US Citizens with a KiwiSaver

by Daria Vovk
Sep 22, 2024

US Citizens with a KiwiSaver

A KiwiSaver account may be considered a grantor trust for IRS reporting purposes if certain conditions are met.

In general, a grantor trust is a type of trust where the individual who contributes assets to the trust retains control or certain powers over the trust, such as the power to revoke the trust or make investment decisions.

If these conditions are met with regards to a KiwiSaver account, it could be classified as a grantor trust for U.S. tax purposes.

When a KiwiSaver account is classified as a grantor trust, the following are some key IRS reporting requirements that may apply:

  1. Form 3520: Trust form
  2. Form 3520-A: Trust form
  3. Form 1040: Personal tax return
  4. Form 8938: Foreign financial assets
  5. FBAR (FinCEN Form 114): Foreign financial assets
  6. Form 8621: PFIC

 

A Passive Foreign Investment Company (PFIC) is a foreign corporation in which at least 75% of its gross income is passive income or at least 50% of its assets produce or are held for the production of passive income.

If a grantor trust holds investments greater than the value of US$25,000 that qualify as PFICs, there are certain reporting requirements that may apply.

For a grantor trust that is classified as a PFIC, the grantor of the trust (individual who created the trust and contributed assets to it) may be subject to additional reporting requirements on their U.S. tax return. These requirements include:

  1. Annual Reporting: The grantor of the trust may need to file IRS Form 8621 annually to report information about the PFIC investments held by the trust.
  2. PFIC Calculations: The Form 8621 requires calculations related to the taxation of PFIC investments, which can be complex and may result in additional tax implications for the grantor.
  3. Taxation: Income derived from PFIC investments is subject to special tax treatment under the PFIC regime, which can include excess distribution tax and interest charges.

 

If you are a US citizen or greencard holder with questions or concerns about the US tax implications of having a kiwisaver please feel free to contact the team at US Global Tax.

NZ – contact Daria on [email protected]

AU – contact Shalen on [email protected]

US Global Tax website – usglobaltax.com