# FBAR fears



## Stuart35

I have only just recently learned about this thing for USA taxes and am properly scared. Have done loads of reading.

I plan on becoming compliant by somehow trying to figure out all my bank account details over the last 6 years. Not easy when I am always hunting for the best deal and thus moving money around. :/

My last few question:

1. There's been plenty of times when I had X amount in account A and then moved it to account B. Will there be an issue from the perspective that I will look a lot richer than I am, in a scenario like this, if I only have 50k total but it looks like I have 150k total since that 50k went from account A to B in January, from B to C to get a better interest in June? Do you attach explanations to say money is being moved around?

2. It seems people are ok as long as they have filed and paid their taxes in the past. I have done so, but in my panic and looking into my bank accounts etc over the past years, I appear to have missed out on about 500 dollars of interest income (taxed locally) a couple years. Given that I was filing my income and form 2555s, this extra 500 dollars would not impact my tax bill in any way. It seems people that file FBARs at the same time as 1040Xs are in much deeper trouble. Do I have to file amended returns over small amounts like that, which do not impact my overall tax bill in the US?

And finally...

3. What is the FBAR treatment of houses & mortgages?

Thank you for all the help. So worried!


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## BBCWatcher

1. It is what it is. There's no use worrying about what has already happened.

2. Take a look at the IRS's streamlined compliance program and use it. If you need to file amended returns, do it. People file amended returns all the time when they become aware of new facts. It's way better to let the IRS know what reality is before they figure it out. If there's no change in your tax liability you're fine. If there is a change in your tax liability the worst that can happen (if you report) is that you'll have to pay interest and penalties. And for $500 of interest income that's not much.

3. Neither houses nor mortgages are financial accounts for purposes of FBAR, unless they're something quite strange.


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## Stuart35

The problem here is that the streamlined procedure is not available if you have any amended 1040s... I thought they only want amended ones anyway if there would be a change in the tax itself (which mine would not)? I guess technically if FBARs have not been sent before most would in theory need to redo the 1040 because of a missing schedule b part 3 but I guess this is not normally done.

I thought the preferred procedure was to just get up to date, not the proper streamlined procedure (especially if I have filed my previous tax returns)?


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## Bevdeforges

As BBCWatcher says, it's not nearly as critical a process as you may think.

They are looking specifically at the high balance in each account each year and not at any "apparent" totals. The key thing is reporting the accounts (and they do ask for bank addresses and account numbers). If you don't have all the monthly statements, make a good faith estimate (guess) at what the high balance could have been - and if you're worried about it, better to overestimate by a bit than to underestimate. (I usually add $1000 or so to a balance if I have any doubts about the high balance for the year.)

File 6 years back (statute of limitations) and the current year (2012) and you should be done with it. I wouldn't bother to amend past returns unless you find a LARGE amount of income you neglected to report that would result in a significant amount of additional taxes due (say, $1000 or more). Generally speaking, the most they'll look at is to compare the bank accounts you declare against the bank accounts you reported interest from - and if they note anything "odd" they have the account numbers to check things out. As long as you've made a good faith effort to come into compliance and you're not "hiding" anything, you'll probably never hear anything again from them on the matter.
Cheers,
Bev


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## Stuart35

Thanks Bev.

A few follow up questions:

1. So say in account A, in the middle of the month 10k came in but 5k went out a few days later, and the month end bank statement says 5k, are they wanting what is on the statement - 5k - or the total the single day of the year when the account held the most money at any given point?

2. As I said, any amendments would be minor to the extent that there would be no tax change at all. We are talking a few hundred at most, which would all be well covered within the foreign income tax exclusion since my income (all reported properly) is well under the limit. But, I never included a schedule B in ANY return, as I didn't think I needed to. It never got questioned either - I even had the IRS give me an extra refund for a credit I missed out on once, and no word on Schedule B. So I just included the interest on like 8a, as I didn't think I was required to send a schedule B. Is this a bigger issue?? Worried about this now and had no idea it was a problem!

3. Is it best to mail them all together (the FBARs) with a letter of explanation?


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## Stuart35

FYI - I didn't include Schedule B because it said you only need it if interest is over 1500 dollars, which it wasn't. So I guess I am in the clear and okay with that aspect? Other than the FBAR part obviously. It means they'd not have anything on an FBAR to compare to which accounts I declared in my income, as there was not a listing of those accounts in the 1040.


