Foreign Bank Account Reporting in Orange, CA

Americans with foreign bank accounts or overseas income are required to report these assets to the IRS. Failure to report this information could result in civil or criminal penalties, depending on the situation. Reporting your offshore account earnings to the IRS can be complicated, and the IRS has stepped up its enforcement on monitoring foreign bank account reporting, making it essential to have a tax professional on your side. 

 

Having a deep understanding of the tax rules surrounding foreign accounts—such as the Foreign Account Tax Compliance Act (FATCA) and Report of Foreign Bank and Financial Accounts (FBAR) —is necessary to ensure you are abiding by federal regulations. Since the federal regulations surrounding foreign bank reporting are so complex, hiring a tax attorney can help you avoid troubles with the IRS. 

What to Know About Foreign Account Reporting

When it comes to foreign account reporting, there are two main regulations: FATCA and FBAR. Taxpayers who have offshore accounts or income are required to report them through either a FATCHA or FBAR disclosure, spending on the value of their accounts. 

 

FBAR disclosures are required when the value of any foreign accounts exceeds $10,000 at any time during the fiscal year. FATCHA disclosures are more complicated and depend on the value of an account along with whether the taxpayer is married and lives in the U.S or abroad. For example, a married taxpayer filing jointly with their spouse and living abroad has a much higher threshold of assets that they can have before they are required to report it under FATCHA. Alternatively, a single taxpayer filing alone living in the U.S. has a much smaller limit on the amount of foreign assets they can have before they are required to disclose. 

What Are the Penalties for Failing to Report Foreign Bank Account Earnings?

Failing to report earnings on your foreign accounts can be accompanied by significant fees and penalties. In the event of an FBAR audit, taxpayers found to have omitted their foreign income could face a fine of up to $10,000 for each year they failed to disclose their accounts. Penalties can become worse if the IRS believes the failure to disclose was willful. Willful violations can be accompanied by fines of up to 50% of the foreign account’s balance. In some scenarios, fines and penalties can exceed the original balance as they can be applied to multiple years of undisclosed reporting. 

What Is the Risk of Offshore Account Detection?

Unfortunately, if you have an offshore account, it will likely be detected by the IRS. When the FATCHA was passed, more than 100 countries agreed to share tax information with the U.S. government. This means that any foreign accounts located in cooperating countries are required to turn over the information of any U.S. linked accounts. The IRS can then use this information to find taxpayers who failed to pay taxes on their foreign accounts. 

Choose Morgan Sebastian Law for Foreign Bank Account Reporting

If you have foreign bank accounts, it’s essential to ensure you are complying with federal regulations. At Morgan Sebastian Law, Attorney Becky Sebastian is eager to help you navigate the complexities of foreign bank account reporting. As a trusted tax resolution lawyer, Attorney Becky Sebastian has years of experience representing individuals who have been audited by the IRS.  She can provide you with the professionalism and peace of mind you deserve when dealing with the IRS. You can count on her to collect all the documentation needed to achieve a favorable tax resolution.  


To schedule a consultation with an experienced tax resolution lawyer, call (877) 223-6605 or fill out our online contact form.

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