The Best FBAR Filing To Handling Your Overseas Accounts
Reporting your overseas accounts through FBAR filing is an important part of your tax return process. As a taxpayer, you have many options for where to place your money. Using overseas accounts is allowed, as long as you report these accounts each year.
Keeping your accounts in overseas accounts brings up extra issues during tax season. Following the proper procedures can keep you in the clear and save a lot of money on your tax return. If the idea of this type of filing makes you nervous, consider a tax professional to get the job done.
What is the FBAR Filing?
If your overseas account reaches $10,000 or more at any time during the year, you must file an FBAR. Accounts that stay under this limit do not need to file for that year, but may need to file in following years. You must keep great records to prove the years that you must file and the years when it is not necessary.
It is imperative that you file all information regarding to your overseas accounts. The IRS has set strict rules against these accounts in the hopes of preventing tax evasion from taxpayers using these accounts to hide money. Failure to report your overseas accounts can result in hefty fines. Reporting the accounts each year they qualify will leave you in compliance with the law.
If you do not file FBARs, the IRS may crackdown when they find out about your overseas accounts. It may be immediate or take the IRS some time to find the accounts, but once the IRS finds these accounts, you can face many issues including:
- Hefty fines and penalties on the money in the account.
- Up to six years considered in the penalty
- Possible criminal penalties
- Time in jail if you are criminally prosecuted
Reporting your overseas accounts each year can help you avoid these issues. You will pay taxes on the amount in the accounts, but these taxes are way below the fees and penalties on hidden accounts. Working with a tax professional can help show the difference in fees from filing your FBAR each year or just letting the IRS find out about the account on their own.
Since the IRS has recently changed their rules regarding FBAR filing, the IRS offers minimized penalties to taxpayers who come forward with information about their overseas accounts.
Even if you have not filed your overseas accounts in the past, coming forward with voluntary disclosure can bring your accounts in compliance with the law and prevent the other severe penalties.
The process of voluntary disclosure is meant to bring your account into compliance with the law while helping the IRS understand overseas accounts. Your tax professional can help organize the paperwork you need to file correctly and on time.
During the voluntary disclosure, the IRS will ask you questions about your overseas accounts. The IRS wants to know if other countries are promoting their accounts as methods to evade United States taxes and other information about why you chose an overseas account rather than an American account.
Voluntary disclosure can seem scary and long, but it is a much better option than hiding the account for longer. The IRS does not take kindly to taxpayers hiding their income to evade taxes. Choosing this option allows you will save on taxes and fees as well as avoid criminal prosecution.
Dealing with an overseas account can be challenging. Consider hiring a tax professional to help with this process. Whether the IRS is found your overseas account or you chose voluntary disclosure, a tax professional can help you with FBAR to get things in order on your account.
With all of the changes the IRS requires with FBAR filing, it is easy to get lost in the shuffle. Our lawyers can bring your overseas accounts into compliance with these laws and help you complete your FBAR. Give us a call at (847) 580-1279 and contact us today.