Many citizens of this country who live in other
countries are often not aware that they still need to file a report on their
financial and bank information in the US. This report is known as theFBAR and helps the IRS keep track of all your foreign bank accounts. The
IRS started this filing in 1970 as a way to deter taxpayers from trying to hide
money and not pay their taxes. Some taxpayers wish to not pay as much in their
taxes and just want to get away with as little money as possible. These
individuals will send their money overseas in the hopes of not getting caught
and only paying a bit in taxes that year.
The IRS does not look kindly on individuals who
evade taxes in this way. While you may be able to hide the bank accounts for a
couple of years, once the IRS finds out about these accounts, you will be in a
lot of troubles. The IRS has stepped up their efforts to prevent tax evasion
and is cracking down hard on individuals with these foreign accounts. Hereis some information about the FBAR, who needs to file the form, and some of
the deadlines.
Who should file these forms?
Anyone who has at least $10,000 in a foreign
account at some point during the year. You will need to file the Form 90-22.1.
This process can be tricky to understand. For example, if you usually have a
balance of $9000 in the account but you get a bonus at work and end up with an
extra $1000, you will still need to file the form. This form needs to be filled
out even if you use up that money in one day and it goes back to $9000.
The $10,000 does not have to be in one account.
If you have two accounts and they add up to the $10,000 you will need to report
your foreign accounts. All persons from the United States will need to report
their foreign accounts. These people would include domestic entities, estates,
trusts, resident aliens, and citizens. These requirements will also pertain to
joint accounts and anyone who has a financial interest in the account.
What to file?
If you have an account that meets the
requirements above, you will need to file the FBAR forms. There are a few forms
and pieces of information you must have ready to properly fill out the FBAR. The
information you need includes:
- of the bank The name and the address or other
institution that holds your account
- The kind of account that you are using overseas
- The number of the account so the IRS can check your
facts
- The names that are on your accounts
- The maximum amount of money that was on each account
during the year you are reporting.
You will need to become good at record keeping.
Some years you will need to file and others you will not. Whether you need to
report the account will depend on the amount of money for each account. Keeping
accurate records will assist you in determining if you must file.
Deadlines
You must file your FBAR no later than June 30th
of each year that you qualify. The IRS does not offer extensions to this date.
You also must file the FBAR online as no paper returns are accepted. File the
information on time to avoid issues with the IRS.
Reasons to File the FBAR
The penalties for not filing the FBAR are
severe. The IRS is cracking down on individuals who may be using these accounts
to evade their taxes. You could be charged criminally and civilly for failure
to comply. The penalties could be in excess of $10,000 depending on the amount
of money in the account and the reason for not complying. If you are not
purposely hiding your money overseas to avoid taxes, the IRS will work with you
if you missed the deadlines or did not know about filing the FBAR.
