If you have a financial account in a foreign country with $10,000 or more in it, you are required to report the amount to the IRS once a year. The deadline for filing IRS Form 114, the Foreign Bank Account Report (i.e. the “FBAR”), has always been June 30.
Recent legislation that President Obama signed into law, the Surface Transportation and Veterans Health Care Choice Improvement Act, had a provision to also change the FBAR due date. In addition to changing the date to April 15, which is more in line with other common due dates for various types of tax returns, there is a six-month extension available, making that deadline October 16. But just like other tax filing deadlines, you must request the extension.
The new rule also waives any penalties for someone new to the process who is filing for the first time, a generous provision that will help anyone confused by the rules for FBAR filing. If you’d like to read the IRS guidance on FBARs, you can find it here.
To clarify, when we’re discussing foreign accounts, we do mean traditional bank accounts as well as other financial accounts. Even fairly average working folks may have a foreign bank account. If you’ve immigrated to the states from a foreign country, you may still have a bank account back home.
Or perhaps you have a second home in Europe or a tropical island (lucky you) and you maintain an account there – which is understandable. You may also own an investment account, or have a business account or mutual fund in a foreign country. Depending on how much money is in those accounts, and how those accounts are connected, you may be required to file an FBAR for each such account.
Just filling out the forms isn’t terribly difficult if you’ve got some financial knack and especially if you’re accustomed to filing your own taxes. We do, though, see people who have more complicated financial pictures and need some help figuring out how to report foreign assets. It can be especially complicated if your business, spouse, child or ex-spouse are involved. That’s when you may need some help – and where we can give you legal advice on how and what to report.
The FBAR form may not be all that’s required – and that’s another thing we can help you untangle. The IRS may also require you to fill out Form 8938, Statement of Specified Foreign Financial Assets, depending on what assets you own abroad.
Taxes aren’t ever going to be fun – well, not for most folks. But we speak it and know it, and we can help you with any matters involving FBARs or Form 8938.Contact me, Nathan Vinson, at email@example.com or (270) 781-6500 for assistance in handling your tax matters. I’m happy to help.