E-file your FBAR Reports

E-file your FBAR Forms

Too many topics, too little time. Sorry for the long blog-silence.

I may not be writing here as much, but I am 'sharing' - at my Facebook company page. If you’re interested, you’ll find some of my shared news clippings on Facebook at “EdvensonConsulting.” Welcome to my Facebook page! And please, if you visit, ‘Like’ me! Follow me! You’ll enjoy it! And if you don’t, you can always unlike me . . . or unfollow me . . . or however that works.

Today’s topic is: the new e-filed FBAR form. This is the Foreign Bank Accounts Report form (FBAR for short). And it is now January, 2014.

Yes, you too can manage to file this form. Just say it: “I can do this!” Yes, you, American abroad who has not told the U.S. government about your foreign bank accounts, which basically make it possible for you to live the modern life in whatever country you live in. But also yes, you, American surfer dude who lives in Miami and keeps what he thinks are his own secret bank accounts in the Cayman Islands, or Antigua or another of the world’s thankfully but slowly disappearing tax havens, where he sends his profits from whatever he does for money, and therefore tries to hide it from U.S. taxation, which frankly makes all Americans the poorer. And this is not to mention all the other types of Americans who think they’re getting away with something, which makes us all the poorer.

The IRS and U.S. Department of Treasury have, as you may know, gone from permitting FBAR filings on paper to ONLY permitting FBAR filings ONLINE. This is a challenge for the online-challenged. First, then, you should plan to map out all your entries on paper – why not? The details needed are your accounts, the highest amounts in them during any particular year, and the currency type, bank name, address, etc.

This form is no longer called the TDF 90-22.1 but is called the FinCEN Form 114. This stands for: Financial Crimes Enforcement Network Form 114. . . . even though the form itself is still entitled, “Report of Foreign Bank and Financial Accounts.” Therefore, do NOT be scared off by this: it is obviously a reflection of the fact that the Financial Crimes Enforcement Network would like to take credit for Form 114, and NOT that you are in some kind of trouble!

Just do the form!

Start here:   http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

At this page, they tell you to first (1) fill out the form, and then second (2) file the form online.

When you click through to see the form, you will see the usual-looking FBAR form.

Save this form to your computer. Then you can open it up and fill it out by typing onto it. Save your typed-on draft(s) with new names - to your computer in a folder – (don’t keep typing onto the form online without saving it) so you always save your work - until you are finished listing your accounts. Then save your final ‘hard file’ version on your PC.

Then you can go back online, to this address: : https://bsaefiling1.fincen.treas.gov/NoRegFilerUpload , and file the FBAR Form.

Generally, all the same requirements apply to the online form as to the offline form of the past. Any American with values equivalent to $10,000 in any combination of bank and financial accounts in any given year – during the current or prior 6 years, must file, going back (for each applicable year) 6 prior years. The forms are due to be filed by June 30th of the year after the year of the report, so 2013 FBAR reports are due to be filed by June 30, 2014.

Got it?

And here, if you want your hand held, go see some videos:

This one, for starters: 

http://www.irsvideos.gov/SmallBusinessTaxpayer/BankSecrecyAct/WhenHowReportForeignFinancialAccounts

Or go watch Rod Lundquist’s IRS Powerpoint presentation that reviews some of the context for the report: http://www.irsvideos.gov/ReportingForeignFinancialAccountsOnTheFBAR/player/frame-wm.htm

If you want further assistance, you can contact the IRS directly at their FBAR help line, which, if the information online is still correct is at the phone number: (800)800-2877. I have heard good reports from clients who spoke to agency staff by phone.

As I always tell my clients, try to ‘enjoy’ doing the FBAR reports – think of it as a secretarial job, which is what it is. Also, it’s not just part of enjoying being in compliance with the law, but part of contributing to the infrastructure and services that a civil society can provide.

***

If you need assistance with your out-of-country U.S. IRS individual personal income tax return (also known as 'the 1040'), feel free to call or write me – that’s one of my consultancy’s services.

FBAR Reporting & the 4th of July

It was time to come up with a topic for my next blog, but as summer crept into our lives here, in Norway, it was easier to wish the rain would go away, and wistfully recall good times with old friends. That must explain why I woke up this morning humming the words of Simon & Garfunkel’s Scarborough Fair, and not the Stars & Stripes Forever.

The sense of loss brought on by living in what is still, ultimately, a foreign culture, combined with both the isolation many experience when at their sometimes remote ‘summer cabins’ and the simultaneous need to find solace in old and strong American friendships, with friends who are no longer anywhere near, is only raised another notch on the day on which the American Coordinating Council of Norway (ACCN) holds its Frogner Park, Oslo celebration of American ‘Independence Day,’ known more commonly in the U.S. simply as ‘the 4th of July.’ So . . .

Are you goin’ to Scarborough Fair?

(Parsley, sage, rosemary & thyme)

Remember me to one who lives there –

He once was a true love of mine.

