Reporting a Foreign bank and financial accounts FBAR Filing On Your Overseas Accounts| Gordon Law LTD call at (847) 580-1279 There are times when you may have a bank account in another country than the United States. If you belong to this country, you might need to follow some special rules to make sure that the IRS reported all of your money correctly. The IRS will look suspiciously on any overseas accounts and will assume you are hiding money from them if you do not report this kind of income.
If you have any financial interest in an account that is located in another country, you will need to report this account to the Department of Treasury each year. The accounts that would fit under this umbrella include trusts, mutual funds, brokerage accounts, and bank accounts. You will be able to file an FBAR each year to meet this requirement. Right now, the only way that you can file this form is online. You can file through the BSA filing system online to make things a bit easier for you. Who needs to file the FBAR Filing? Any person who lives in the United States will need to file this form if: This person has some financial interest in one or more accounts that they placed outside the US. If you have an account that is in the US, you will not have to report this. If the total value of all your foreign accounts combined is over $10,000 any time through the year, you are reporting. To be a US person you can be a resident, a citizen, or business that is running in this country. It is important to fill out this form every year to avoid any issues with the IRS or with tax fraud.
The exceptions There are a few exceptions to this rule, and you will not need to file an FBAR if you meet one of these requirements. There are a few accounts you can own jointly with your spouse that will not fall under this umbrella, even if you placed the account overseas. Any financial accounts that the government owns will not fall under this either. If you have the signature authority over an account that is overseas, but you do not benefit financially from this account in any way, the IRS will grant you an exception. If you are a company who is from another country but sets up some offices in the United States, it is usually not required that you report the bank accounts. You do not have to report because you are already paying taxes in your country. Also, if you have a retirement account that is using foreign investments, the IRS will usually not ask that you file the report.
In some cases, you may need to report this account, even if you do not make any taxable income on the account. You should check the IRS website to see if this pertains to you or not. For the most part, your reporting obligation will be met when you answer the questions that are on your tax return concerning these foreign accounts and when you fill out your FBAR form. Navigating through this territory can be confusing for most taxpayers and businesses. If you own a bank account in another country, you may want to consider contacting a tax professional. They will be able to look over your information and determine if you must fill out an FBAR or if you qualify for one of the exemptions above. Do not decide on your own that you qualify for the exemption or you could have the IRS knocking on your door. File the FBAR for every year that it is required to meet your reporting requirements. You should never try to hide the money that you have in overseas accounts. The IRS will find this money. When the IRS finds the accounts, they will charge a high penalty on the amount. Talk to your tax professional to figure out the right way to fill out your FBAR each year for the accounts.
Reference: https://www.gordonlawltd.com/tax-law/fbar-filings/