Do you need to report foreign bank and financial accounts (FBAR)?

Many American taxpayers must file FBAR reports with the Department of the Treasury and don’t even know it. Do you know if you need to report your foreign bank and financial accounts? Read on to learn more about FBAR reports.

What is FBAR?

Foreign Bank and Financial Accounts, or FBAR, is a form used by the IRS to collect information about offshore financial accounts owned or managed by US taxpayers. While many people believe that the FBAR form is part of the annual US tax filing process, it is not actually included with your tax returns and should be submitted directly to the Treasury Department. The FBAR form must be submitted by June 30 of each year and is an informative return only. That means you won’t have to pay any tax on the accounts you report, but the FBAR can be used to determine if you don’t report income or use foreign accounts for illegal purposes.

Do I need to submit an FBAR report?

Any U.S. taxpayer with a foreign account with a balance of more than $ 10,000 at any time during the financial reporting year must file an FBAR report. Offshore accounts include bank accounts, mutual funds, unit trusts, and brokerage accounts. If the account is not in your name but you have signing authority on the account (for example, your husband owns the account but you can log in), you must submit an FBAR report.

What happens if I don’t submit an FBAR report?

The IRS takes FBAR very seriously and the penalties for failing to file an FBAR are severe. Penalties can range from an automatic $ 10,000 fine for filing the FBAR late to fines of 50% of the account balance. If the IRS finds that you intentionally withheld information by failing to submit an FBAR, you could even face criminal charges and possible jail time.

Recently, the IRS has significantly increased its efforts to get taxpayers with foreign accounts compliant with FBAR reporting. They have been lobbying other governments for information on foreign bank accounts and have even launched various voluntary disclosure programs. The most recent, the Offshore Voluntary Disclosure Initiative (OVDI), offers US taxpayers who did not know they were not in compliance to file their expired FBARs with the IRS, and the IRS will take their willingness to comply into account when calculating their penalties. .

If you have any questions about whether you should file an FBAR report or whether you are eligible for the OVDI program, you should contact a tax attorney immediately. An experienced tax attorney can review your accounts and help you weigh your options for submitting the FBAR. If you are a US taxpayer with foreign accounts, call a tax attorney for more information today.

Leave a Reply

Your email address will not be published. Required fields are marked *