With tax season underway, don’t forget your annual FBAR report is due in April too.
Filing your Report of Foreign Bank and Financial Accounts (FBAR) is an annual requirement. Since 1970, the Bank Secrecy Act decrees that certain U.S. persons must file a FBAR report. Your FBAR report is due in April, but is not bundled with your federal income tax return. While your tax return will report income earned from your foreign bank accounts, the FBAR provides identifying information on assets in which you have an interest that reside outside of the country.
The Internal Revenue Services (IRS) works to detect and deter global tax crime like money laundering, tax fraud, and tax evasion. In addition to the Bank Secrecy Act, the IRS relies on the Foreign Account Tax Compliance Act (FATCA). While the FBAR is largely seen as the reporting tool for taxpayers, a FATCA may be required as well. Foreign institutions that cater to U.S. taxpayers must file FATCA reports directly with the IRS.
If you are new to foreign holdings, you may not have filed an FBAR in the past. An FBAR is required in the following circumstances:
- A U.S. person who has signature authority, financial interest, or ownership over one or more foreign accounts may need to file an FBAR.
- An FBAR is required if the value of any one or all of your offshore tax or other accounts exceeds $10,000 at any time of the year. It is a common mistake to assume the value threshold is only considered at the conclusion of the calendar year. As well, this means if the aggregate value of three smaller accounts exceeds $10,000, an FBAR is required.
- Jointly owned foreign assets that meet the threshold requirement must be reported by each party with signature authority or ownership of a financial interest.
- In most cases, spouses are not required to file a separate FBAR.
On your FBAR, you will need to calculate and report the greatest value of monies or other assets held by foreign entities during the year in U.S. dollars.
Filing an FBAR is an easy way to stay in compliance and help yourself steer clear of an IRS civil tax audit. And there is a bonus--if you do not make the April 15 filing deadline, there is an automatic extension to October 15 of each year. When in doubt on your FBAR, FATCA or tax reporting requirements, reach out to an experienced tax attorney for help.
Skilled legal representation with tax litigation, compliance, and foreign bank accounts
Serving local and international clients from offices in Chicago and Cleveland, the legal team at Robert J. Fedor, Esq., LLC helps you respond strategically to questions about IRS audits, bankruptcy, or allegations of criminal tax fraud. Call 800-579-0997 or contact us today.