By now, most of us that fall into the above titled category for reporting Foreign Bank Accounts Reporting, FBAR, and hopefully met the June 30, 2015 filing deadline of Form 114, “Report of Foreign Bank and Financial Accounts”, that is filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department. As you recall, this form must be filed electronically and is only available online through the BSA E-Filing System website and there is no extension of time for filing on the June 30, 2015 deadline for calendar year 2014. Failure to timely file has heavy penalties and an exception for late filing may apply to your particular situation. If you have missed this important deadline, call us at your very earliest time so that we may assist you with an early resolution.
Record Filing Form 114:
FBAR filings have risen dramatically in recent years as FATCA phases in and other international compliance efforts have raised awareness among individuals with offshore assets. According to data from FinCEN, FBAR filings exceeded 1 million for the first time in calendar year 2014 and rose nine of the last 10 years from about 280,000 back in 2005.
The qualifying individuals listed in this article’s title, with foreign assets, even relatively small amounts should check to see if you have yet another relatively unknown filing requirement. Qualifying individuals also is intended to include American Expats, U.S. citizens and Green Card Holder living and working overseas may also have to file the FATCA-related Form 8938 with their individual tax returns by the yearly June 15 deadline.
“… FBAR and FATCA filing requirements make it tougher for that relatively small number of taxpayers trying to hide assets and income offshore,” said IRS Commissioner John Koskinen. “Taxpayers are encouraged to review the rules and disclose their offshore assets.”
FATCA refers to the Foreign Account Tax Compliance Act. The law addresses tax non-compliance by U.S. taxpayers with foreign accounts by focusing on reporting by U.S. taxpayers and foreign financial institutions.
In general, federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax returns. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and generally requires U.S. citizens to report the country in which each account is located.
In addition, certain taxpayers may also have to complete and attach to their return, “Statement of Special Foreign Financial Assets”. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds.
NB: The FATCA Form 8938 requirement does not replace or otherwise affect a taxpayer’s obligation to file the above-mentioned FBAR Form 114. A brief comparison of the two filing requirements is available below. If you find yourself unsure of your filing requirements or have not made the timely filing, please call us for a private consultation to get this matter resolved.
Comparison of Form 8938 and FBAR Requirements:
The new Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file FinCEN Form 114 (Report of Foreign Bank and Financial Accounts). Individuals must file each form for which they meet the relevant reporting threshold.
Types of Foreign Assets and Whether They are Reportable