I specialized in international taxation from San Diego, California. I do consultation, tax planning, and tax compliance for US citizens and US residents who do international business or have a foreign bank account. A foreign person is considered a US resident if he has a green card or has lived for more than 6 months in the USA.
US citizens and residents (a US person) must report foreign financial accounts, such as bank accounts, brokerage accounts and mutual funds, to the Treasury Department and keep certain records of those accounts. The accounts are reported by filing a Schedule B (Form 1040), or/and Form 8938, or/and FinCEN Form 114. The reporting requirement depends on the value of the financial account.
If a US person has a financial interest in and/or controls any foreign bank account, they must report it on Part 3, Schedule B, Form 1040. The value of the account is negligible.
If the total value of the foreign bank accounts is greater than $10,000 during the tax year, a US person must file FinCEN Form 114 to the Financial Crimes Enforcement Network. For example, on December 27th, John has 6,000 CAD in a Canadian bank, 10 Mexican pesos in a Mexican bank, and 5,000 euro in a German bank. John must send information about all his foreign bank accounts. He also must report the maximum value during the tax year of each account. John may be subject to civil monetary penalties and/or criminal penalties for FBAR reporting and/or recordkeeping violations. Assertion of penalties depends on facts and circumstances. The penalty varies from $10,000 up to 50% of the value of the account.
If the total value of the foreign bank accounts is greater than $50,000 during the tax year, a US person may need to file Form 8938 to the IRS. If a US person is required to file Form 8938 but failed to file, complete and correct Form 8938, they will be subject to a penalty of $10,000.
If you or someone you know has any issues with foreign bank account reporting requirements, or other tax issues, please feel free to contact us directly at (760) 842-7885 or by email at info@usibts.com
Dennis Ovchinnikov, E.A.
U.S. International Business Tax Solutions
3520 College Blvd., Suite 204,
Oceanside, CA, USA 92056
Tel: +1-760-842-7885
Fax: +1-760-683-2208
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