Each year, American taxpayers are required to report certain assets that they hold overseas to the United States Department of the Treasury through Form 114. These reports—known as Reports of Foreign Bank and Financial Accounts (FBAR)—are mandatory for individuals who hold a certain amount of financial assets overseas in any given year.
These reports exist to aid the federal government in preventing tax evasion. This approach has resulted in situations where honest errors produce an inquiry. An experienced tax lawyer could help you deal with complex FBAR reporting issues. Let a Washington DC FBAR lawyer review your foreign accounts and advise you on whether you are at risk for penalties.
When it comes to filing FBAR reports, a large number of American citizens and residents are required to comply. These rules specifically apply to a “United States person,” which covers more taxpayers than just natural-born citizens. A United States person could also include domestic business entities or lawful foreign residents. Trusts and estates could also face these compliance requirements. FBAR does not include foreign property ownership, only foreign financial accounts.
Not every account will necessitate an FBAR filing. Under federal law, it is only necessary to report assets valued more than $10,000. This value is determined in the aggregate and applies to all assets held on any given day. If it becomes necessary to file an FBAR, a taxpayer must provide notice of all their foreign accounts regardless of the individual balances.
There are certain accounts and assets that hold exceptions to FBAR reporting requirements. The most common exception is an account maintained by a U.S. military banking facility. However, assets held in overseas pensions and retirement plans are reported on an FBAR.
Given the various requirements and exceptions that come with FBAR compliance, it is useful to enlist the help of a Washington DC overseas bank account lawyer who could help someone avoid future controversies.
It is necessary to complete FBAR reporting requirements annually for each year that a taxpayer meets the asset threshold. This report must be filed online through the Financial Crimes Enforcement Network (FinCEN). Unlike other asset reporting requirements, this report is not filed along with a tax return.
The deadline to file an FBAR is April 15 of the year following the reporting period. However, there is flexibility regarding this deadline. FinCEN will grant an automatic extension until October 15 with no extension request needed. In the past, FinCEN has granted longer automatic extensions with no extension request needed for the victims of natural disasters.
A local FBAR attorney could advise a taxpayer on how best to report their foreign bank accounts and their options for addressing past reporting issues.
If you have questions about how to report your overseas assets through an FBAR filing, you do not need to go through the process by yourself. An attorney is available to help you avoid any future questioning by the IRS by ironing out any reporting issues you might face. Learn more about your overseas tax filing obligations by speaking to a Washington DC FBAR lawyer who has extensive knowledge on these matters.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Vienna, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.