Didn't know I was required to file FBAR

[tandsviajourney 0]

I am in a total panic and wondered if anyone could offer me some advice.

My husband's work colleague who is originally from Indian was talking to him and another colleague from the UK yesterday about FBAR. Neither my husband nor the other colleague from the UK had ever heard of it. When he got home and researched it, we discovered to our horror that we should have been filing an FBAR with the IRS for the last 3 years.

How could this have happened? I searched through all the documentation I have received from the board of immigration, particularly paying attention to 'rights and responsibilities' sections and there is no mention of it. There isn't even a mention of it on the tax return. How on earth are you, as a new immigrant, supposed to know this stuff??!!

Of course, I then went on to read about the penalties for not submitting the form - heavy fines, relinquishing my green card, criminal prosecution!!!!! I really can't believe this could happen. It's such a simple form compared to some of the other stuff we have to fill out. I had absolutely no reason for not filling it out other than I knew NOTHING about it. I have nothing to hide.

I am scrambling now to meet the deadline for filing this year. The IRS say that they won't penalize people who file delinquent reports where there is reasonable cause for not filing them, but is not knowing the law reasonable cause?

I have read horror stories about immigrants in my situation being fined everything they have. I'm not rich. The money I have was from a house I sold in the UK years ago and I was saving it in the hope we might buy a house here in the US someday.

Has anyone here been in a similar situation and offer me advice? I would really appreciate it.

[christeen 966]

Yes, we were in this situation but for one year as we did. Jot realize that we needed to file. We filed the back year and attached a sheet of paper that said that when my husband immigrated, we were not aware of the FBAR, what it was, or the filing requirements and that we were not willfully not filing, and now that we understand, we will file from this point forward... I never heard anything back, no penalty and now we file every year...

[lubnajavid 20]

I have completed our taxes online for over 10 years....

the question has always been asked - do you have any accounts overseas?

It is asked - if you do your taxes online or with one of the computer programs (offline)

If you do your taxes through a service - they may not ask you.

If you do your taxes yourself manually - then you may not know about it and will not file it.

My advice - file ammended taxes for all years you THINK this applied to you.

Remember - the key points are : signature authority of or over / Aggregate of 10,000 USD.

[christeen 966]

That si what happened tous... The first year, we went to a tax preparer as the foreign income etc... Was confusing, the following year, I used software and it prompted me to answer, which is when I discovered it... I did not amend the taxes as nothing changed, just filed the missing FBAR with the letter... All seems ok.

[tandsviajourney 0]

Many thanks to you both for taking the time to respond - very much appreciated.

We really couldn't understand how this could have got under our radar, so we dug around extensively to see if we had missed something somewhere. We don't use software to file our taxes - we just use the standard tax form. The only time that foreign bank accounts are mentioned is on the standard tax form is on Schedule B and you would only look on the Schedule B if you had interest to declare which we did not. Section B asks you about foreign bank accounts, but there is no mention of it on the standard tax form at all .

I'm really confused why this really important federal law requirement isn't mentioned on any of the documentation you receive when you become accepted as a permanent resident. There is a section in there for rights and responsibilities and it mentions about filing with the IRS, notifying USCIS of change of address, etc. The Guide for New Immigrants is 124-pages long. Couldn't they squeeze this absolutely vital piece of federal law requirement in there somewhere? It is reasonable to assume that immigrants may have some money or assets in their home country at the point of immigration, so the law is very likely to apply to them and they are very unlikely to know about the law because it isn't law in any other country other than the US. Its like we're set up to fall foul of the law! It makes me feel very uneasy and I wonder what else there is that I don't know about?

@lubnajavid - I have a bank account in the UK that over the 3 years I have lived here has had a very small (less than $10k/year) income derived from a company I work for in the UK. That income was declared in full and properly on the joint tax return that I file with my husband. Our tax returns have been accurate - we just didn't know about the additional requirement to file the FBAR. With this in mind, do you still think I need to resubmit the tax returns? I suppose the only change would be the check box on Schedule B indicating that I do have a foreign bank account.

I really hope that my situation resolves itself like christeen's experience!

Thanks again.

