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FBAR fubar!!

FBAR fubar!!

Old Mar 29th 2019, 9:14 pm
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Default FBAR fubar!!

Hey guys,

Does anyone have any experience with back filing FBAR? Been a dual US/UK citizen for 9 years and am only just hearing about this Was using Turbotax for the first time just now and the question came up , and several hours of research later I am stressing big time.

I have bank accounts in the UK from before I moved to the US, but as I understand it I need to report everything, no matter how old. I've been reading about 'Streamlined Filing Procedures' where you can retrospectively file the last six years . Has anyone any personal experience of this doing this? Just pulling all the info together from the UK for the past 6 years is going to be a delight on its own, before I even get to the US authorities. Should I look for a decent accountant to help? Anyone know one in the Raleigh area.

Help!

Thanks

Dave


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Old Mar 29th 2019, 10:04 pm
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Default Re: FBAR fubar!!

I am not a tax professional however I do my own business taxes and have interacted with the IRS on many occasions.
Therefore in my opinion...

You've apparently found the information on the streamlining process.
Just follow it and don't stress. You are unlikely to get into any trouble unless you were being willfully fraudulent.
Of course if you Google you'll see many horror stories/dire warnings from tax pros offering their expensive services.

I'd just do it myself and save the money but it depends on how confident you are following instructions. It's up to you whether @ $500 is worth the peace of mind.

If you do end up having penalties/fees applied by the IRS, for anything, use the 'get out of jail card' for first timers. (First Time Abatement)
https://www.aicpa.org/interestareas/...abatement.html

Basically you write them a nice letter saying you made a mistake and please don't fine me.
It works.

Last edited by Hotscot; Mar 29th 2019 at 10:06 pm.
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Old Mar 29th 2019, 11:28 pm
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Default Re: FBAR fubar!!

Cheers Hotscot; funnily enough, all the horror stories I was reading about were linked to people offering their professional services 0
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Old Mar 30th 2019, 12:17 am
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Default Re: FBAR fubar!!

Yup!
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Old Mar 30th 2019, 10:17 am
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Default Re: FBAR fubar!!

Originally Posted by col_dan View Post
Does anyone have any experience with back filing FBAR? Been a dual US/UK citizen for 9 years and am only just hearing about this Was using Turbotax for the first time just now and the question came up , and several hours of research later I am stressing big time.

I have bank accounts in the UK from before I moved to the US, but as I understand it I need to report everything, no matter how old. I've been reading about 'Streamlined Filing Procedures' where you can retrospectively file the last six years . Has anyone any personal experience of this doing this? Just pulling all the info together from the UK for the past 6 years is going to be a delight on its own, before I even get to the US authorities. Should I look for a decent accountant to help? Anyone know one in the Raleigh area.
The post is slightly confusing. Have you neglected to file the FBAR only or have you also neglected to declare interest from UK bank accounts on the 1040(s)?

Either way, FBAR correction is simple. If the FBAR filed is being submitted for a missed prior year, on the first page of the FBAR there is a drop down box for explanations as to why it is being submitted late. One option is "didn't know". You may have to do this for each of the last 6 years you failed to file. Unless the amounts are substantial, you'll likely hear nothing more. If it's FBARs only, there is no need for the Streamlined procedures.

If there was UK interest from the accounts, and you didn't report it, then the task becomes more involved with the need to correct the last 3 years of 1040(s).
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Old Mar 30th 2019, 1:10 pm
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Default Re: FBAR fubar!!

Thanks; unfortunately the latter - not huge sums or anything, but don't really want it hanging out there you know...
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Old Mar 30th 2019, 2:46 pm
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Default Re: FBAR fubar!!

OAP

To clarify. If only delinquent FBAR's one does not need to use the streamline process? Just the following?

https://www.irs.gov/individuals/inte...ion-procedures

Good to know. Simplify's matters.
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Old Mar 30th 2019, 6:21 pm
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Default Re: FBAR fubar!!

Originally Posted by col_dan View Post
Thanks; unfortunately the latter - not huge sums or anything, but don't really want it hanging out there you know...
Have you been tax resident in the US for all 9 years? If so and you wish to correct those years, you would use the Streamlined Offshore Domestic Procedures.

https://www.irs.gov/individuals/inte...-united-states

For those resident in the US, there is a bit of a sting in the tail - mainly the 5% penalty.

