chopper40

Also, Your IRS tax return is good to go so long as it is postmarked by the last filing date. FBAR must be recieved at the Treasury by the filing date.

robin1234

Yeah fortunately I always send the FBAR in way early, in February or so, since it is so easy to fill out (mine is anyway.)

Dazey

Hi all, I'm an American living in the UK, but this thread seems to apply to my problem as well. I only learned about the FBAR this year. I'll file on time for the 2010 form, but I've got 3 years of back forms to fill out. I did US taxes each year and reported UK earnings and interest from the bank, but I misunderstood where to input my UK interest on my taxes (I folded it in with my US bank interest), and as such Turbotax never flagged up that I should do an FBAR.

I understand that I should not use voluntary disclosure and should just send in my back forms with a note explaining why I never filed them by the end of August.

Here's what I want to make certain: That I should list the highest amount that was in each individual account, even if that account never held the money more than a day (it makes it look like we have much more money than we do)? I think the answer to that is yes, but I wanted make sure that's what others are doing. We have a checking account, an instant access saver, and an online saver. When our paycheck is deposited into the instant access saver, I immediately move some to checking and all of the rest to the online saver.

chopper40

From the Voluntary Disclosure Q & A
http://www.irs.gov/businesses/intern...html?portlet=7
Q37. If a taxpayer transferred funds from one unreported foreign account to another between 2003 and 2010, will he have to pay a 25 percent offshore penalty on both accounts?
A: No. If the taxpayer can establish that funds were transferred from one account to another, any duplication will be removed before calculating the 25 percent penalty. However, the burden will be on the taxpayer to establish the extent of the duplication.

From that it seems reasonable to assume that you only have to report money once. So if you did an bank transfer from one account to another you would only count that money in one account. Which one is anybody's guess! Keep the records that show the credit and debit of equal amounts from one account to the other.

celticgrid

The extract you quote is unrelated to the question. The rules state that if at any time during the year the total across all accounts is more than $10k then all accounts must be reported. Each account reported must show the highest balance during the year and yes, that means you may be reporting a greater total than actually exists. It doesn't matter, as this is a reporting exercise, not a taxation exercise. It doesn't have to make sense, it is simply the law they have enacted

chopper40

Celticgrid
Yes I did wonder if I was right to correlate the penalty logic to the reporting logic. I realise that this process has little logic! If someone got slapped with a penalty it would be on the highest aggregate balance, so at that point it would be up to the individual to prove that money has been transferred from one account to the other. So its still important to keep those bank statements.

celticgrid

Indeed. And here the IRS say:

Which implies that even if all your reporting is spot on, they can get you simply for not having the records. The mind boggles...

robin1234

Whoa that is draconian. In practice, though, that should not be a problem if it comes to the crunch; I imagine you can always get records from the bank or other institution, even if you've discarded or never had a hard copy yourself.

I've stopped all statements from banks and I must admit that I do not regularly print off statements. So in my case, I'd be relying on the bank to be able to come up with copies of old statements on demand.

pachamamma

Hello

I am US citizen and my husband is British. For the last 6 years we have lived in Asia and all our income and savings are derived from my husband's income.

I have filed my US taxes as married but separate for the last 6 years to cover some small investments in the US, but I have not declared my joint foreign accounts with my husband. The overall income on those accounts have been small and my husband reports it on his local taxes.

From what I understand, i think I need to file fbar for the last six years, but am very scared of what sort of penalties I might get on income that was not mine.

Any ideas?

ian-mstm

You're required to report if the total value of those accounts is US$10,000 or higher and if your name is on the accounts. If the total value is less than that, there is no requirement to file FBAR.

Ian

celticgrid

My suggestion would generally start with sending in some backdated FBAR paperwork with a covering letter explaining that you only just found out about this requirement. Apologise. Cross fingers. Get on with life.

When we did that we were also able to say quite honestly that any income from those accounts had been taken into account for the appropriate US tax returns. Unfortunately it isn't clear what your position is.

There's no need for you to disclose personal numbers here, but note that "small" means different things to different people. No-one can tell you what the IRS would consider as "small" in terms of income, unfortunately.

You have been filing taxes to cover "small" investments in the US? If they really are small then were you earning little enough that you were not above the tax threshold? If so, it is likely that the impact of the foreign income would have no material effect on your US tax liabilities. Depending how small things are, you may have not had a tax filing requirement? If that is the case then that's good. In my view the risk of catching up with FBAR paperwork quietly depends a lot on whether there's a tax issue as well as a reporting issue.

If your name is one the account then a proportion of the income deriving from those accounts is yours and should, I would say, have been included on your US tax returns.

I hope something of the above is helpful!

Dazey

So you've been in this situation of sending FBARs in past the due date because you didn't know you had to do them? How did it turn out, were you fined?

Also, I wonder once I send them in, at what point can I breathe a sigh of relief if they haven't responded? From what I can tell, they don't acknowledge receipt of the documents, so how do I know if/when they are fine with my forms and won't be seeking penalties?

celticgrid

Yes.

We owed FBAR paperwork for 5 years. When we found out about it we completed it all, made sure that it was simply a reporting issue and there were no implications for tax returns, i.e. any income from the accounts had been appropriately dealt with as far as the IRS was concerned. Then sent the forms in to the Treasury, along with a letter explaining and apologizing.

See Post #38 in this thread for a link and a quote to some IRS text that may help you worry a little less. As it happens we had done exactly what the advice in the final paragraph quoted in Post #38 says.

Dazey

That is very good to hear, thank you!

Dazey

I need to borrow some more of your experience on this board.

Where do I list the spouse's name and SSN on the FBAR when filing a joint account? I know that I write "(spouse)" on line 26, but you are also supposed to put the names and Social Security Number of the joint owners, but I only see spaces to put that information for the principal owner.