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Tax and crypto glossary
Plain-English definitions of the terms that show up in IRS letters, crypto tax reports, offshore disclosures, and opinion letters, written by the attorneys and accountants who deal with them every day. Each term links to the guide or service page where we go deeper.
Browse by topic: All terms Business and Corporate (18) Crypto Tax (71) International Tax (24) IRS Forms (47) IRS Notices and Letters (10) Opinion Letters (4) Tax Controversy (68) Web3 Regulation (7)
Showing 24 terms in International Tax.
B
- Bona fide residence test
- The bona fide residence test qualifies a taxpayer for the foreign earned income exclusion if they are a bona fide resident of a foreign country for an uninterrupted period that includes a full tax year, based on the facts of their life there.
C
- Controlled foreign corporation (CFC)
- A controlled foreign corporation is a foreign corporation more than 50 percent owned by U.S. shareholders who each hold at least 10 percent, and its U.S. owners must report on Form 5471 and may owe tax on the corporation's income before it is distributed.
D
- Delinquent FBAR submission procedures
- The delinquent FBAR submission procedures allowed taxpayers who reported all foreign income but missed the FBAR to file late reports with an explanation and generally no penalty. Their status changed in 2026; confirm current availability before relying on them.
E
- Exit tax (expatriation)
- The exit tax is a mark-to-market tax under Section 877A on covered expatriates who renounce U.S. citizenship or give up long-term residency, treating their worldwide assets as sold the day before expatriation.
F
- FATCA and Form 8938
- FATCA is the Foreign Account Tax Compliance Act, and Form 8938 is the statement of specified foreign financial assets it requires U.S. taxpayers to attach to their return when foreign assets exceed set thresholds.
- FBAR (FinCEN Form 114)
- The FBAR is the annual Report of Foreign Bank and Financial Accounts, filed with FinCEN by any U.S. person whose foreign accounts had a combined value over 10,000 dollars at any point in the year.
- FBAR penalties
- FBAR penalties for non-willful violations are up to an inflation-adjusted amount per report per year (over 16,000 dollars in 2026), and for willful violations the greater of an inflation-adjusted amount (over 165,000 dollars) or 50 percent of the account balance, with criminal exposure in extreme cases.
- Foreign earned income exclusion (FEIE)
- The foreign earned income exclusion lets qualifying U.S. taxpayers living abroad exclude an inflation-adjusted amount of earned income (over 130,000 dollars for 2025) from U.S. tax, using either the bona fide residence test or the physical presence test.
- Foreign gift reporting
- A U.S. person who receives more than 100,000 dollars in gifts or bequests from a foreign individual in a year, or a smaller inflation-adjusted amount from a foreign corporation or partnership, must report it on Form 3520, even though the gift itself is not taxable.
- Foreign tax credit
- The foreign tax credit reduces U.S. tax dollar for dollar by income taxes paid to a foreign country on the same income, claimed on Form 1116 and limited to the U.S. tax attributable to foreign-source income.
- Form 3520 and 3520-A
- Forms 3520 and 3520-A report transactions with foreign trusts and the receipt of large gifts or inheritances from foreign persons, and late filing penalties start at 10,000 dollars or a percentage of the amount involved.
G
- GILTI
- GILTI, global intangible low-taxed income, is a category of controlled foreign corporation income that U.S. shareholders must include in their own income each year under rules enacted in 2017, even if nothing is distributed.
I
- IRS Voluntary Disclosure Practice
- The IRS Voluntary Disclosure Practice is the program for taxpayers with potential criminal exposure to come forward, disclose unreported income or accounts, and pay tax and penalties in exchange for a generally reduced risk of prosecution.
N
- Non-willful certification
- The non-willful certification is the sworn narrative on Form 14653 or 14654 in which a taxpayer explains how the failure to report foreign accounts happened and why it was not willful.
P
- Passive foreign investment company (PFIC)
- A passive foreign investment company is a foreign corporation whose income or assets are mostly passive, which includes most foreign mutual funds and ETFs, and U.S. shareholders face punitive tax rules and Form 8621 filings unless they make an election.
- Physical presence test
- The physical presence test qualifies a taxpayer for the foreign earned income exclusion if they are physically present in a foreign country for at least 330 full days during any 12-consecutive-month period.
Q
- Quiet disclosure
- A quiet disclosure is filing amended or late returns and FBARs that report previously omitted foreign income or accounts without using an IRS disclosure program, in the hope they are processed without scrutiny.
S
- Streamlined Domestic Offshore Procedures
- The Streamlined Domestic Offshore Procedures are an IRS program that lets U.S. residents correct non-willful failures to report foreign accounts or income by filing three years of amended returns and six years of FBARs and paying a 5 percent penalty.
- Streamlined Filing Compliance Procedures
- The Streamlined Filing Compliance Procedures are the IRS program for non-willful taxpayers to catch up on unreported foreign income and accounts by filing three years of returns and six years of FBARs with a certification of non-willfulness; the domestic version carries a 5 percent penalty and the foreign version none.
- Streamlined Foreign Offshore Procedures
- The Streamlined Foreign Offshore Procedures let U.S. persons living abroad who non-willfully failed to file returns or FBARs catch up on three years of returns and six years of FBARs with no offshore penalty.
- Subpart F income
- Subpart F income is passive and certain related-party income of a controlled foreign corporation that U.S. shareholders must include in their own income currently, whether or not it is distributed.
T
- Tax treaty
- A tax treaty is an agreement between the United States and another country that allocates taxing rights and reduces double taxation, and treaty benefits claimed on a return are disclosed on Form 8833.
- Totalization agreement
- A totalization agreement is a treaty between the United States and another country that decides which country's social security system a worker pays into and lets contributions in both count toward benefits.
W
- Willful vs. non-willful
- In offshore compliance, willful means a voluntary, intentional violation of a known legal duty, including reckless disregard, while non-willful means negligence, mistake, or a good-faith misunderstanding of the rules.
