If you are a US citizen and have financial interests, signature authority or other investments overseas, you are required to file the Report of Foreign Bank and Financial Accounts (FBAR).
These foreign investments include:
- Bank accounts
- Brokerage accounts
- Mutual Funds
- Any other type of foreign financial account
The FBAR is required for any expat who has, in aggregate, over $10,000 in foreign bank and financial accounts at any point (even one day) during the year. Anything over $10,000 (and this figure applies to all foreign accounts combined) and all accounts must be reported.
FBAR Filing Deadline
In addition to filing with the IRS, many American expats are required to file a foreign bank account report (referred to as an FBAR). The FBAR filing deadline coincides with the U.S. tax deadline of 15th April, but an automatic six-month extension is available for overseas residents (15th October).
How do I file taxes as a US citizen living abroad?
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside. You need to file a tax return and potentially a report of foreign bank and financial accounts (FBAR) and we recommend using a tax adviser to do this.
What happens if you don’t file your tax returns?
Failing to report a foreign bank account or file US tax returns could result in severe penalties and require voluntary disclosure. If FBAR violations are found to be willful, the penalty can be greater than $100,000 or 50% of the amount in each account. Non-willful violations can carry a civil penalty of $10,000.
The good news is that we are experienced in helping clients go through their voluntary disclosure options including the streamlined compliance procedures and voluntary disclosure.
How can we help?
Here at Ingleton Partners our team of in-house UK and US tax specialists have extensive experience in understanding the tax obligations for US expats. When you come onboard you’ll work with our dual qualified team who will be able to assist with all your international tax matters.