"The Title 26 miscellaneous offshore penalty is equal to 5 percent of the highest aggregate balance/value of the taxpayer’s foreign financial assets that are subject to the miscellaneous offshore penalty during the years in the covered tax return period and the covered FBAR period. For this purpose, the highest aggregate balance/value is determined by aggregating the year-end account balances and year-end asset values of all the foreign financial assets subject to the miscellaneous offshore penalty for each of the years in the covered tax return period and the covered FBAR period and selecting the highest aggregate balance/value from among those years."

FBARs may still be filed by the individual. You'll also need to file Form 14654 along with the past 3 delinquent tax years.
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Old Mar 30th 2019, 6:57 pm
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Default Re: FBAR fubar!!

An FBAR reports many more kinds of accounts than just bank accounts. Have you included all UK income, filed an 8938 (if required) and answered Schedule B, Part III correctly each year?
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Old Mar 30th 2019, 9:23 pm
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Default Re: FBAR fubar!!

Damn, that's 5% for each of the three years!! Bloody hell that's a bit harsh, borderline criminal It makes me wonder why my so called accountant never flagged any of this up in the years he did my taxes???
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Old Mar 30th 2019, 10:44 pm
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Default Re: FBAR fubar!!

Originally Posted by col_dan View Post
Damn, that's 5% for each of the three years!! Bloody hell that's a bit harsh, borderline criminal It makes me wonder why my so called accountant never flagged any of this up in the years he did my taxes???

Remember, First Time Abatement....
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Old Mar 31st 2019, 10:53 am
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Default Re: FBAR fubar!!

Originally Posted by Hotscot View Post
Remember, First Time Abatement....
According to the link you provided in reply #2, the First Time Abatement only applies to 1 year.

"FTA only applies to one tax year/period. If a request for penalty relief is being considered for two or more tax years/periods and the earliest tax year/period meets FTA criteria, penalty relief based on FTA only applies to the earliest tax year/period."

Streamlined is for 3 years returns and 6 years FBAR, and is viewed as a single package. Would the term "period" include the Streamlined package as a whole? I was under the impression the reasonable cause claim of FTA is the basis of the Streamlined procedures, and the reason for the form 14654.

@ col_dan
"Damn, that's 5% for each of the three years!! Bloody hell that's a bit harsh, borderline criminal"

Do some research to make sure, in fact, the instructions aren't indicating the 5% penalty applies only to the 1 year with the highest balance/value among "each of the years in the covered tax return period and the covered FBAR period".

As for borderline criminal, the basic assumption is any offshore account is being used for criminal/evasion purposes until the account holder certifies the account by filing the FBAR with the Financial Crimes Enforcement Network (FinCEN).
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Old Mar 31st 2019, 2:49 pm
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Default Re: FBAR fubar!!

Thanks again to the both of you for providing comments/insight; this whole thing has knocked me for six a bit (understatement)
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Old Mar 31st 2019, 2:53 pm
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Default Re: FBAR fubar!!

"As for borderline criminal, the basic assumption is any offshore account is being used for criminal/evasion purposes until the account holder certifies the account by filing the FBAR with the Financial Crimes Enforcement Network (FinCEN). "

The irony being that these are accounts I had in the normal course of day to day living in the UK before I became a US Citizen. Not that they would know that I suppose!
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Old Mar 31st 2019, 2:57 pm
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Default Re: FBAR fubar!!

OAP

You make good points as always.
Everything is worth a try. There's a certain amount of variation/flexibility involved in the interpretation, by the IRS.
And even if, strictly, FTA can only be applied to a single tax year it's better than nothing.

If it was me and the numbers were significant I would perhaps hire the services of an Enrolled Agent,
https://www.irs.gov/tax-professional...nt-information

But in this case I feel it would be overkill.
I don't think OP has much to be concerned about.

Dave...I wouldn't stress...just do the paperwork and get it off your mind.

Last edited by Hotscot; Mar 31st 2019 at 3:28 pm.
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