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## Bevdeforges

Stuart35 said:


> Thanks Bev.
> 
> A few follow up questions:
> 
> 1. So say in account A, in the middle of the month 10k came in but 5k went out a few days later, and the month end bank statement says 5k, are they wanting what is on the statement - 5k - or the total the single day of the year when the account held the most money at any given point?


You can choose what method you want to use to determine the high balance. And one of the methods they expressly condone is reporting the highest balance reported to you on your regular (monthly) statements. If you took money out mid month and it didn't show up on an end of the month statement, that's fine.



> 2. As I said, any amendments would be minor to the extent that there would be no tax change at all. We are talking a few hundred at most, which would all be well covered within the foreign income tax exclusion since my income (all reported properly) is well under the limit. But, I never included a schedule B in ANY return, as I didn't think I needed to. It never got questioned either - I even had the IRS give me an extra refund for a credit I missed out on once, and no word on Schedule B. So I just included the interest on like 8a, as I didn't think I was required to send a schedule B. Is this a bigger issue?? Worried about this now and had no idea it was a problem!


The fact that you're backfiling the FBAR forms kind of implies that you would have filed a Schedule B if you had known. And yes, people file Schedule B's just to tick the little box. But some folks "forget" and I have yet to hear of anyone getting hassled for filing an FBAR when they hadn't filed a Schedule B to tick the little box. It's really and truly not a problem.



> 3. Is it best to mail them all together (the FBARs) with a letter of explanation?


The FBARs aren't actually an IRS form. For years they were referred to as "the Treasury form" and you send them to a separate office of the Treasury Department (i.e. not the IRS). 

Personally, I'd send them all in, with a cover note explaining that you just learned of the FBAR requirement and mention that you believe you have included the interest income in your prior tax returns. Keep it simple. They're really looking for the high rollers, who have something to hide.
Cheers,
Bev


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## Stuart35

Thank you - your help is much appreciated!

I have spoken to my sister who also lives abroad about this, and she was just as clueless and is properly freaking. Considering giving up citizenship over it!


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## BBCWatcher

Tell her to just file the forms and not "freak out." She can freak out if she meets Justin Bieber.


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## Vangrrl

Stuart35 said:


> 1. There's been plenty of times when I had X amount in account A and then moved it to account B. Will there be an issue from the perspective that I will look a lot richer than I am, in a scenario like this, if I only have 50k total but it looks like I have 150k total since that 50k went from account A to B in January, from B to C to get a better interest in June? Do you attach explanations to say money is being moved around?


What you are describing is a pretty normal scenario and I'd say pretty much everyone filing FBAR's has come across this issue. Assuming these aren't million dollar accounts, I wouldn't attach any note or explanation.


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## Stuart35

They're not million dollars at all - I wish! But in total we're talking maybe 90k USD (which obviously could look 2-3x bigger being in several accounts, unless they don't show up in a monthly statement which I will need to check). Life savings, really. No issues, I guess?

Still so worried. I don't want to become a criminal over all of this if they don't like my so-called quiet disclosure I guess.


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## Bevdeforges

$90K may sound like a lot to you and me, but believe me, the IRS has much, much bigger fish to fry with all this FATCA and FBAR nonsense. And as long as you've been filing your regular tax returns all this time, you're really not at all the profile that they're out to "get."
Cheers,
Bev


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## Stuart35

Thanks again. And I have indeed, though I am late with the last one by a few months now obviously...going to get that sorted and pay any late penalties of course. I hope this wouldn't affect anything extra. :/


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## Stuart35

Another quick follow up - is it bad that I got a refund one year, thanks to the making work pay credit? Obviously that is several years ago, but I don't want it to make me seem high risk or anything, especially since I guess the best thing to do is just file the FBARs and not try to do the streamlined procedure.


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## BBCWatcher

No, it's not bad.


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## Bevdeforges

Don't get paranoid about this. One little refund won't put you on the IRS hit list. 

Just send in the FBARs. If they really want anything more from you, they'll be in touch. And if they have some reason to suspect you're hiding your millions (or should I say "zillions") they'll be in touch really soon. But otherwise "no news is good news."
Cheers,
Bev


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## Stuart35

Just want to say a big thanks for tolerating all my fears over this. It was just a big shock to the system. Not sure how long it will take me to get all the papers ready (need my banks' cooperation), but hopefully soon enough.

