Many of my clients have Foreign Bank Accounts. In Jupiter and South Florida they are quite common. What most people do not know is that the IRS and government require you to fill out a form to tell them how much you have. The penalties are stiff if you do not get the forms in on time. Here is general information on how the process works.
A taxpayer with a financial interest in or signature authority over a foreign financial account exceeding certain thresholds may be required to report the account yearly by filing a Financial Crimes Enforcement Network (FinCEN) Form 114, [Report of Foreign Bank and Financial Accounts (FBAR)]. Specifically, for 2014, Form 114 is required to be filed during the year if—
1. a taxpayer has a financial interest in or signature authority over at least one financial account (which can be anything from a securities, brokerage, mutual fund, savings, demand, checking, deposit or time deposit account to a commodity futures or options, and a whole life insurance or a cash value annuity policy) located outside the U.S., and
2. the aggregate value of all such foreign financial accounts exceeded $10,000 at any time during 2014.
The 2014 Form 114 must be filed by 6/30/15 and cannot be extended. It must be filed electronically through bsaefiling.fincen.treas.gov. The penalty for failing to file Form 114 is substantial—up to $10,000 per violation (or the greater of $100,000 or 50% of the balance in an account if the failure is willful).
FinCEN Form 114 is not required if: (1) the aggregate value of all foreign accounts is $10,000 or less at all times during the year or (2) the accounts are at a U.S. military banking facility. Also, the FBAR is filed on a separate return basis (that is, joint filings are not allowed). However, a spouse who has only a financial interest in a joint account that is reported on the other spouse’s FBAR does not have to file a separate FBAR.
Abacoa CPA's
(561) 331-0744