[lubnajavid 20]

see http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/FAQs-Regarding-Report-of-Foreign-Bank-and-Financial-Accounts-(FBAR)---Filing-Requirements

It appears that IF your account did not have 10,000USD or more at any time then you are not required to file FBAR

But, if any of your statements (periodic or not) showed any balance of more than 10,000USD in the past 5 years (thats the period of time you must maintain these records) then you have to file FBAR.

As you may know, this has to be done by June 30th of each year - there is no extension allowed.

[JimVaPhuong 4,863]

I'm really confused why this really important federal law requirement isn't mentioned on any of the documentation you receive when you become accepted as a permanent resident. There is a section in there for rights and responsibilities and it mentions about filing with the IRS, notifying USCIS of change of address, etc. The Guide for New Immigrants is 124-pages long. Couldn't they squeeze this absolutely vital piece of federal law requirement in there somewhere? It is reasonable to assume that immigrants may have some money or assets in their home country at the point of immigration, so the law is very likely to apply to them and they are very unlikely to know about the law because it isn't law in any other country other than the US. Its like we're set up to fall foul of the law! It makes me feel very uneasy and I wonder what else there is that I don't know about?

This requirement doesn't just apply to immigrants. It applies to everyone who has to file a tax return in the United States. The full text of Title 26 (the law that covers the federal income tax system) is over 16,000 pages long. How much of it do you think they should squeeze into the Guide for New Immigrants? I've venture to guess that at least 500 pages of that law applies to most immigrants, in one way or another.

Similarly, given the overwhelming complexity of the law, how much do you trust your ability to ensure that you're not missing anything when you file your own returns by filling out only what you believe to be the relevant tax forms? The 1040 instructions do not list every possible schedule or amendment you might be required to include, nor does the IRS forgive you if you don't include them. You're expected to know which forms are required. Most people either hire a tax professional or use any number of tax preparation programs to ensure they don't miss anything.

[tandsviajourney 0]

@JimVaPhuong, do you mean a tax professional or tax preparation program like H&R Block? Look, I don't wish to enter into a back and forth with you, so this reply is not aimed directly at you. However I would like to say one thing to you directly and leave it at that. I may well have misread the tone of your response, but it came across as 'you should have known better'. I was reaching out to the community in a panic for help, advice and support; I'm sure you meant well, but I didn't find your advice helpful or supportive ... sorry.

I'm adding this information to the thread for anyone interested because if you feel that you are safe by using a tax professional or tax preparation program that may not be the case. Firstly, my husband prepares our taxes manually because the one time that he used a tax preparation program (H&R Block) it calculated a deduction he was not entitled to. That aside, we went to see a tax professional at H&R Block at the weekend. However, she turned us away because she said she wasn't knowledgeable about FBAR and had never had a client who needed to file one. She told us she wasn't in a position to advise us and no one in their office could assist us. This isn't just our experience. My husband's work colleague who told him about FBAR has used H&R Block for 3 years for his tax preparation. He didn't know about the requirement to file either. It was only because he needed to employ a CPA this year that he became aware of it. As it happens, this CPA is also a specialist in FBAR. We now have an appointment to see him and will hopefully be able to get everything straightened out.

In 2011, 62% of US expats didn't know about the requirement to file FBAR either (http://www.prycewarner.com/news-us-expats-dont-know-about-fbar-43.html). If the majority of US expats don't know about FBAR and tax professionals aren't knowledgeable in dealing with it, IMO its not surprising that us immigrants are being caught out.

[lubnajavid 20]

@tandsviajourney:

Sorry you couldnt get H&R to help you; good to hear you have an appointment with your CPA - i would hope they can help you.

Failing that - i suggest you look into contacting your local IRS office - they are not as bad as they appear to be - not in my experience anyway...

Hope you can get this sorted out without having too many more problems to overcome.

Thanks for highlighting this for others in VJ

If i can help in anyway, you know how to contact me

Good luck

PS. dont worry about others' posts - i read Jim's also at the weekend... you know what i have written before!

Edited July 1, 2013 by lubnajavid

[Harsh_77 718]

I am in a total panic and wondered if anyone could offer me some advice.

My husband's work colleague who is originally from Indian was talking to him and another colleague from the UK yesterday about FBAR. Neither my husband nor the other colleague from the UK had ever heard of it. When he got home and researched it, we discovered to our horror that we should have been filing an FBAR with the IRS for the last 3 years.