Quick (and hopefully final) follow ups:

1 - how long before I hear back from them, IF I were to (which I hope to not)? ie, after x amount of time, when I can I start breathing a sigh of relief?
2 - how come just mailing them is the preferred method over the streamlined procedure with the questionnaire etc?


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## Stuart35

I'm hoping anyway they've never tried to get in touch, they could have but the address they have would be outdated for a while now so I'd have had no idea.


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## Bevdeforges

If you've been filing your income taxes, why wouldn't they have your current mailing address? But honestly, this is the ultimate in "no news is good news." Unless they have some reason to doubt your filings or to have further questions, you won't hear anything from them.

I once got a response to a FBAR I filed. The company I work for has an English sounding name, and I had simply left the space for "Employer ID number" blank. So they asked me for the EIN. I sent the form back marked "not a US employer - no EIN" and that was the end of that. (Had to report my employer's bank account since I have signature authority over the account.)
Cheers,
Bev


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## Stuart35

Oh it was just that I moved shortly after my last return. Either way, fingers crossed it all goes well. Still very nervous. Thanks for all the help!


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## Vangrrl

Stuart35 said:


> Just want to say a big thanks for tolerating all my fears over this. It was just a big shock to the system. Not sure how long it will take me to get all the papers ready (need my banks' cooperation), but hopefully soon enough.
> 
> Quick (and hopefully final) follow ups:
> 
> 1 - how long before I hear back from them, IF I were to (which I hope to not)? ie, after x amount of time, when I can I start breathing a sigh of relief?
> 2 - how come just mailing them is the preferred method over the streamlined procedure with the questionnaire etc?


Trust me, many of has have felt exactly as you have! Once you have a plan and take action, you will feel better. 

1- I did a quiet disclosure and filed back 4 years of returns and FBARs in summer of 2011 (this is before the "streamlined" process was introduced - I wrote a short letter explaining why had never filed and attached it to the two mailings). I heard from the Dept of Treasury in April 2012. It was a letter saying that I had used the wrong version of the FBAR form for 2007 and I should use the new version of the form. So I filled out the form again and sent it back to them. Never heard from them again. I've never heard from the IRS. 

2- Personally I have no interest in making the process "streamlined" for them! I'd rather add my stack of papers to the larger stacks of papers that flooding their offices thanks to these disclosure rules! I will not file fbar's online or even my tax returns unless I have to. I'm also somewhat obtuse in my filings - I've never included my husband's name or my employers name on my returns (I've written Non-American or Non-American corp). I was semi-expecting to be asked for more info, but so far so good.


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## Stuart35

Very nice to hear you had no issues. Can I ask why you only filed 4 years instead of the typical 6?


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## Vangrrl

Back when I filed there was no clear direction from the IRS about what you "should" file other than the recommendation that filing "delinquents" enter the OVDI program. Quiet disclosure was frowned up and to be undertaken at your own risk. Some "experts" were suggesting filing back 6 years, some were saying 3 years and some were saying 1 year but no one new for sure what would satisfy the IRS.

I opted to file back 4 years because I had all the documents readily available for those years and my tax situation had been consistent over that time. My goal was to establish that I don't have any US financial ties or income sources, I don't owe taxes and am not stashing millions in an off shore account. I wanted to identify myself as someone not worth their effort to pursue further. 

I figured if they wanted more info or more returns, then they could ask.


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## Bevdeforges

BBCWatcher said:


> I don't think you can file FBARs online.
> 
> Paper forms are scanned and OCRed these days.


Actually, as of last year, yes you can. I forget the website URL, but when I checked it out last year, it was pretty gruesome. (Apparently the website is the property of some "Anti-fraud" unit of the government, with all the ambiance that implies.) The paper forms are far "friendlier" than the e-file stuff for the FBAR. 
Cheers,
Bev


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## Stuart35

When they say 6 years...do they include the "current" year or not? ie should I be filing 2006-2012, or 2007-2012?

Trying to figure out these figures for my bank accts 6-7 years ago when I have so many that I move money around to get the best rates etc is proving to be no easy feat!


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## Bevdeforges

Given that the "current" year (2012) is not yet due, I'd say do six back years (2006 - 2011) and then just be sure to get 2012 in on time (by the end of June).

The key thing is to get the account names, addresses and account numbers straight. If you have to guesstimate the high balance, make a real good faith stab at it and get on with things. Unless there is something "weird looking" about what you report, it's very unlikely they'll check the back filings much (if at all). And by "weird looking" I mean depositing $1 million in "Fred's Friendly Bank of the Cayman Islands" and having that amount simply vanish into thin air the next year.
Cheers,
Bev


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## Wee Wallace

Can I just say that, having just found this site, I've been hugely helped and reassured - many thanks, Bevdeforges!!

