# FBAR related question- Max amount to declare after transfering money between accounts



## manny.j

Hello:

I am in process of doing an online filing of FBAR.

One question I have regarding this is, where last year (2013) I had £12,000 in one of my saving account jointly with my wife, which we closed and transferred it to a new saving account which paid high interest rate.

Does this means I have to report both the new open account and close account and stating "£12,000" in the FBAR form even though its the same money? If yes, does this not giving a false impression that we have £24,000 instead of actual £12,000?

Thanks


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## Bevdeforges

manny.j said:


> Does this means I have to report both the new open account and close account and stating "£12,000" in the FBAR form even though its the same money? If yes, does this not giving a false impression that we have £24,000 instead of actual £12,000?


Yup. Though, to be fair, the US$ equivalent of GBP 24,000 is nothing to the IRS. (You do have to report your balances in US$, after all.) They really don't do much with the balances you give them - until and unless they find some discrepancy or "peculiarity" on your income tax form.

Lots of folks transfer money during a given year and wind up "double reporting" like that. Until and unless you're up in the $ millions, I wouldn't worry about it.
Cheers,
Bev


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## manny.j

Bevdeforges said:


> Yup. Though, to be fair, the US$ equivalent of GBP 24,000 is nothing to the IRS. (You do have to report your balances in US$, after all.) They really don't do much with the balances you give them - until and unless they find some discrepancy or "peculiarity" on your income tax form.
> 
> Lots of folks transfer money during a given year and wind up "double reporting" like that. Until and unless you're up in the $ millions, I wouldn't worry about it.
> Cheers,
> Bev


Bev- Thanks very much. Likely always, you are of great help


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## BBCWatcher

Folks, why does this "look like" anything? Give the U.S. Treasury some credit! They are aware of the concept of funds transfer.


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## mavis3001

As a resident alien in the US, I have a related question as I've just discovered that I will need to file delinquent FBARs and probably pay the 5% penalty via the streamline procedure. Is this method of calculating assets used to generate the 5% amount, because then it is effectively 10% in the example given above?
Thanks & sorry if I've hijacked this thread.


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## DavidMcKeegan

mavis3001 said:


> As a resident alien in the US, I have a related question as I've just discovered that I will need to file delinquent FBARs and probably pay the 5% penalty via the streamline procedure. Is this method of calculating assets used to generate the 5% amount, because then it is effectively 10% in the example given above?
> Thanks & sorry if I've hijacked this thread.


Fortunately we have caught up hundreds of people on their FBAR's and have yet to see anyone receive a penalty. If you truthfully did not know about your requirement, and you are coming forward voluntarily, we have found the Treasury to be quite lenient on late filers.

I would get your FBAR's filed for the last six years and send them in as soon as possible. From there you are likely not going to hear another word.

However in the rare event that they decide to penalize you, I am sure you can speak with them and explain the situation if need be so that you are not being penalized twice on the same income.

Good luck!


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## mavis3001

DavidMcKeegan said:


> Fortunately we have caught up hundreds of people on their FBAR's and have yet to see anyone receive a penalty. If you truthfully did not know about your requirement, and you are coming forward voluntarily, we have found the Treasury to be quite lenient on late filers.
> 
> I would get your FBAR's filed for the last six years and send them in as soon as possible. From there you are likely not going to hear another word.
> 
> However in the rare event that they decide to penalize you, I am sure you can speak with them and explain the situation if need be so that you are not being penalized twice on the same income.
> 
> Good luck!


Thank you.

I believe that as I have around $2000 interest from these foreign accounts I have to amend the last 3 years of returns and pay whatever is necessary there too. This probably means I can't just file the last 6 FBARs and hope for the best.

The irony is that I've used a foreign CPA in the past who never asked the question of me about foreign accounts! It was turbo-tax that alerted me to the problem this year.


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## DavidMcKeegan

Yes in that case you should amend the last few years of returns as well just to make sure everything is properly reported. You are still unlikely to receive an FBAR penalty, however you could receive interest and penalties from your tax returns if it turns out you would have owed for each of the last few years.


