What to Know About Foreign Bank Accounts in CA?

On: June 26, 2020

If you are a U.S citizen and you have any type of bank account located outside of the U.S, then you might be familiar with FBAR (Foreign Bank Account Report), but if not, then according to the bank secrecy act you are required to report it to the IRS. Even if the foreign account does not generate taxable income, or it holds funds generated abroad with foreign investments. This can be done by filling out form TDF 90-22.1, also known as the Report of Foreign Bank Financial Account (FBAR). Failing to do so may have serious penalties or even criminal charges. This does not mean that you have to pay taxes on that separately, it just means you have to declare it. You only have to pay taxes once any transaction is done from that account. The IRS has been given civil enforcement over FBAR since 2003. So if you have a foreign account and have not declared it, you should do so right away. The U.S tax system is applicable globally, which means the IRS requires foreign banks to comply with their regulatory system and share information of all U.S citizen account holders with the IRS. Seek professional help at Leading Tax Group to get your situation evaluated and find the right solution to your problem and avoid unnecessary trouble. The U.S government requires FBAR because the tax system in every country is different and may not be as strict as the IRS. Also, the government does not want the U.S citizens to try to evade taxes or be involved in any illegal activity by using foreign bank accounts in any way. The IRS requires FBAR to be filled out every year by any U.S citizen having a financial account outside the United States. Failing to do this could have serious implications. Any person who has a foreign account(s) and at any point of the year the total value of all accounts (combined) exceed 10,000 dollars is required to file FBAR and declare his accounts. So if you have an account with $5000 and another one with a $6000 fund, then you have to declare both.

Amnesty Program for Non-Resident U.S Citizens

The “U.S citizen” as per IRS is a person or an individual who is a United States resident (having green card even if not present in the U.S). However, an amnesty program for non-resident U.S citizens has been implemented by the IRS recently (including dual nationality holders) who unknowingly couldn’t file FBAR but wish to do so when they found out about the requirement. Individuals who have not yet filed U.S tax returns are also eligible for this program. This new Filing Compliance Procedure has been effective since September 1, 2012. Those eligible for the new procedures will have to file back tax returns and FBARs for only three years instead of the usual eight years, according to the Offshore Disclosure Program (OVDP), which was the older IRS program. Plus, FBAR or other penalties will not be posed by the IRS. To qualify for the new Filling Program, you must have lived outside of the U.S since January 1, 2009, and thus cannot have filed a U.S. tax return during the same period. The FBAR is not filed with a federal income tax return, rather as a separate filing that has to be submitted by June 30 following the year of reporting. Electronic filing of FBAR forms is compulsory as of July 1, 2012. If you have unreported foreign accounts, always make sure to call Leading Tax Group and don’t attempt to do it yourself.