Index Card – FBAR
There are many questions on the FBAR specifics, such that what financial accounts we need to report. IRS literatures are not easy reads. Here is a quick list reference.
FBAR: Financial Bank Account Reporting
Forms: TD FR 90-22.1; file annually
Due Date: June 30 of following year
2009 Amnesty Program
One time program for voluntary disclosure to avoid imprisonment. Due on 9/23/2009, but extended to 10/15/2009. File TD FR 90-22.1, amend tax returns for prior 6 years, and pay interests and filing penalties
Legitimate Reasons for Holding Foreign Accounts
1. Family ties
2. Investment opportunities
3. Employment or working abroad
4. Privacy concern as to creditors
5. Concerns about US economy, US currency, etc
6. Fill in the blank (any thing else other than tax evasion)
Filing Threshold
Combined value of all foreign accounts over $10,000 any day in a year
Who
1. US Citizen
2. Green card holder
3. Resident alien (183 days test for 3-year period, or 31 days for current year)
4. New: Foreign person doing business in US will require to file in 2010, for 2009 tax year (I am not kidding)
5. Also includes partnership, corporation, non-profit, foundation, trust, and estate
Foreign Financial Accounts
1. Bank accounts (checking, saving, debit card, pre-paid credit card)
2. Investment accounts (brokerage)
3. Pooled investment funds such as mutual fund, hedge fund, or even private equity fund if “commingled”
4. Some retirement accounts (similar as IRA, or 401k)
5. Life insurance with cash value (only as owner, not as insured)
6. Gold bullion or commodities held in a financial account (not in safe deposit)
7. Lines of credit
8. Currency accounts
9. Mortgage escrow
Excluded Accounts
1. Bond, note or stock certificates on foreign companies held by US person
2. Unsecured loans to foreign businesses (non-bank)
3. Your money in a US branch of a foreign bank
4. Ownership in real estates or collections
5. Safe deposit box, unless the bank can trasact on your behalf
Foreign Bank Exceptions
1. US military foreign base banks
2. Banks in Guam, Puerto Rico, and the US Virgin Islands
3. US branch of foreign banks
Other Reports
1. If you earn dividend or interest on those accounts, report on Form 1040, Schedule B, also check Part III, Line 7b
2. If you pay foreign taxes, claim foreign tax credit with Form 1116
Penalty & Fine
1. Civil penalty: non-willful, up to $10,000 per violation; willful, up to $100,000 or 50% of account value
2. Criminal penalty: up to $500,000 and 10 years imprisonment
Side Note
IRS is kind to you if you own real estate properties and direct investments as shareholder or bondholders in foreign countries. You can lend money and put valuable in a safety deposit. I can only deduce that as long as your asset is not liquid and not easily transact,
it is not suspicious. Well, just my guess. Go figure.