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## maz57

I think the 5% penalty is assessed on the unpaid taxes owed on the income from the undeclared accounts, not the value of the accounts themselves. I expect you will be just fine. 

There is a section on the FBAR form where you can explain why they are late. Some variation of "I didn't know about FBAR until now" seems to work well. Logically, penalizing people for doing the right thing wouldn't be a good way to encourage people to do the right thing.


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## BBCWatcher

As David is alluding to, one choice you have is to follow the normal process: file ordinary 1040X amended tax returns to get the undeclared interest income properly reported. You'll then likely owe additional income tax on that previously undeclared income, plus interest and penalties. Once the IRS sends you a bill you have the option to ask the IRS for forbearance, to waive (or partially waive) the penalties (but likely not the interest and unpaid tax).

For the FBARs you also have the option of ordinary late filing, for the past 6 years plus the current year (so 2014, plus 2008, 2009, 2010, 2011, 2012, and 2013, assuming you had a filing obligation in all those years -- you skip the ones when you didn't). FinCEN Form 114 allows you to select a reason why you're filing late. Assuming the reason is truthful, and assuming your late filing is "unprompted" (meaning the Treasury Department didn't contact you first), we haven't heard reports of penalties being assessed.

The domestic Streamlined Program has certain terms and conditions which may or may not be attractive in your circumstances, but that's another option in lieu of the _normal_ late filing processes. My understanding is that whether you choose to participate in the Streamlined Program or not, it begins with exactly the same procedure: filing your FBARs. So start with that, now. Then (very soon) take a look at how much tax (and interest and penalties) you're likely to owe on that $2000 of interest income per year. (Don't forget to take the Foreign Tax Credit on foreign income tax on that interest -- the U.S. does not double tax you on that income.) _Probably_ the normal late tax (including interest and penalties) is going to be quite low relative to Streamlined Program penalties on assets, but you can compare.


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## StewartPatton

DavidMcKeegan said:


> Fortunately we have caught up hundreds of people on their FBAR's and have yet to see anyone receive a penalty. If you truthfully did not know about your requirement, and you are coming forward voluntarily, we have found the Treasury to be quite lenient on late filers.
> 
> I would get your FBAR's filed for the last six years and send them in as soon as possible. From there you are likely not going to hear another word.
> 
> However in the rare event that they decide to penalize you, I am sure you can speak with them and explain the situation if need be so that you are not being penalized twice on the same income.
> 
> Good luck!


This is an extremely bad idea. David is advocating a "quite disclosure," which is where you simply file the forms late and hope for the best (i.e., play the audit lottery). The better way to handle the issue is to use one of the amnesty programs, which may not involve any penalty at all depending on your specific facts. Friends do not let friends do a quiet disclosure.


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## Bevdeforges

Depending on your level of income, and the level of exposure given your sources of income, lots of folks have done quiet disclosures and lived to tell about it.
Cheers,
Bev


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## StewartPatton

Lots of people have walked across the street without looking both ways and have lived to tell about it. Doesn't mean it's a good idea, especially when it is so easy to simply look both ways (ie, participate in an amnesty program).


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## shidareume

StewartPatton said:


> This is an extremely bad idea. David is advocating a "quite disclosure," which is where you simply file the forms late and hope for the best (i.e., play the audit lottery). The better way to handle the issue is to use one of the amnesty programs, which may not involve any penalty at all depending on your specific facts. Friends do not let friends do a quiet disclosure.


There is nothing "quiet" about filing past FBARS. You're filing them, and saying why you are late with them. What could be more noisy than that?


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## StewartPatton

shidareume said:


> There is nothing "quiet" about filing past FBARS. You're filing them, and saying why you are late with them. What could be more noisy than that?


A "quiet disclosure" is a term of art for when you just file something without going through an actual amnesty program. It's an option in a situation where the only available amnesty program would be really rough on the taxpayer, but it's a really bone-headed move when using the amnesty program is no more costly than just filing the naked FBARs.

Just so we are clear, the IRS has published an amnesty procedure for when a taxpayer has not filed FBARs and has no unpaid tax. The taxpayer needs to file the FBARs and send a reasonable cause statement to the IRS. David is advocating not using that very simple procedure and instead only filing the FBARs. There is just no justification for this cause of action. The IRS wants you to jump through a hoop to reduce your likelihood of a $10,000 per year penalty down to 0%, so you might as well jump through that hoop--it is ridiculous not to.


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## DavidMcKeegan

StewartPatton said:


> A "quiet disclosure" is a term of art for when you just file something without going through an actual amnesty program. It's an option in a situation where the only available amnesty program would be really rough on the taxpayer, but it's a really bone-headed move when using the amnesty program is no more costly than just filing the naked FBARs.
> 
> Just so we are clear, the IRS has published an amnesty procedure for when a taxpayer has not filed FBARs and has no unpaid tax. The taxpayer needs to file the FBARs and send a reasonable cause statement to the IRS. David is advocating not using that very simple procedure and instead only filing the FBARs. There is just no justification for this cause of action. The IRS wants you to jump through a hoop to reduce your likelihood of a $10,000 per year penalty down to 0%, so you might as well jump through that hoop--it is ridiculous not to.



I am not advocating anything one way or another. I am offering general advice on a general forum and that is that. People can weigh their options and choose what is best for them. 

For our clients we go over all of their options and they can choose what works best for their situation. Much more thorough advice and guidance is given, but of course you can not go into that type of depth on a public forum. 

While the vast majority go through an amnesty program of some kind, others don't and we have yet to see a penalty applied for either situation. Using scare tactics and threats of penalties is completely unprofessional and is part of the reason expat accountants and lawyers are getting a bad name.


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## StewartPatton

DavidMcKeegan said:


> I am not advocating anything one way or another. I am offering general advice on a general forum and that is that. People can weigh their options and choose what is best for them.
> 
> For our clients we go over all of their options and they can choose what works best for their situation. Much more thorough advice and guidance is given, but of course you can not go into that type of depth on a public forum.
> 
> While the vast majority go through an amnesty program of some kind, others don't and we have yet to see a penalty applied for either situation. Using scare tactics and threats of penalties is completely unprofessional and is part of the reason expat accountants and lawyers are getting a bad name.


David, you said upthread that you do quiet disclosures all the time. You can't now try to back-pedal from that by calling it general advice on a public forum--it is a ridiculous recommendation, and it is teling that you won't stand by it now.

I am not using scare tactics and threats of penalties, I'm educating people on the best way to solve a problem. The best way is to use the procedures that the IRS has published for people to use to avoid penalties, not to simply file delinquent FBARs and hope for the best.


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## DavidMcKeegan

StewartPatton said:


> David, you said upthread that you do quiet disclosures all the time. You can't now try to back-pedal from that by calling it general advice on a public forum--it is a ridiculous recommendation, and it is teling that you won't stand by it now.
> 
> I am not using scare tactics and threats of penalties, I'm educating people on the best way to solve a problem. The best way is to use the procedures that the IRS has published for people to use to avoid penalties, not to simply file delinquent FBARs and hope for the best.


You are obviously not reading the same thread I am because no where did it say anything of the sort. The only telling thing I can see is your lack of professionalism shining through. Well done.


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## ForeignBody

StewartPatton said:


> A "Just so we are clear, the IRS has published an amnesty procedure for when a taxpayer has not filed FBARs and has no unpaid tax. The taxpayer needs to file the FBARs and send a reasonable cause statement to the IRS. David is advocating not using that very simple procedure and instead only filing the FBARs. There is just no justification for this cause of action. The IRS wants you to jump through a hoop to reduce your likelihood of a $10,000 per year penalty down to 0%, so you might as well jump through that hoop--it is ridiculous not to.


Delinquent FBAR Submission Procedures

Where does it say "send a reasonable cause statement to the IRS"?

It says "file .. according to the FBAR instructions". It doesn't even go to the IRS.

You "professional" guys give us good reason for not paying anyone, but working it out ourselves.


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## Bevdeforges

OK, I think this discussion has gotten itself into an endless loop.
Cheers,
Bev


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