FBAR Filing: The Fees Associated with Foreign Bank Accounts FBAR Filing On Your Overseas Accounts| Gordon Law LTD call at (847) 580-1279
Just the thought of the IRS is frightening to many people. These people are scared about the IRS coming after them and causing a lot of issues. No one wants to be audited or have more of their money taken out for taxes. But the IRS is part of your life each year if you want to avoid fees and other penalties.
When you are dealing with a foreign bank account, there are a few other things that you will need to take into account. The IRS takes a special interest in these foreign bank accounts. It is easy for individuals to hide money overseas and never report their earnings to the IRS. The IRS requests that you send in this information so all of your earnings can be reported. While you may be able to hide the use of a foreign bank account for some time, once the IRS finds out about this account, you could be in a lot of troubles. For a foreign bank account, you need to fill out the proper paperwork. This paperwork allows you to report the bank account and any money that you receive through it to the IRS to look through. You will need to fill out the FBAR Filing paperwork ahead of time for each year you have the foreign account to avoid issues with fees and penalties. Recently, the IRS in America has intensified how hard it will crack down on your foreign accounts if you do not report these accounts. These steps make it hard to hide the money, and it is usually best to just report the accounts. In many cases, the IRS will audit those taxpayers who are more affluent in the hopes of finding foreign bank accounts. The IRS will determine the fees be based on a percentage of the amount in the account rather than the amount that you made in income. Depending on the amount in the bank account, this fee could be high. Here are a few of the ways that you can avoid a tax penalty on your foreign bank accounts. These include: Standard OVDP—this is going to have a penalty of 27.5%. This amount is still a fee, but it often lower than what you would pay on the amount in your foreign accounts. Many taxpayers will go with this option to save a bit of money on the fees. You will apply this to the highest value on your account. 50 percent penalty—this is an option for those who are already in trouble with the IRS. The IRS is going to apply this amount to the highest balance in the account at a particular time. The Standard OVDP that has an opt-out—working with a tax professional can help you out with this one. The point of this opt out is to get something much lower, like a smaller penalty or a warning letter. You would fill this one out with the tax professional if you do not think the fees are reasonable.
Streamlined foreign offshore procedures—you will be able to get this option if you live outside of the United States. You will be able to receive no penalties on the money if you are not from the United States. Domestic Streamlined OVDP—for this procedure, you will be able just to get one penalty of 5 percent on the money based on the highest balance in the account in six years. You can work with a tax professional to determine how to get this penalty on your bank account. Voluntary disclosure—you may want to try and disclose information to the IRS, even after they find out about the account. When you go along with them, they might reduce the penalty. It is usually best to disclose the account ahead of time to avoid penalties on the foreign bank account.
Reference: https://www.gordonlawltd.com/tax-law/fbar-filings/