FBAR From Overseas
FBAR From Overseas: Do Taxpayers Abroad Still File FBAR? A common misconception (understandably so) is that only Taxpayers who reside in the United states are required to file the FBAR — but that is incorrect. When a person is considered a US Person, then they are required to file the annual FBAR — whether or not they reside in the United states or abroad. The reason why is because the FBAR is required to be filed by US persons who meet the threshold requirement for filing — and the US person is still considered a US person even if they are residing outside of the country.
What Happens if a Person Does Not File FBAR?
If a person was required to file the FBAR, but did not do so — that does not automatically mean they will be subject to fines and penalties. If a person is able to show that their failure to file was reasonable cause, they may avoid penalties altogether.
In addition, if the person was non-willful and qualifies as a foreign resident, then they may qualify for the Streamlined Foreign Offshore Procedures — in which the Internal Revenue Service eliminates all penalties associated with the non filing of the FBAR, along with other requirements as well.
More than Just the FBAR Requirement?
Oftentimes, taxpayers are surprised to learn that the FBAR is just one of several international information reporting forms they may be required to file — depending on the type, value and category of foreign assets, accounts and investments they have an interest in or signature authority over.
Some other common offshore reporting forms to consider are:
- Form 3520
- Form 3520-A
- Form 5471
- Form 5472
- Form 8621 (PFIC)
- Form 8865
- Form 8938 (FATCA)
FBAR Reporting and More
In conclusion, just because a taxpayer resides overseas does not eliminate their requirement that they file the annual FBAR. In addition, depending on the type and value of foreign assets and accounts the person has, they may have additional reporting requirements as well. Even if they have not filed timely, the IRS has developed various FBAR amnesty programs for the person to say if we get into tax compliance.
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