US expat tax and foreign bank account deadlines approaching

by Ray Clancy on May 27, 2011

Tax deadlines approach for US expats

It is just three weeks until US expats need to fill in their tax forms and foreign bank account declarations but few are ready and many don’t even know they need to, according to tax experts.

The tax-filing deadline is June 15 and the Foreign Bank Account Report (FBAR) deadline is the end of next month.

The US Department of Treasury requires all US citizens and green card holders with a financial interest in or signature authority over a foreign financial account to report these accounts to the US Treasury each year.

The FBAR report must be received by the US Treasury on or before June 30th of the year immediately following the calendar year being reported. Even if you have an extension to file your US expat taxes you must file your FBAR by June 30th, as there are no extensions.

If you have a financial interest in or signature authority over financial accounts and these accounts exceeded $10,000 at any time during the calendar year you must file or face penalties of up to 50% of the account value.

The FBAR is used by the US government to identify those who may be using a foreign account to circumvent US law. Investigators use the FBAR to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad. There is even some indication that the Treasury will begin to fine foreign financial institutions that help individuals hide assets overseas, which could be particularly worrying for certain large Swiss banks.

62% of Americans living overseas though do not know about FBAR. ‘This is very worrying. If these individuals do not know they need to file their FBAR they could unknowingly be putting their savings at risk and could face some very large penalties in the future,’ said David McKeegan of Greenback Expat Tax Services.

‘Although US expats are not the primary target for the FBAR, they are required to file the form if they have over $10,000 in financial accounts. Many people do not realize that there is such a thing as the FBAR, especially if they are filing their own taxes and did not have overseas assets when they were living in the US,’ he explained.

‘It is very important for US expats to file the FBAR accurately and on time. If you have not been filing your US expat taxes while living abroad or did not know about the FBAR requirement you should try to come forward now, before the end of the 2011 Offshore Voluntary Disclosure Initiative (OVDI), which ends on August 31, 2011,’ he continued.

‘This is your best opportunity to get caught up on your expatriate tax obligations and disclose your overseas bank accounts. No one knows what or how the penalties will be enforced in the future,’ he added.

{ 4 comments… read them below or add one }

Graham June 7, 2011 at 3:26 pm

"62% of Americans living overseas though do not know about FBAR. " That's a big percentage of US expats who don't know about FBAR. Makes you wonder why the US Tax authorities don't do more to make everyone aware, especially when I image the penalties for non-compliance can be quite severe.

Reply

Guest June 7, 2011 at 9:37 pm

Working on my US taxes now. The IRS can go F itself for wasting my time.

Reply

Piper June 21, 2011 at 8:36 pm

I thought if you have lived out of the USA for 18 months you didn't even have to file….

Reply

Pathologic1 July 13, 2011 at 5:24 am

The USA is on the verge of bankruptcy. If you can, get caught up with the IRS and then renounce your citizenship. This becomes more honerous as you get older so rather than having your children make sure they get US citizenship, have them renounce it as soon as they are able. Then they can enjoy the benefits that other canadians enjoy like TFSA, RESP and no hassle from the IRS

Reply

Leave a Comment

Previous post:

Next post: