Foreign Bank Account Report Made Easy

By Author: Alice Coope
Total Articles: 213
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The offshore account disclosure over the past few years have become a popular buzzword. The moment the U.S government urged the UBS Switzerland to disclose the name of the entities in U.S who had undisclosed accounts, it propelled the IRS to commence the OVDP (Overseas Voluntary Disclosure Program) initiatives. These initiatives in turn propelled a count of approximately 30,000 taxpayers to report their overseas holdings which they otherwise were not disclosed.

These concerned taxpayers of Foreign Bank Account reporting i.e. FBAR could have also saved themselves from tension by reporting their overseas financial holdings earlier as stated by the law. Whenever a financial foreign bank account or foreign asset surpasses, two forms should be filed. They are:

* The Report of Foreign Bank and Financial Accounts

* The Statement of Specified Foreign Financial Assets

FBAR is necessary for a taxpayer who ...
... is a domestic entity or belongs to U.S with a financial interest in or a signature authority over an account that records a balance of $10,000 or more at any point of time in a year. There is an informational form that is individually due from other tax filings, the FBAR needs to be received by the government by June 30th of every year to the IRS. The form is named Form TDF 90-22.1. In a situation where an individual has more than one account then the aggregate of the value of the accounts will be considered. However, if taxpayers fail the FBAR reporting then they need to witness harsh penalties. Any kind of unintentional or accidental failure can lead to a penalty of $10,000 per year. In case of intentional aversion to the FBAR filing results in penalties up to $100,000 or 50% of the account balances, whichever is more.

The 2012 FBAR program needs the following from the taxpayers:

* To file 7 years of back tax returns indicating the unreported foreign earnings

* Estimate the interest every year on the unpaid tax

* Applying 20 percent precision related penalty or 25 percent of delinquency penalty

* Applying 27.5 percent penalty on the basis of the highest balance of the foreign account over the last 8 years

Therefore, in case you are involved with in any financial transactions or have overseas financial holdings it is essential that you participate in FBAR reporting with the sound advice of a tax planning agency that will offer perceptive insights and useful suggestions.

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