With numerous offshore account dramas unfolding recently, the IRS has been taking a closer look at offshore foreign accounts of US taxpayers. Taxpayers who have such financial interests in and/or signature authority over foreign accounts are already required to file a Report of Foreign Bank and Financial Accounts (FBAR) form if the combined value of their financial accounts exceeds $10,000 during the calendar year. Recently IRS sent out a reminder about Form 8938 (Statement of Specified Foreign Financial Assets) that must be filed in addition to the FBAR.
Form 8938 was enacted in 2010 and the IRS imposes big penalties on taxpayers who qualify to fill out the form, but do not do so. Failure to initially file the form when qualified will result in a $10,000 penalty and an additional penalty of $50,000 for continued failure to file; hefty penalties to pay!
If you aren’t sure if you should file a Form 8938 some guidelines are as follows:
- Qualified filers include U.S. Citizens and residents, nonresidents who elect to file a joint income tax return and certain nonresidents who live in a U.S. territory.
- The form 8938 is required when certain thresholds of amounts in foreign accounts is reached: For example: A Married couple, living in the US, filing jointly must file Form 8938 only if their foreign account assets exceed $100,000 on the last day of the tax year, or if they reach $150,000 at any point during the year.
- Thresholds for taxpayers living abroad is higher. Married couples, for instance, are not required to file Form 8938 unless their foreign assets reach $400,000 on the last day of the tax year, or if they reach $600,000 at any point during the year.
- Taxpayers who are not required to file income tax returns do not need to file Form 8938.
For more information on specific thresholds, form instructions etc. you can visit the IRS website page on Foreign Account Tax Compliance Act. If you are or someone you know needs help with FBAR and Offshore Account Disclosures because of failure to file contact a Certified Tax Resolution Specialist or tax attorney today.
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