Almost everyone is aware that April 15th is a critical tax deadline. However, in addition to this there is yet another tax deadline that is round the corner, which might or might not be known to many. The tax deadline date is June 30th, a data that is fixed for the United States citizens where they need to file a Foreign Bank Account Report (FBAR, Form TD F 90-22.1) with the IRS to report their overseas bank account. Over the past few years the IRS has been proactive and to an extent aggressively pursuing taxpayers that are involved in objectionable overseas transactions. Taxpayers have tried to avert the U.S income tax by concealing their income in overseas banks, brokerage accounts and utilizing nominee entities. Taxpayers also try to avert taxes by utilizing the overseas debit cards, wire transfers, credit cards, foreign trusts, employee-leasing schemes, private annuities or insurance plans. In order to prevent such abuses, FBAR filing was set up. The FBAR is therefore a tool that helps the IRS Amnesty and the Department of Treasury investigators to keep a track of funds that is used for illicit purposes and recognize unreported income generated or maintained abroad. Therefore, an annual FBAR needs to be filed with the IRS whenever a taxpayer has an interest in or signature authority gets over, a foreign financial account recoding a value exceeding $10,000 anytime during the calendar year. It makes zero difference if the average amount in the account during the year tends to be lesser than $10,000 or the overall amount being withdrawn towards the end of the year. In vase the account recorded more than $10,000 anytime during the year, t6he FBAR filing is essential. Furthermore, FBAR filing requirements are not restricted to foreign accounts having cash. A taxpayer is supposed to file the FBAR in case a foreign account has non-monetary assets exceeding $10,000. For instance, the cash surrender value of a life insurance policy is such a non-monetary asset. However, the penalties for failing to file FBAR is harsh. There is a minimum $10,000 penalty in case the failure was accidental. However, if a taxpayer is found guilty of FBAR filing then minimum fine is fixed at $100,000 or even half the value of the account, whichever stands greater. This is the reason why it is beneficial to partner with a tax planning agency to stay correct in FBAR filings. All FBAR forms need to be accessed from the IRS website and must have the name and address of every financial institution in which there is an account more than a $10,000 and the maximum amount in the account during the year. Read More About: India Capital gain
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Foreign Bank Account, FBAR, IRS Amnesty, tax planning, India Capital gain,
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