to either of the foreign corporation questions may indicate a requirement to file Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations. Indirect ownership exists when, for instance, an individual owns 10% or more of a U.S. company that owns 100% of a foreign subsidiary. A Form 5471 must be filed in such a case. The IRS has announced that starting January 1, 2009, it will send automatic $10,000 penalty letters for late or inaccurate Forms 5471 attached to Forms 1120, U.S. Corporation Income Tax Return. (For more on this, see Keenan and Patel, “IRS Changes Policy for Asserting Penalties for Late-Filed Form 5471,” Tax Practice & Procedures).

The Form 5471 filing requirement for an individual can be met by the U.S. company if the Form 5471 filed by the U.S. company discloses the U.S. shareholder’s information on page 1, Section D; however, the individual must attach a statement to his or her Form 1040 stating that the Form 5471 is filed with the U.S. company’s income tax return.

Note: Regarding foreign bank accounts, the form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, is required to be filed by U.S. citizens, residents, and certain nonresidents (including individuals, corporations, partnerships, trusts, or estates) who have a financial interest in or signature or other authority over any financial accounts (including bank, securities, mutual fund, or other types of financial accounts in a foreign country) if the aggregate value of such accounts exceeded $10,000 at any time during 2008.

A preparer who has any indication that a client may have a foreign bank account should ask the client about the existence of such an account and document the conversation in order to comply with what the IRS has suggested is a requirement under Circular 230.

Tax Insider Articles


Business meal deductions after the TCJA

This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.


Quirks spurred by COVID-19 tax relief

This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID-19.