Looking At Some of the Forms Needed for a Typical Offshore Asset Disclosure

Sep 07, 2017

This post gives a brief overview of some of the main tax forms that those withat are obligated to report foreign accounts and/or offshore assets to the IRS. A taxpayer who has an interest in or signature authority over certain foreign accounts must inform the Internal Revenue Service of the existence of the account each year by checking the box in Part III, line 7a, on Schedule B, Interest and Ordinary Dividends, of the taxpayer’s Form 1040, U.S. Individual Income Tax Return. The taxpayer must also attach Form 8938, Statement of Specified Foreign Financial Assets, providing details about the foreign accounts if the account balances and the value of other foreign financial assets total more than $50,000 on the last day of the year or more than $75,000 at any time during the year for single filing status. For married taxpayers filing jointly, the threshold amounts are $100,000 and $150,000, respectively. Taxpayers with foreign accounts with an aggregate value of more than $10,000 during the calendar year must also file FinCEN (Financial Crimes Enforcement Network) Form 114 (formerly labeled TD F 90-22.1), Report of Foreign Bank and Financial Accounts (FBAR). This form is filed electronically with the Treasury Department’s BSA (the Bank Secrecy Act) E-Filing System not later than June 30. No extensions are available. Over the past few years, many taxpayers with foreign accounts have erroneously checked “no” on line 7a of Schedule B, Part III, and have not filed Forms 8938 or FBARs as required. A taxpayer who signs a return without disclosing the existence of a foreign account may well have committed perjury, and hiding assets in an offshore account may constitute tax fraud. To begin this whole process, you can quickly and anonymously determine if you are obligated to report offshore accounts and foreign assets to the IRS by using the free FBAR Wiz app here. The FBAR Wiz is a great way to begin the process and helps you determine what forms that you need to file. To learn of a helpful reporting exception for officers and employees of foreign companies, check out this related blog post.