People with Lawful Permanent Resident (LPR) status, commonly called green card holders, are still taxpayers, despite not being citizens. If you have a green card, you must report all your financial holdings, regardless of where they are located, including your foreign bank and financial account records (FBAR).
Many people do not know about this requirement or they overlook it, but failing to make the required disclosures can lead to IRS penalties. The tax attorneys at our firm know how to handle FBARs for green card holders in Washington DC. We can help you correct any failures to report and ensure that you are compliant going forward.
Tax Obligations of Green Card Holders
The tax obligations of people with Lawful Permanent Resident status are the same as those of U.S. citizens. You must report and pay tax on your worldwide holdings and income. Even if you live outside of the United States, if you retain your lawful permanent residence status, you must file a U.S. tax return and report all of your income and holdings.
The Foreign Account Tax Compliance Act (FACTA) obligates banks to file reports to the IRS on the holdings of U.S. citizens and green card holders. Banks that do not comply face a potential 30% withholding tax on payments from the U.S. and other regulatory consequences. This means that the IRS will know of your foreign accounts, even if you do not report them.
The enforcement of FBAR issues has been an IRS priority. If you were unaware of your FBAR obligations as a green card holder and have unfiled returns or disclosures, contact our Washington DC law office for help in bringing these matters up-to-date.
Reporting Foreign Assets
The obligation to report foreign holdings under FACTA depends on the taxpayer’s marital status, the type of holding, and its value. However, most green card holders with foreign assets will need to make a report under the FBAR rules.
The value threshold for cash is quite low. If you have an aggregate of $10,000 in one or more bank accounts at any point in a tax year, you must file FinCen Form 114. This filing does not go to the IRS, but to the Department of the Treasury’s Financial Crimes Enforcement Network.
Other assets must be reported on IRS Form 8938, Statement of Specified Foreign Assets. Our attorneys can help you determine whether your foreign assets meet the value threshold for reporting.
Delinquent Reporting Procedures for Green Card Holders
Failing to make the required FBAR disclosures can lead to substantial penalties—up to 100 percent of the value of the undisclosed accounts— if the IRS determines that you willfully failed to comply with FBAR requirements. Inadvertent failures to file may be subject to less onerous penalties.
If you have not made required FBAR filings as a green card holder, it is in your interest to address the delinquency. The look-back period is six years, so six years worth of filings is the maximum number you will need to submit. When you can demonstrate that your failure to make the required disclosures was not willful, there are several simplified processes available to help you come into FBAR compliance.
If the IRS is asserting that a green card holder’s failure to comply with FBAR requirements was willful, it is critical to work with an experienced DC attorney to resolve the matter as quickly as possible. A failure to do so could impact your immigration status or prevent you from gaining citizenship.
Work With a Washington DC Attorney to Comply With Your FBAR Obligations as a Green Card Holder
A green card bestows numerous rights and privileges, but it carries the obligation to report all of your worldwide financial holdings to the IRS. That includes the FBAR obligation to report your cash holdings.
Our attorneys can help you meet the obligations under FBAR for green card holders in Washington DC and resolve any delinquent filings and bring you into compliance. Reach out to our tax controversy attorneys today to get started.