Reporting of Foreign Assets

If you have signing authority or a financial interest in a foreign account that exceeds $10,000 at any time during the year or you have earned income from these accounts i.e. interest you may be required to complete a Report of Foreign Bank and Financial Accounts (FBAR) yearly to the IRS. The bureau that handles the reporting is the Financial Crimes Enforcement Network or FinCEN.

The IRS requires a United States person to complete this form by June 30th for previous calendar year being reported. A United States person is defined as a citizen, resident, an entity formed in the U.S. that includes corporations, partnerships, LLC's, Trusts and Estates.

The following are different types of financial accounts that must be reported: bank accounts including, savings, time deposit account, and checking accounts, i.e. an account you can write a check, securities accounts for example, brokerage accounts, securities derivatives or instruments, insurance policies that have a cash value for example a whole life insurance policy, mutual funds for example a fund that is available to the general public with a net value and regular redemptions, commodity futures or options accounts.

If you have one of these accounts you will then need to determine the maximum amount in the account and convert it into United States Dollars using the exchange rate on the last day of the calendar year.

A Report of Foreign Bank and Financial Accounts (FBAR) must be completed electronically. You will then need to download and complete the PDF FBAR or use the one attached to this newsletter. You will then need to submit the form on the website by clicking submit FBAR. Once this is complete you will receive a confirmation within a few days of filing, once received keep a copy for your records

If you have one of the above accounts and you do not file an FBAR you could be subject to civil penalties that could cost up to $10,000 per unintentional violations and deliberate violations may be more than $100,000 or 50% of the balance in the account at the time of the violation.

If you have any questions or would like to schedule an appointment please feel free to contact us at 630-663-1500 or you can email us at tax@greatwaysinc.com.