You ought to learn the fundamentals of United States tax code and FBAR reporting, especially if you live in or near New York, Los Angeles, or anywhere within the taxing territory of the United States and also have monetary possessions abroad. Not just citizens of the United States who gain their income outside the States are obligated to pay tax; resident aliens also have to pay tax on both their domestic and offshore income.
In the US, laws can be put into effect by legislative bodies at the governmental, state or local level. The U.S. law is so intricate that in order to avoid mistakes as well as criminal charges, you might wish to ask yourself “Do I have to speak with a tax attorney offering FBAR services in the area near me?” Lots of taxpayers require the support of an attorney when gathering their files for FBAR reporting. Be certain that an experienced and competent FBAR lawyer in or near Los Angeles can help you get into compliance with all Unites States legislations referring to foreign nationals’ earnings, investments, as well as business activities in the US.
If you were not aware of your FBAR responsibilities, it’s time to learn more about FBAR reporting.
What is FBAR filing?
Also called FBAR or the Foreign Bank Account Report, The Record of Foreign Bank and Financial Accounts is a yearly report you need to file imposed by the Bank Secrecy Act. This declaring obligation was established to assist the United States government in stopping shady foreign transactions and discover those taxpayers who attempt to escape or avoid federal income tax.
Do I have to submit the FBAR report?
Non-resident aliens need to pay tax on any kind of revenue from a United States source and don’t need to pay income tax on their offshore earnings. Additionally, they don’t have to report international bank accounts they have abroad.
However, resident aliens and U.S. nationals have to fulfill their tax obligation and report their overseas earnings. This includes foreign-issued life insurance policies, as well as foreign pension funds. Moreover, these individuals need to disclose specific offshore economic resources.
As a resident alien or a United States citizen, you are subject to the FBAR filing in case you have at least 10,000 dollars (or its foreign equivalent) of maximum value or aggregate maximum value in overseas bank accounts at any point during a single calendar year.
Individuals, businesses and green card holders who have a financial interest in, or a signature authority over an overseas financial account all have to file the FBAR, regardless of whether they have monetary or non-monetary assets of the specified amount in one or more accounts.
Is there a due date?
For those living in the US, the FBAR filing deadline is the same as individual income tax returns, which is April 15. Those who live abroad need to file their FBAR until June 15, which coincides with the expat tax filing deadline.
Anyone who misses the deadline is allowed to file the FBAR report until October 15 without having to fulfill any specific requests. It’s important to know that you don’t submit the FBAR with your federal tax return nor does the six-month extension applies to the federal income tax return filing deadline.
How can I submit the FBAR?
In order to file your FBAR FinCEN Report 114, you need to access the BSA E-Filing System. The only way to submit the FBAR is online and you can find all the information on the requirements on the IRS website.
Basically, you will need to disclose the name, type and number of the financial account(s), the name on the account(s), the total value for every account (the amount needs to be converted into US dollars), as well as the name and address of the institution responsible for the account maintenance.
Is it possible to be excluded from the FBAR reporting?
According to the FBAR instructions, some of the filing exceptions are: offshore accounts that are owned by a governmental entity or an international institution, foreign accounts that are jointly owned by spouses, US persons who are included in a consolidated FBAR, as well as certain individuals who have signature authority over a foreign account but don’t have any financial interest in it, etc. To find out more, consult a skilled tax attorney to aid you in determining if you have an FBAR filing requirement.
What happens in case I have failed to report my previous FBARs?
In this case, you ought to know that you can’t just file all your late FBARs on your own. That is called a silent or quiet disclosure, and it is prohibited so the IRS can launch an investigation, which exposes you to criminal prosecution and a 100 percent fine.
In order to clarify why the filing is late, you could submit your explanation or choose one of the given reasons for the delay on your electronic form. This is possible in case the IRS hasn’t called you or you are not under a civil examination or a criminal investigation.
There are other possibilities, such as The Offshore Voluntary Disclosure Program (OVDP), which will be available until September 28, 2018, and the Streamlined Filing Compliance Procedures, which keeps being available for the taxpayers with unreported offshore property or earnings. Speak with a well versed international tax attorney in/near Los Angeles to find the best solution for disclosing your international account(s) legitimately.
Exactly how serious are the FBAR penalties?
Criminal and civil penalties can be quite severe if the Internal Revenue Service declares your violation was willful. You can face the penalty that could go as high as $100,000 or 50 percent of the balance in your offshore account(s) at the time of the violation. You may have to pay the penalty for every account and every year the account was unreported.
If the Internal Revenue Service finds that the violation was unintentional, the fine could go up to $10,000 per offense and even though it can be imposed for each unrevealed international account and each year of the violation, the IRS usually imposes only a $10,000 fine. On the other hand, criminal penalties can consist of a five-year jail sentence and/or could lead to a fine of as much as $250,000.
Can an FBAR legal representative near my location help me?
In case you have neglected one or several FBARs, it is highly recommended that you speak to an attorney. If you live in Los Angeles, you can schedule an appointment with our skilled international tax attorney to further discuss your FBAR reporting. If you are beyond Los Angeles, we offer 1-hour consultation via skype or phone completely free of charge. It’s important to have a reliable attorney who could help decrease your tax obligation liabilities and fines and, if possible, help you avoid prosecution.