How could this have happened? I searched through all the documentation I have received from the board of immigration, particularly paying attention to 'rights and responsibilities' sections and there is no mention of it. There isn't even a mention of it on the tax return. How on earth are you, as a new immigrant, supposed to know this stuff??!!

Of course, I then went on to read about the penalties for not submitting the form - heavy fines, relinquishing my green card, criminal prosecution!!!!! I really can't believe this could happen. It's such a simple form compared to some of the other stuff we have to fill out. I had absolutely no reason for not filling it out other than I knew NOTHING about it. I have nothing to hide.

I am scrambling now to meet the deadline for filing this year. The IRS say that they won't penalize people who file delinquent reports where there is reasonable cause for not filing them, but is not knowing the law reasonable cause?

I have read horror stories about immigrants in my situation being fined everything they have. I'm not rich. The money I have was from a house I sold in the UK years ago and I was saving it in the hope we might buy a house here in the US someday.

Has anyone here been in a similar situation and offer me advice? I would really appreciate it.

They cannot tell you every single thing that you are required to do in your welcome document.

If you were using a CPA than he should have told you about it or if you were using the tool like Turbo Tax if would prompt you for it as soon as you mention about your foreign account.

I don't know if someone like H&R block would had it pointed out to you, my experience with such companies have been so-so mostly they only know how to fill std 1040 and anything that has little complexity they struggle to get it done.

[JimVaPhuong 4,863]

@JimVaPhuong, do you mean a tax professional or tax preparation program like H&R Block? Look, I don't wish to enter into a back and forth with you, so this reply is not aimed directly at you. However I would like to say one thing to you directly and leave it at that. I may well have misread the tone of your response, but it came across as 'you should have known better'. I was reaching out to the community in a panic for help, advice and support; I'm sure you meant well, but I didn't find your advice helpful or supportive ... sorry.

No, it wasn't meant that way at all. I was commenting more on the fact that you thought USCIS should include advice on this in the Guide for New Immigrants. The guide's section on income taxes is meant to be nothing more than a cursory introduction to the concept of income taxes in the United States, as well as an admonition that everyone is obligated to file an annual income tax return. The guide explains the general types of income tax you might have to pay, and tells you where you can go to get further information and advice. They don't get into specific sections of the tax law, nor do I believe they should. As I mentioned, Title 26 is massive. It would be impossible to cherry pick the portions that would be relevent to most immigrants without making the guide huge. Since Title 26 is really outside of the jurisdiction of USCIS, it's better that they advise people to seek assistance from the IRS.

I just checked my 2012 copy of H&R Block "At Home" tax software (premium edition). The following question is asked during the "Income" portion of the 'interview', under "Foreign Accounts and Trusts":

Foreign Accounts and Financial Assets

You must report certain foreign investments. Otherwise, you face significant penalties. Special rules apply if you had either of these:

• Financial interest in or signature authority over a financial account located in a foreign country. (click link to "learn more")

• Ownership or authority over foreign financial assets. (click link to "learn more")

Did you have either of these in 2012?

(buttons provided for yes or no answer)

A "yes" answer would produce form TD F 90-22.1 for you to fill out.

I can't speak for the professionals you consulted with. I'm fairly certain you would have known about the requirement if you'd used H&R Block's software, and probably also if you'd used Intuit's TurboTax. There have been numerous occasions when H&R Block's software (and Kiplinger's software before H&R Block bought them out) had identified forms it said I need to file based on how I answered the interview questions, and I would definitely have missed those forms if the software hadn't determined I needed them.

[elvenshadow 19]

I just prepared my taxes and I am also in the process of getting my i-130 packet ready for my Japanese wife. We both live in Japan and I have been here since 2007, we have been married since July 2012.

I just now found out about FBAR on accident when I was looking for information related to the i-130 and taxes. I have never filed it. However, we currently have 3 bank accounts in Japan. One is my regular checking account in my name only. The other 2 are a checking account and a savings account in her name only. We never bothered to add each other’s names to any of the accounts, though sometimes I deposit money from my paycheck (which is direct deposited into my checking account) and put it in her savings since we just use that as our general savings account.

So my question is, since my name is not on her savings account and I have only ever filed as Married Filing Separately, do I still have to file FBAR if the balance of the checking account with my name on it only has never exceeded $10,000 worth of money?