Now that we’ve gotten our priorities in order, it is time to note – to all Americans overseas – the imminent change in the FBAR reporting procedure. This is the reporting requirement for Americans overseas who have any combination of foreign (non-U.S.) accounts (bank and/or securities)(even one) with, a total of the equivalent of $10,000 at any time during the year. In that case, one is obliged to file what is called the FBAR report – Foreign Bank Account Report. The form itself has the innocuous title, TD F 90-22.1, which only reminds us of how pathetically out-of-tune bureaucracies can be when it comes to assuaging natural human fears of numbers, and people’s related reporting obligations. We leave that essay for another time.

Onward, Americans – to the challenge at hand: reporting your foreign bank accounts – but no longer ‘on paper.’ The imminent news is: you are now (well, starting in a few hours) supposed to only file those forms ONLINE. Yes, paper production has been officially squelched, and hundreds of trees are, on the day you are reading this, being saved as a consequence. On the other hand, hundreds of Americans overseas are trying to figure out how to e-file the online form. We’ll all see how it works out.

I’ve had quite a few inquiries about this form in the past few months, as more Americans in Norway and Europe get ‘on-board’ with their ‘filing obligations,' shall we say nicely. I therefore created a ‘form e-mail’ reply, which takes the desperate and clueless and leads them softly by the hand through the current FBAR form. I’ll copy that here, under the philosophical title, ‘How to Approach the FBAR Form.’

How to Approach the FBAR Form

 Here's some FBAR information I usually send folks when they express their concerns. Since it is mostly a secretarial job for me, I don't do it - it's really quite easy for you to do. Read this note below when you open up the form.

As you will see when you open it, each page or section is for a different type of circumstance.

The first page is for starting to list any accounts you actually own yourself. First, you enter your personal information, which will include your Social Security number (called ID number) at the top. Then, there is room in the middle of that page to list your first foreign account (a non-U.S. account)(one you own).

Page 2 is a continuation page. You just put some ID information in the top boxes and then can continue to list any other accounts you own yourself. You put the bank name, address, account number and highest balance during the year for each of the accounts you own yourself.

You use page 3 to start any list of accounts you own jointly with someone else. This can include any joint accounts owned with non-Americans (ex: your Norwegian wife or husband), and highest balance during the year you are filling it out for. (These are joint accounts – therefore, don’t forget to show their name and address, as required.)

You can see that page 4 is where you would list any accounts where all the money is someone else's and is in their account, but you can access it (example: you use that account, which only includes your husband's money, to buy groceries with your debit card). (Don’t forget to show all the requested information for each of those accounts including the name of the other person.)

You can see that page 5 is the page where you would list any account that you have in a company name, not your personal name. You show the company name on that page and the other information as requested, which is similar to that requested on the other pages.

You only use the page types that you need.

The rest of the pages are instructions to read if you need to do that.

At this time, you should report back to 2006. Also note, the year reported is just for you to enter at the top of the pages. Therefore, you are doing the same forms for each year, for each account that was foreign during that year. If you are catching up, you’ve got at least 6 pages involved for one account (1 page x 6 years), and multiples of that if you have more accounts to show.

If you have questions, you can call the IRS – they are the only experts in this matter.

They threaten grave actions against persons who have the obligation to file and don’t. If you had the equivalent of $10,000 in any given year in any combination of foreign accounts, you must file these forms annually. They are due to be received by June 30 of each year. This means not posted-by June 30th but received by them.

Don’t delay in doing these forms.

The address to post them to is in the middle of page 1 . . . .

End of my form e-mail message!

And - oops! No more mailing the form to Detroit!

“Imminent” means: almost immediately. Is tomorrow soon enough? FBAR filings will be electronic starting tomorrow, July 1st, 2013.

The notice was not received by this tax preparer until yesterday, so they’re really giving us a lot of notice on this. Ah, well, it’s probably part of the pared-down ‘American way.’ Still, if Congress wants to save money, I recommend they stop cutting the IRS’s budget, and start cutting their own salaries, redirecting lobbying outlays to public services for the needy, and increasing corporate tax coverage and tax rates. To start. It certainly makes more sense than crippling America’s tax administration.

To help them out a bit, here’s the latest link to information listed at the IRS website. It includes internal links to the form, the FBAR question and answer folks, and other information needed to get started with e-filing of the FBAR form: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-%28FBAR%29

And now, how can we Americans overseas respond when, for example, the ‘Independence Party’ takes place on June 30th, is bound to be rained out, and is half in Norwegian? Answer: With at least serious pride, if not outright glee. Therefore,

Hurrah for the flag of the free!

May it wave as our standard forever,

The gem of the land and the sea,

The banner of the right.

Let despots remember the day

When our fathers with mighty endeavor

Proclaimed as they marched to the fray

That by their might and by their right

It waves forever.

  

-June Edvenson

Financial & tax reporting for Americans Abroad

Subject: Financial & tax reporting to the IRS and U.S. - for Americans Abroad


Take: This is an update of my discussion of several tax and foreign bank related issues that are particularly noteworthy for Americans living and working overseas. It has to do with the need to report to the Internal Revenue Service and the U.S. Treasury Department.

