A recent IRS Press Release aims to remind taxpayers with foreign bank accounts and assets that their filing deadline to report them to the IRS is June 17, 2013. This applies to U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2012 and military personnel outside the country. Also, some U.S. citizens abroad may be required to submit financial asset information along with their tax return as well as file the Foreign Bank and Financial Accounts (FBAR) report due June 30, 2013.
Here is some important information citizens abroad need to know about offshore reporting:
- Offshore Account Reporting: U.S. citizens and resident aliens are required by federal law to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to fill out and attach Schedule B to their tax return. Part III of Schedule B asks about foreign accounts, such as bank and securities accounts, and generally requires U.S. citizens to report the country in which each account is located.
- The Foreign Account Tax Compliance Act (FATCA) Requirement: According to FATCA, U.S. taxpayers with specified foreign financial assets (exceeding certain thresholds) need to report those assets to the IRS using Form 8938, Statement of Foreign Financial Assets. The form gets attached to the federal income tax return.
- FBAR filing: Currently, taxpayers are required to report all income from domestic and foreign sources. In addition, taxpayers who have a financial interest in or signature authority over foreign accounts are required to file a Form TD F 90-22.1, (FBAR Report) if the aggregate value of all such financial accounts exceeds $10,000 at any time during the calendar year. IMPORTANT NOTE: This report is due to the Treasury Department by June 30, 2013.
If this information sounds a bit confusing, that’s because it is. Due to increases in IRS enforcement on offshore bank accounts, however, it is extremely crucial for you to understand everything you are required to do by law. If you are unsure what your offshore filing requirements are, your best defense is to contact an expert tax professional who is well-versed in offshore account compliance for guidance. Failure to comply with IRS regulations regarding FBAR will result in severe tax penalties that could ruin your financial well-being.
When it comes to offshore account disclosure, don’t mess around with the IRS; seek tax relief now to disclose your foreign funds immediately! If you have yet to disclose your offshore accounts to the IRS, you will need to hire an expert IRS tax attorney to help you with the following:
- Seek redress through the penalty abatement process (if applicable)
- Minimize or reduce the impact of IRS penalties that can exceed 100% of the value of the asset plus interest
- Work to negotiate the best offshore tax settlement for your situation
More Tax Help, IRS News and Tax Relief Tips:
- Swiss Bankers Caught Hiding Offshore Accounts from IRS
- Cayman Island Tax Haven No Longer Secret Due to FATCA
- IRS Releases 2012 Data Book
- IRS Budget Cuts Hurt Offshore Tax Collection
- Swiss Adopt Plan to Cooperate with U.S. and Avoid Charges