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I have a question I have not done fbars in 6 years as i have…

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I have a question I...
I have a question I have not done fbars in 6 years as i have been living abroad in Australia. in 2011 and 2012 I did not put any interest from my Australian accounts on my tax return but it would have been minimal and I would have ad no taxable income anyway. Should I do the FBARS for those years. After 2013 I did the returns myself and and used the income exclusion and claim some of my interest (there have may have been more) At morst I may have may have forgotton $500. Is it worth even redoing the returns and maybe just submitting FBARS I had no idea I dad to do them? I never made more than 70k Australian.
Submitted: 9 months ago.Category: Finance
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9/19/2017
Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 9 months ago
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Finance
Satisfied Customers: 2,529
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
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Hello my name is ***** ***** I will be able to assist you today.

First I would like to cover who has to file a FBAR

United States persons are required to file an FBAR if:

  1. the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
  2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

A person who holds a foreign financial account may have a reporting obligation even when the account produces no taxable income. The FBAR is not filed with a federal tax return.

Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to civil monetary penalties.

Taxpayers who have not filed a required FBAR and are not under a civil examination or a criminal investigation by the IRS, and have not already been contacted by the IRS about a delinquent FBAR, should file any delinquent FBARs according to the FBAR instructions and include a statement explaining why the filing is late.

The IRS will not impose a penalty for the failure to file the delinquent FBARs if income from the foreign financial accounts reported on the delinquent FBARs is properly reported and taxes are paid on your U.S. tax return, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted.

Please let me know if you have any follow up questions.

Thank you!

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Customer reply replied 9 months ago
Well chad thankyou from your response. I know some of that looking online. However I still had a few questions.
1) the statement explaining why it is late should just be the drop down menus part where it days I did not know I had to file or is there something more your can do?
2) its it worth even filling amended returns for a few 100 dollars that will probably result in no taxable income.
Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 9 months ago

1) If one of the drop downs does not describe your particular reason then you would select "other" and provide a written explanation in the text box.

Since you have been out of the country it is very permissible not to be aware of the tax law changes. However, being unaware is not an acceptance excuse. The IRS is more concerned that you report the accounts as soon as possible and pay any past taxes with interest if any past tax with interest is due.

https://www.irs.gov/individuals/international-taxpayers/delinquent-fbar-submission-procedures

"The IRS will not impose a penalty for the failure to file the delinquent FBARs if you properly reported on your U.S. tax returns, and paid all tax on, the income from the foreign financial accounts reported on the delinquent FBARs, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted."

The statute of limitations on assessment of an FBAR penalty is six years, and it begins to run on the filing date of the FBAR--the June 30 succeeding the calendar year of the FBAR.

2) if there is any taxable income due, the IRS does require you pay the income tax due no matter how small. If you become aware that your taxes may be incorrect and do not correct this error you may incur civil penalties.

The FBAR penalty for non-willful violations is $10,000 for each financial account not reported. For willful failure to comply with the FBAR filing requirements, the penalties are even harsher. For each violation the fine is $100,000 or 50% of the amount in the account. These fines can be imposed for each year of non-compliance.

Even if the amount of taxable income is small you need to report the income and the accounts.

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Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 9 months ago

FBAR reporting is relatively new. As trivial as reporting a few extra dollars of income may sound, it is important that you do report your accounts and pay the taxes. In practice I have very few penalties for failing to file FBAR's, however, FBAR reporting is relatively new.

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Customer reply replied 9 months ago
Well if its not enough to make taxable income on line 43 of the 1040 above zero because I used the foreign income exclusion on my taxes after 2011. So even $500 would not change that? Is it worth doing those returns again?
Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 9 months ago

The requirement is in part

  1. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

The foreign income exclusion is for earned income. Dividends and interest are still reported as usual.

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Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 9 months ago

The income earned on the interest of the money held in foreign bank accounts is only one factor in determining if you need to file a FBAR.

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