Just a reminder to prepare and file the Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR) with the Treasury Department as the deadline is fast approaching – June 30, 2015.
Any United States (U.S.) person or entity with signature authority over or interest in foreign accounts with the highest aggregate balance of all accounts totaling more than $10,000 on any day of the calendar year must file an FBAR. You must include any PayPal accounts in addition to foreign financial assets including, but not necessarily limited to, bank accounts, securities, investments, and most pensions and life insurance plans. Remember that in addition to reporting your foreign investments on the FBAR, foreign investments such as foreign annuities, life insurance, and pension plans often do not have the tax deferred benefits as would be expected based on U.S. investment treatments and generate taxable income in the U.S.
A minimum penalty of $10,000 per account is applied to each year that the FBAR is filed late, or not at all. For willful violations, penalties can reach up to the greater of $100,000 or 50% of the highest account balance in any year. The taxpayer may also face criminal charges.
The FBAR must be filed electronically – paper forms are no longer accepted. The form must be accepted before that date to be considered timely filed – no extensions, even if you received one for your tax return. The FBAR is only available online through the Bank Secrecy Act (BSA) E-Filing System.
Taxpayers with foreign financial assets may also need to file a Form 8938, Statement of Specified Foreign Financial Assets. It may include some assets not listed on the FBAR. Form 8938 must be filed with Form 1040 by April 15, or by the extension date if you filed for one. Form 8621 would be required for foreign investments that qualify as Passive Foreign Investment Corporations.
If you are not sure you need to file these forms, and/or you need help doing so, please contact your Henry & Horne tax advisers for further assistance. Please note the information above is only very general in nature and is not meant to be used as tax guidance or relied upon for your filings.
By Debra Callicutt, CPA, MBA