Every taxpayer who opens a foreign financial account should know this The United States Taxes citizens and other US persons on worldwide income. This means that income earned offshore and deposited in a foreign account is subject to US income taxes and various foreign information reporting requirements.
A taxpayer may be asked to submit a Foreign Bank and Financial Accounts (FBAR) report (FinCen Form 114). It is common for taxpayers to miss an FBAR filing if they are unfamiliar with FBAR regulations. Be aware, however, that failure to prepare an FBAR report may not exempt a taxpayer from penalties for making mistakes.
There are two categories of FBAR punishments based on the offender’s mindset: premeditated punishments and non-premeditated punishments.
The IRS may require a taxpayer to determine their intent if they violate FBAR rules:
- The total value of the unreported accounts.
- The amount of revenue generated on all accounts.
- Whether the taxpayer had assistance from a CPA or other professional in filing their taxes.
- Whether the tax advisor asked about your foreign income.
- The length of time the taxpayer was considered a US Person.
- The first time the taxpayer had to file a tax return.
To be held responsible for the willful violation of FBAR rules, the defendant must have had access to information that would have increased the likelihood that he or she produced an accurate and timely FBAR report that was intentionally ignored or ignored.
To arrange confidential advice on your FBAR reporting requirements, call our law firm at (800) 681-1295 or arrange an initial consultation at a discounted rate on the contact page on our website.
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Dave Klasing Esq. MS-Tax CPA
SOURCE Tax Law Offices of David W. Klasing, PC