If you are a U.S. citizen, resident alien, have dual citizenship, you must check to determine if you have a tax liability or a filing requirement. If you have a foreign bank or financial account you have to report these accounts, often referred to as FBARs.
Here is a rundown of key points to keep in mind:
Deadline for reporting foreign accounts
The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is the same as for a federal income tax return. This means that the 2017 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 17, 2018. FinCEN can grant an automatic extension until Oct. 15, 2018, to file the FBAR. Previously, the FBAR deadline was June 30 and no extensions.
In general, the filing requirement applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2017. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-Filing System website.
Reminder: IRS to end Offshore Voluntary Disclosure Program
The Offshore Voluntary Disclosure Program will close on Sept. 28, 2018. Taxpayers with undisclosed foreign financial assets still have time to use OVDP before the deadline. The IRS will continue to use different tools to find offshore accounts which can lead to fines and criminal prosecution.
People abroad may need to file
If you qualify for the Foreign Earned Income exclusion or Foreign tax credit you may be required to file US income tax return.The income tax filing and payment deadline is June 15, 2018.
Income tax return reporting for foreign accounts and assets
US Citizens and resident aliens are required to report worldwide income. Taxpayers may need to complete Schedule B on their tax return. Some taxpayer may need to complete and attach to their return Form 8938, Statement of Foreign Financial Assets, if aggregate value of assets exceeds certain amount.
Report in U.S. dollars
Foreign currency needs to be reported in US dollars. FinCen Form 114 and IRS Form 8938 require the use of a Dec. 31exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction.
Do you have tax obligations for 2017? It is in your best interest to reach out to a professional tax specialist, before the IRS or the state takes enforcement action.
Reliable Tax Attorney is a Maryland Tax Attorney representing clients nationwide before the IRS and various tax agencies. For more information on how our office can assist you with your tax problems, please call 443-345-8291.