The Peck Group, LC - Tax Law
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What are your tax obligations as an American with foreign assets?

On Behalf of | Oct 21, 2021 | Tax Law |

There are various reasons why United States citizens place their funds in offshore bank accounts. One may be to qualify for secondary citizenship by investment. Another may be because the target country serves as a tax shelter.

Americans often purchase homes abroad. They do so to have a place of their own that they can go to when they’re looking for rest and relaxation. They might like the idea of getting into the market low and reaping the rewards once the area becomes popular with tourists.

It’s become increasingly popular in recent years for Americans to place their money in foreign bank accounts or buy homes abroad. Many individuals in this predicament think that their choice is between them and the other country, not between themselves and America. The Internal Revenue Service (IRS) thinks about this differently, though.

Are you familiar with the FBAR?

If you have funds in a foreign bank account or own real estate abroad and you’re not familiar with the Foreign Bank Account Report (FBAR), then listen up.

Any U.S. citizen with real estate, a bank account or any other fiduciary asset held abroad must disclose that they own these assets to the IRS, providing they meet certain thresholds, including:

Bank accounts must be reported if they contained a balance of $10,000 or more in a single year.

Real estate-oriented transactions must be reported on an IRS FBAR 8938 form if they involve any transfer of $200,000 or more that will be used to purchase real estate abroad. You must disclose any income-generating aspects of the transaction as well.

You may face penalties for failing to timely file an FBAR. The IRS most commonly assesses a penalty of at least 50% of what you should have paid.

Many individuals do not realize that they had an obligation to file an FBAR. You may want to take time to learn more about how to take care of filing any missed disclosures and inquire about determining how much in penalties you owe right away. Taking a proactive approach to handling your oversight is key to minimizing any legal exposure you otherwise may face.

We insist that your taxpayer rights are protected and your options are known.

Our services are confidential and are protected under the attorney-client privilege as allowed by law.