Foreign Bank Account Reporting & the IRS
There are very strict Deadlines for filing the reports. If Offshore Accounts are not filed timely, the IRS may issued penalties. Our Board-Certified Tax Law Specialist Team will teach you how to report.
For many U.S. Taxpayers, it oftentimes comes as an unwelcome surprise to learn that they are not in compliance with IRS reporting requirements for foreign bank accounts.
Foreign Account Penalties Can be Pretty Bad (But Not Always)
The reporting requirements for foreign bank accounts vary based on many different factors.
Our Tax Attorneys are providing you with a brief primer on how the process works:
How Do I Report Offshore Accounts?
Common Questions we receive:
What is Foreign Bank Account Reporting?
Foreign Bank Account Reporting is the process of disclosing foreign bank accounts and foreign financial accounts to the U.S. government such as the Internal Revenue Service, the Department of Treasury and Department of Justice.
How do I Reporting Foreign Bank Accounts to the IRS?
Foreign Bank Account Reporting IRS is the process specifically of disclosing your foreign bank accounts and financial accounts return to the Internal Revenue Service.
What is the Foreign Bank Account Reporting Deadline 2019?
Foreign Bank Account Reporting deadlines very based on which specific form the bank accounts are being disclosed on and to which government agency the reporting is due.
Foreign Bank Account Reporting Penalty
Foreign Bank Account Reporting penalties can vary extensively. In a good situation, you may receive a penalty waiver and in the bad situation you could be found to be willful and get hit with the hundred percent penalty on the maximum balance value of your accounts.
Foreign Bank Account Reporting Tax
Foreign Bank Account Reporting tax refers to taxes that may be due on income being generated from the bank accounts, including interest, dividends, Capital gains, royalties, bonus and other various types of income.
Foreign Bank Account Reporting 1040
Foreign Bank Account Reporting 1040 refers specifically to their foreign bank and financial accounts that you Report on your 1040 tax return. Typically, this involves a schedule B, Form 8938, and PFIC Form 8621.
Foreign Bank Account Reporting Signature Authority
Foreign Bank Account Reporting with signature authority refers to accounts that a person may have in which the money in the account is not there’s but they have the ability to sign on behalf of the account owner. Two typical situations include:
· Signing on behalf of a parent or child
· Signing as an employee on behalf of an employer
Which Taxpayers with Foreign Accounts May Have to Report
That depends, but generally any U.S. person, including minors, and including us persons who reside outside of the United States, in any given year that they the threshold requirement on anyone of a number of different forms.
Which Taxpayers with Foreign Assets May Have to Report
Similar to the response above — any us person, including minors, and including us persons who reside outside of the United States, in any given year that they the threshold requirement on anyone of a number of different forms.
How do I report a foreign bank account on my tax return
How a person reports a foreign bank account tax return will vary, depending on if there’re US residents or foreign residents, marital status, and the type of asset or account
Do I need to file an FBAR?
Just because a person has a foreign bank account does not mean they will have to file an FBAR. Generally, a US person has to file an FBAR in any year, in which the aggregate annual total value of all of there for an accounts combined, exceeds $10,000 dollars on any given day of the year.
How Do Foreign Bank Account Cause Large Tax Penalties?
When foreign accounts are not reporting properly Comedy IRS can issue extremely high penalties.
Foreign Bank Account Reporting penalties can vary extensively.
In a good situation, you may receive a penalty waiver and in the bad situation you could be found to be willful and get hit with the hundred percent penalty on the maximum balance value of your accounts.
What is the FBAR Filing Deadline (FBAR Deadline 2018 and FBAR Deadline 2019)?
The FBAR Filing Deadline is on automatic extension. Therefore, a person has until October to timely file an FBAR. It is important to note that these rules and regulations can change it anytime, so you should always double-check before presuming the rule has not changed.
Main Foreign Bank Account Reporting Forms
There are many different types of IRS International Tax Forms which can be used to report different foreign accounts, assets, and investments.
When it comes to Foreign Bank Accounts, generally the three (3) main forms for IRS reporting, include the following:
FBAR (FinCEN 114) – Report of Foreign Bank and Financial Account Form
The FBAR is due when your tax return is due (including extensions). A U.S. person files an FBAR in any year in which the U.S. Person (including entities) has more than $10,000 in annual aggregate total on any day of the year. The form is separate from your tax return, and filed directly with FinCEN (even though the penalties are enforced by the IRS)
- It does not matter if the person is a U.S. or Foreign Resident.
- It does not matter if the person has to also file a tax return.
- It does not matter if the money belongs to the person or the person is merely a signatory.
In other words, if your name or entity/trust/estate name is associated with foreign accounts, and the total value of the accounts exceed $10,000 on any given day of the year – you almost always file the FBAR.
Form 8938 FATCA (Foreign Account Tax Compliance Act)
FATCA Form 8938 is part of your tax return. Therefore, if you are below the threshold for filing a tax return, you do not have to file form 8938 separately. FATCA is generally more expansive than the FBAR, since it includes assets as well, such as direct ownership of stock.
The thresholds for filing Form 8938 vary based on whether you file single or married filing jointly, and whether you reside in the U.S. or are a Foreign Resident. In addition, Form 8938 requires additional information, such as the amount of income you earned, the type of income you earned, and the source of income you earned.
Form 8621 – Passive Foreign Investment Companies (PFIC)
Unlike the other two forms, Form 8621 can be very complicated, depending on whether you had any excess distributions. When it comes to U.S. Persons and form 8621, generally the form is filed in any year a person had more than $25,000/$50,000 in certain PFICs — even if they had no distributions from the PFIC.
The way many people get caught in the PFIC matrix is because they have ownership in foreign mutual funds, which are considered PFICs — even though you probably do not consider your investment in foreign mutual funds to mean you have ownership of a PFIC.
If you have foreign mutual funds, or ownership in a foreign corporation that generates significant passive income, or is comprised of significant passive assets, you should probably speak with an experienced International Tax Attorney to assess your specific tax situation.
*Of course, as with all tax related issues – various exceptions, exclusions & limitations may apply to the filing and reporting requirements of each form.
What if I an Out of IRS Compliance?
When you have not met your prior year IRS foreign bank account compliance obligations, your best options are either the Traditional IRS Voluntary Disclosure Program, or one of the Streamlined Offshore Disclosure Programs.
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.
Golding & Golding: Board Certified Tax Law Specialist
We specialize exclusively in international tax, and specifically IRS offshore disclosure.
We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.
- Learn more about the Board-Certified Tax Lawyer Specialist credential
- Learn more about the Enrolled Agent credential
- Learn more about Golding & Golding’s Case Accomplishments
- Learn more about Golding & Golding Testimonials from prior clients
*Beware of less experienced copycat firms misleading the public about the streamlined procedures and IRS offshore disclosure.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.