Information for Retired U.S. Citizens Living Abroad

Are You a Retired U.S. Citizens Living Abroad? Do You Know About FBAR and Foreign Asset Reporting Requirements?

If you are a U.S. taxpayer living outside the United States and you have assets in a foreign bank account, you may need to file an FBAR or other specific foreign asset reporting forms with the Internal Revenue Service (IRS).

U.S. retirees living abroad with a financial interest or signature authority over a financial account located outside the United States, such as a bank account, brokerage account, mutual fund, retirement account and some life insurance policies, may need to report the account yearly to the IRS if the total value of all foreign accounts is greater then $10,000 at any time during the calendar year.

You may have retired outside the United States to relax or to get away from it all, or maybe it was more economical, whatever your reasons, the IRS is sure to track you down when it comes time to collect your tax money. Here are some tips to help you remain in compliance with U.S. tax laws and regulations when living abroad.

What You Should Know About Foreign Bank Account Reporting (FBAR)

  • It is also referred to as FinCEN Form 114.
  • For 2015 an FBAR must be filed on or before June 30, 2016 for the previous year’s Federal tax return. (For 2016 and after, the FBAR filing deadline will be April 15th).
  • There are no extensions for filing FBARs, even if you received an extension to file your tax returns.
  • An FBAR must be filed electronically.

Retirees May Also Need to File Forms 8938 and 8621

  • IRS Form 8938: Statement of Foreign Specified Assets is similar to the FBAR but has a higher account balance.
  • Form 8938 includes reporting of foreign partnership interests, private equity and hedge funds.
  • IRS Form 8621 are used to report investments in Passive Foreign Investment Companies (PFICs)

Consequences of Not Reporting Foreign Bank Accounts

  • Nonwillful violations can result in a civil penalty not to exceed $10,000 per violation.
  • Willful violations penalties may be greater than $100,000 or 50% of the balance in the account at the time of the violation.
  • Criminal prosecution with the possibility of jail time.

Options for Coming Into Compliance with FBAR and Other Foreign Asset Reporting

There are four main options for coming into compliance with the IRS regarding foreign financial accounts. Please see “What Should You Do If You Have An Undisclosed Foreign Bank Account?” for more information on each of the options.

  • Streamlined Filing Compliance Procedures
  • Offshore Voluntary Disclosure Program
  • Delinquent FBAR Submission Procedures
  • Delinquent International Information Return Submission Procedures

Don’t get caught by surprise when it comes to reporting foreign bank accounts to the IRS. Talk to a tax accountant or a tax preparer to about your particular situation.

Resources from the IRS

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The information contained in the McMahon & Associates, PC web site is solely for informational purposes and does not create an attorney-client relationship or constitute legal advice. Unsolicited information transmitted electronically to our attorneys via this web site or the Internet is not considered confidential.

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