Is the FBAR Different Than the Form 8938 – Do I File Both IRS Forms?
- 1 FBAR vs. Form 8938
- 2 Remember to Breathe…
- 3 What is the Foreign Account Reporting Law?
- 4 FBAR (FinCEN 114)
- 5 FATCA Form 8938
- 6 When Do I Need to Use Voluntary Disclosure?
- 7 What Can You Do?
- 8 We Specialize in Safely Disclosing Foreign Money
- 9 Who Decides to Disclose Unreported Money?
- 10 Sean M. Golding, JD, LL.M., EA (Board Certified Tax Law Specialist)
- 11 Beware of Copycat Law Firms
- 12 4 Types of IRS Voluntary Disclosure Programs
FBAR vs. Form 8938
FBAR vs. Form 8938 is a very common question, especially as it comes closer to the tax filing due dates.
Both of these forms require U.S. Persons to report Foreign Accounts (accounts that are located abroad) to report their accounts.
Each of these forms are different, and each form has different reporting requirements.
Four main issues to remember:
- The FBAR & 8938 Forms are not the same
- The FBAR & 8938 Forms are not mutually exclusive.
- You may have to file both forms.
- If you do not file these forms, the penalties can be extreme.
Remember to Breathe…
When people first learn that they are required to report their Foreign Bank Account, Retirement Account, Investment Account, or Business Account to the IRS and U.S. Government — the first thing that happens is usually a glass of wine (or two) and a night spent Google Searching (Read: Unnecessary Panic).
By the end of their midnight search, they have come to the conclusion that if it wasn’t for FATCA (Foreign Account Tax Compliance Act), they would have not reporting requirement – but this is false.
Even before FATCA, there was in IRS rule and requirement to file and report U.S. foreign accounts called FBAR Reporting (Report of Foreign Bank and Financial Account Form)
The introduction and enforcement of FATCA is more of a Catalyst for the IRS and U.S. Government’s renewal of interest to penalize undisclosed foreign accounts.
The failure to properly file an FBAR report of FATCA Form annually may result in excessive fines and penalties – which is how the IRS and U.S. government motivates you to get into compliance. With the introduction of Customs Holds, Passport Revocations and worse, it is best to remain in compliance with U.S. Law, no matter where you reside.
What is the Foreign Account Reporting Law?
Under current U.S. Tax Laws, Rules and Regulations, there are significant reporting requirements for Individuals, Estates, and Businesses that have foreign accounts. These are individuals who generally fall into the category of being either a U.S. Citizen (accidental or not), Legal Permanent Resident (aka Green Card Holder), or Foreign National subject to US tax under the Substantial Presence Test.
If a person falls into one of these common categories (there are others) and meets certain threshold reporting requirements, then under current U.S. tax law, he or she is required to report their foreign accounts and other foreign money to the US government.
There are two main reporting requirements as follows:
If it any point during the year a U.S. Person has more than $10,000 in annual aggregate total in foreign accounts (aka accounts outside of the United States) on any day the year, they are reported to report that information annually on an FBAR.
It does not matter if the person owns the money, is a joint account holder with a non-US person, or merely has signature authority over the account – they are still required to report. This form is not filed directly with a tax return, but is a separate form that is filed electronically directly to the Department of Treasury.
in addition, starting in 2011 under the new FATCA (Foreign Account Tax Compliance Act) law, individuals may also have a reporting requirement directly on their tax return with Form 8938. Unlike the FBAR, the FATCA form has different threshold requirements that vary depending on whether a person is Married Filing Jointly (MFJ), Married Filing Separate (MFS), or Single.
It will also vary depending on whether a person is a U.S. Resident for Foreign Resident. In fact, the threshold requirements for reporting are much higher (aka you must have more money to report) when you reside abroad (outside of the United States).
When Do I Need to Use Voluntary Disclosure?
IRS Voluntary Disclosure lawyer can be daunting, overwhelming, and downright confusing.
Unlike other areas of International Tax, you need a law firm that practices exclusively in the area of IRS Offshore Disclosure, and your attorney should be a Board Certified Tax Law Specialist.
We’re here to help you.
What Can You Do?
Presuming the money was from legal sources, your best options are either the Traditional IRS Voluntary Disclosure Program, or one of the Streamlined Offshore Disclosure Programs.
We Specialize in Safely Disclosing Foreign Money
We have successfully handled a diverse range of IRS Voluntary Disclosure and International Tax Investigation/Examination cases involving FBAR, FATCA, and high-stakes matters for clients around the globe (In over 65 countries!)
Whether it is a simple or complex case, safely getting clients into compliance is our passion, and we take it very seriously.
Who Decides to Disclose Unreported Money?
What Types of Clients Do we Represent?
We represent Attorneys, CPAs, Doctors, Investors, Engineers, Business Owners, Entrepreneurs, Professors, Athletes, Actors, Entry-Level staff, Students, Former/Current IRS Agents and more.
You are not alone, and you are not the only one to find himself or herself in this situation.
Sean M. Golding, JD, LL.M., EA (Board Certified Tax Law Specialist)
Our Managing Partner, Sean M. Golding, JD, LLM, EA earned an LL.M. (Master’s in Tax Law) from the University of Denver and is also an Enrolled Agent (the highest credential awarded by the IRS, and authorizes him to represent clients nationwide.)
Mr. Golding and his team have successfully handled several hundred IRS Offshore/Voluntary Disclosure Procedure cases. Whether it is a simple or complex case, safely getting clients into compliance is our passion, and we take it very seriously.
He is frequently called upon to lecture and write on issues involving IRS Voluntary Disclosure.
Less than 1% of Tax Attorneys Nationwide are Board Certified Tax Law Specialists
The Board Certified Tax Law Specialist exam is offered in many states, and is widely regarded as one of (if not) the hardest tax exam given in the United States for practicing Attorneys. Certification also requires the completion of significant ethics and experience requirements.
In California alone, out of more than 200,000 practicing attorneys (with thousands of attorneys practicing in some area of tax law), less than 350 attorneys are Board Certified Tax Law Specialists.
Beware of Copycat Law Firms
Unlike other attorneys who call themselves specialists or experts in Voluntary Disclosure but are not “Board Certified,” handle 5-10 different areas of tax law, purchase multiple keyword specific domain names, and even practice outside of tax, we are absolutely dedicated to Offshore Voluntary Disclosure.
*Click here to learn the benefits of retaining a Board Certified Tax Law Specialist with advanced tax credentials.
4 Types of IRS Voluntary Disclosure Programs
There are typically four types of IRS Voluntary Disclosure programs, and they include:
- Traditional (IRM) IRS Voluntary Disclosure Program
- Streamlined Domestic Offshore Procedures (SDOP)
- Streamlined Foreign Offshore Procedures (SFOP)
- Reasonable Cause (RC)
Contact Us Today; Let us Help You.
Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver, and has also earned the prestigious Enrolled Agent credential. Mr. Golding is also a Board Certified Tax Law Specialist Attorney (A designation earned by Less than 1% of Attorneys nationwide.)
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