The 15th June deadline for this year’s US expat taxes is fast approaching but it appears that some expats may be headed for trouble further down the line.
According to a recent survey of 200 American expats, 62% are unaware of the Report of Foreign Bank and Financial Accounts (FBAR) requirements.
“This is very worrying,” said David McKeegan of Greenback Expat Tax Services. “If these individuals do not know they need to file their Foreign Bank Account Reports they could unknowingly be putting their savings at risk and could face some very large penalties in the future.”
What is the FBAR Requirement?
The US Department of Treasury prescribes that all US citizens who hold, or have a financial interest, in a foreign bank account that has held $10,000 or more at any time during the calendar year are required to report details of their financial interests in this account to the US Treasury on an annual basis. The deadline for receipt of this report is the 30th June, 15 days after the due date for filing US expat taxes. Unlike the tax deadline, no extensions are permitted for the filing of FBAR and the penalty for failing to comply can be up to 50% of the account’s value.
What is the purpose of FBAR?
The FBAR tool was enforced to assist the US government to identify individuals who may be using foreign bank accounts to avoid paying tax in the US. Legal authorities can use FBAR to trace funds or identify tax evasion. Although the primary target of such investigations is not necessary expats, US citizens living abroad are still required to file the FBAR if they hold foreign accounts that hold $10,000 USD or more.
Where can I find an FBAR form?
FBAR forms are available online via the IRS. gov website in PDF format or by calling the IRS on t 800-829-3676.
“It is very important for US expats to file the FBAR accurately and on time. Failure to file can lead to significant penalties.” said David McKeegan of Greenback Expat Tax Services.
“If you have not been filing your US expat taxes while living abroad or did not know about the FBAR requirement you should try to come forward now, before the end of the 2011 Offshore Voluntary Disclosure Initiative (OVDI), which ends on August 31, 2011. This is your best opportunity to get caught up on your expatriate tax obligations and disclose your overseas bank accounts. No one knows what of how the penalties will be enforced in the future.”
For further information about the FBAR process see the IRS website.