Green Card Holder & Foreign Accounts
Green Card Holder & Foreign Accounts: The IRS treats a Green Card Holder (aka Legal Permanent Resident) the same as a U.S. Citizen for tax purposes. Instead of U.S. Citizen, a Green Card Holder is a referred to as a U.S. Person, and they (generally) have the same tax and reporting requirements as a U.S. Citizen. While it may not seem like a big deal to be out of compliance (and sometimes it isn’t), many times it can put the taxpayer at risk for offshore penalties. Depending on the nature of the non-compliance, number of accounts or assets, and the value — it may put the Taxpayer at great risk. Luckily, there are various offshore tax amnesty options available to safely get into compliance. We will summarize the rules involving Green Card Holders and Foreign Account compliance.
Offshore Reporting for Green Card Holders
When a person has foreign accounts and they are a green card holder, they must report their Foreign/Offshore Accounts on a U.S. Tax Return and/or FBAR return just as if they were U.S. citizen.
Oftentimes, Green Card Holders incorrectly believe that they are exempt from these reporting requirements.
Common issues we encounter are as follows:
- I opened the account before I moved to the United States;
- The account was opened with foreign money;
- I have not accessed the money since moving to the United States; and
- I have not deposited or withdrawn any money from the Account
While these facts will help determine if a person was willful or non-willful in their failure to comply — it does not impact their reporting requirements.
FBAR is the Foreign Bank and Financial Account Form. The FBAR form must be filed electronically.
FBAR or FinCEN Form 114 is used to report foreign bank and financial accounts.
FBAR is not limited to individuals. Rather, Entities, Trusts and Estates may also have an FBAR filing requirement.
The threshold for filing is when the filer has an “annual aggregate total” of more than $10,000 on any day of the year.
In addition, the FBAR requires more than just bank accounts. FBAR also includes:
- Investment Accounts
- Mutual Funds
- Stock Accounts
- Life Insurance
When is the FBAR Due?
The FBAR 2019 form is due in April 2020, but is on automatic extension.
Therefore, you have until October 15, 2020 to file your 2019 FBAR, and you do not have to file an extension form.
In general, FBAR reporting is a key enforcement priority for the IRS and the FBAR reporting requirements can be complicated.
The failure to file the FBAR can lead to excessive fines and penalties, but there are various amnesty programs to help you avoid these penalties.
Is the FBAR Hard to File?
FBAR Filing can be complicated, depending on the specific FBAR Filing requirements of the filer.
For example, if a person has one savings account in Taiwan, the reporting is not that bad.
But, if a person has 50 accounts, life insurance, mutual funds, and foreign life insurance — the FBAR filing may be much more complicated.
2020 Deadline For Filing
The FBAR filing deadline is relatively forgiving.
Unless the IRS and FinCEN change the current FBAR filing deadline rules, then the FBAR is due when your tax returns are due (April or June). But, the FBAR is on automatic extension through October.
The FBAR Instructions as provided by the IRS and FinCEN can be dense. Therefore, Golding & Golding have prepared our own FBAR instructions for your reference.
FBAR Violation Penalty
FBAR penalties: The failure to file the FBAR (or filing the FBAR late) may result in FBAR penalties. FBAR penalties can be broken down into different categories:
- Willful FBAR Penalties
- Non-Willful FBAR Penalties
- Civil FBAR Penalties
- Criminal FBAR Penalties
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm today for assistance.