This summer, I've had the pleasure of spending the very rainy season doing tax forms for Americans overseas. Ahh, the beauty of formulas and the certainty of numbers when low pressure and constant rain become so challenging to love. And now a conflagration of related news of note has appeared on my personal horizon, albeit mostly digital given the foggy views these days.

It was then that I realized that I had not yet shared the presentation I did for the Fireside Forum group of the American Women’s Club of Oslo. This was delivered in April, 2012, and covers all the basics. You will find it at my Slideshare page, which includes links to documents and resources:
http/www.slideshare.net/EdvensonConsulting/americans-abroad-taxes-and-global-financial-accountability-awcffapril-2012

One of my core points during that April presentation was that global financial concerns must be managed by creating greater transparency - at the individual level. After all, how will Greece solve its problems if they “only take cash” from the Norwegian tourists (the topic of my next blog post), instead of “having to show their income for tax purposes” (...they seem not to know what that is).

On the American side, most Americans overseas are busy working and reporting their income to their country of residence - for taxation in that country. They're rather less concerned with updating their filing status with the Internal Revenue Service while living abroad, and much much less interested in telling the U.S. Department of the Treasury how much they have in foreign banks (for no good reason I can think of, since it is not being taxed in the U.S). And you, Stateside reader, probably think it would be nice to be an ‘American in Paris.’ From what I hear, you would be checking your French tax rate, then your U.S. taxes due, and then you would be cursing that you still owed tax to the U.S. after paying the lower French rates. And then you would report to the IRS, as required, and you would stop complaining, after all, since you would be living the joi de vivre life of brasseries-in-the-sunshine, with beauty and joyful ambience around every corner.

Now that you have studied up the foregoing, and are starting to become alarmed, let’s try this recent IRS notice on for size, dated June 26, 2012. This is entitled, “IRS Announces Efforts to Help U. S. Citizens Overseas Including Dual Citizens and Those with Foreign Retirement Plans.” Here is the link:
http/www.irs.gov/newsroom/article/0%2c%2cid=258431%2c00.html?portlet=108

First, this notice from the IRS indicates that new procedures are going to be in place – to help Americans who have not been reporting to do so now. The new procedures go into effect on September 1, 2012. The article refers to the first new procedure as being that, for citizens who owe little or no back taxes, there will be no “penalties or additional enforcement actions” -if they catch up their tax form filings and financial bank report form filings now and would then owe less than $1500 in back taxes. Well, that is not so new, as most folks are in this category and don’t now pay penalties or experience enforcement actions when they catch up their tax form and bank form filings - because they don't owe anything at all to the U.S. or IRS.

Here is some more specificity on the scope of the new procedures:
http/www.irs.gov/businesses/small/international/article/0,,id=256772,00.html

Let us say, for instance, that you would owe more tax than $1500 and/or have intentionally not been filing your U.S. tax forms while living abroad? You might then want to look into the Offshore Voluntary Disclosure Program (OVDP):
http/www.irs.gov/newsroom/article/0,,id=254187,00.html

Here is the basic run-down, with links to forms and straightforward, relatively uncomplicated writing by the IRS (now that’s nice):
http/www.irs.gov/newsroom/article/0,,id=250788,00.html

Now, do you finally “get the picture?” as we say in Chicago.

I may as well close with this interesting audio news report, covered on National Public Radio on Wednesday, August 8, 2012. You can find it on the www.npr.org website, at:
http/www.npr.org/templates/rundowns/rundown.php?prgId=2&prgDate=8-8-2012

The title of the audio story is, "Tax Evaders, Beware."  Here is a link to the transcript:
http/www.npr.org/templates/transcript/transcript.php?storyId=158441566

As an aside, I really don't know why people don't want to file these forms, except that it's a bit of a hassle. Procrastination produces such unremitting guilt at some point, and even though death and taxes are both certainties in life, why should you let not-filing-your-tax forms ruin your happiness on a continual basis? Stress after all is linked to inflammation, which, left unchecked, can precipitate premature death.

Asides aside! Time to get yourself updated on the tax reporting and bank and securities financial reporting requirements which all American citizens (no matter where they live in the world, and no matter whether they are dual citizens or not) must abide by.
It’s not as scary as it sounds: it’s a matter of just doing it – or having someone do the forms for you, after you collect your information together. If you are in a country with a tax treaty with the U.S., the general routine results in the following scenario: you report your foreign income to the IRS, and if needed, also your foreign taxes paid. The IRS sees this return, reviews it, and says to themselves, “Oh, okay.” They then do not call you or write to you, do not bill you, and they never e-mail you. What could be better? Things could be a lot worse than catching up with these filings – such as not catching up with them before foreign banks begin providing your account information to the IRS anyway, under new rules coming soon.

In other words, if you are like most U.S. citizens abroad, nothing is worse than not doing these forms. Therefore, if you are ‘like’ most U.S. citizens abroad, just do them.  On the other hand, if you are not like most U.S. citizen abroad, it might cost you more.  However, it will only truly cost too much if you don't do them.