Easy Reporting Of Foreign Bank Accounts

By Author: Alice Coope
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If you are an American citizen then the Foreign Bank and Financial Account Report (FBAR) is a form that IRS needs you to file in order to comply with the needs of reporting foreign bank account and financial accounts to the United States tax authorities. This is applicable to any person residing in United States having a financial interest, signature or any other authority on any financial account in a foreign country. Furthermore, it is applicable if the aggregate value of all these countries surpasses US$10,000 anytime in the year. The form that you have to fill out per year is officially termed as Treasury Department Form 90-22.1.

Incomes that are generated inside these foreign bank accounts are reported on the person’s individual tax return on the year the income is earned. Therefore, you will have to report the foreign income based on the kind of income that is being generated, For instance, dividends and incomes would be reported on Schedule B, capital gains on Schedule ...
... C and so on. Hence, if you are going to earn on interest and dividends on these accounts then is it important to check the box in Part III Line 7A of Schedule B and indicate the country/countries where you hold accounts.

What kind of foreign bank and financial accounts can be reported?

The following kinds of financial accounts us required to be reported on the Foreign Bank Account Report, if you qualify for it:-

* Bank accounts (checking and savings)

* Investment accounts

* Mutual funds

* Retirement and pension accounts

* Securities and other brokerage accounts

* Life insurance and annuities having cash value

When do you need to file the form?

The Treasury Form 90-22.1 is due June 30th every year when American citizens are asked to report the foreign bank accounts they are holding. Quoting the Internal Revenue Manual section 4.26.16.3.7 it is highlighted that the “The FBAR is considered filed when it is received in Detroit, not when it is postmarked."

What happens when you miss the filing deadline?

An individual needs to file the TD F 90-22.1 to report about the foreign bank accounts that he is holding presently, even if he missed the June 30th deadline. This is because the state has formulated stiff penalties for willfully failing to file this report. This is where you need help from expert tax planning service providers in United States to avert the penalties and smoothly conduct the process of FBAR.

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