The tax filing deadline for 2020 is quickly approaching. For those who have money in foreign bank accounts or own foreign mutual funds, you need to be careful to report those assets correctly. If you don’t, you can face a massive tax penalty, sometimes up to $100,000.
Here’s what you need to know about reporting foreign assets to the IRS:
- You must report foreign bank accounts if you had a balance of at least $10,000 during the calendar year. You have to report these overseas bank accounts to the IRS not only if you own them, but if you are authorized to conduct transactions for them by the owner.
- One of the most common mistakes people make is omitting one of their overseas bank accounts if they have multiple overseas accounts. Then, tax filers need to file a delinquent Foreign Bank and Financial Accounts report (FBAR) and explain to the IRS why they are filing this form late.
- Those who have lived overseas and invested in mutual funds may need to report those assets. The standards for reporting U.S. mutual fund assets is different than reporting overseas mutual fund investments.
Other overseas assets tax filers need to report to the IRS include:
- Foreign retirement and pension accounts
- Foreign securities and other brokerage accounts
- Foreign life insurance and annuities that have cash value
If you run into problems with the IRS over your failure to report foreign assets, you should consult an experienced tax attorney. An attorney can help you resolve this issue, helping you achieve the best outcome.
You don’t want to end up facing a massive fine over failing to report your overseas assets. This is a problem the IRS takes seriously. You can not only face significant fines, but you may end up facing criminal charges too.