I'm a Brit married to a US citizen who's lived here for over 40 years. Yours truly does the tax returns for both countries - and we've filed every year that he's been here. Like Stuart, I've only recently realised that he should have been filing FBARs; and, like Stuart, I've been very worried about non-compliance.

Having read the discussions here, I've decided to send 2006-2011 FBARS with a covering (grovelling?) letter. I've just about finished pulling together the financial information . Does anyone have access to the Treasury exchange rates for those years? Or will I have to email the Treasury to get them?

Also, am I right, Bev, in thinking that it's OK to send them all in one envelope and send the 2012 separately?


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## quincy

My mom was in the same situation. Lived in Canada for 40 years, filing every year to the IRS but not the FBAR. (She was using an accountant, too!)In 2009, she learned of the FBAR and just started filing from that point forward. No back filing. No letter explaining anything. She had reported all of the income, though, all along. She has never heard a word back and she had balances in the high 6 figures. She used the historical exchange rates from the Bank of Canada site.


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## Bevdeforges

You can use any exchange rates you like, as long as they are "valid" (i.e. logical) and more or less consistent. The IRS publishes its own tables of "averages" for past years: Yearly Average Currency Exchange Rates
Cheers,
Bev


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## Stuart35

quincy said:


> My mom was in the same situation. Lived in Canada for 40 years, filing every year to the IRS but not the FBAR. (She was using an accountant, too!)In 2009, she learned of the FBAR and just started filing from that point forward. No back filing. No letter explaining anything. She had reported all of the income, though, all along. She has never heard a word back and she had balances in the high 6 figures. She used the historical exchange rates from the Bank of Canada site.


Interesting, that is when they were properly cracking down on it too, isn't it? Makes me a bit more reassured that I won't end up with some 200k fine as the horror stories seem to say.

I am still trying to get all the 06-11 data but I guess I should mail that asap, and then the 2012 separately...or all together?


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## Bevdeforges

Mail the 2012 one separately. That one will actually be on time - as long as you get it in before the end of June. It's the back filed ones that (I suppose) you can send in all together - with or without a cover letter saying "oops, I just found out about this. Sorry, guys."
Cheers,
Bev


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## Stuart35

Do accounts that have a zero balance, or near 0 (like 1-5 USD) need reporting? I have a few that I emptied out pretty much but never closed...


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## Stuart35

Also - one of my banks that is helping me with this has gotten back to me and said they don't have access to statements from each month anymore, however what they could do is simply check the figure on the last day of each month and then choose the highest from the year (this is for a bank that doesn't let you see more than a month's history online so I have had to ask them for help). Does this sound ok, or should I ask them to check each individual day in the last 6 years?


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## Stuart35

One final question now that I am in the nitty-gritty! If some pages don't apply (such as signature authority over a company account), can I just emit those pages, or should I attach all pages that the form prints off, even if blank?


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## Stuart35

Thanks.  How frustrating/stupid!

I have one account that has not had any money in it since 2007, but it is still open. Guess that needs reporting every year!


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## Bevdeforges

Actually, in the instructions to the forms, they specifically say that you can simply use the monthly statement balances and report just the high statement balance. You do NOT have to go back through the day by day records. If it makes you feel better, add $1000 or so to whatever balance the bank gives you. (No penalty for over-reporting!)

Whether you report the 0 balance accounts or not is up to you. Technically, yes, you should - you report ALL accounts if your cumulative total is over the threshold. But practically speaking, I doubt they'd fuss too much if you didn't. (How they would find out about an account that small is anyone's guess.) I'm sure there are those who "forget" about accounts much larger than those.

I usually send in the whole form, with the blank pages barred with a single line or with N/A indicated. If you omit the forms, be sure to fill in the little "page ___ of ____" part in the upper right corner of the forms you do submit so they can see that you intended not including the pages.
Cheers,
Bev


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## humanaso

Stuart35 said:


> The problem here is that the streamlined procedure is not available if you have any amended 1040s... I thought they only want amended ones anyway if there would be a change in the tax itself (which mine would not)? I guess technically if FBARs have not been sent before most would in theory need to redo the 1040 because of a missing schedule b part 3 but I guess this is not normally done.
> 
> I thought the preferred procedure was to just get up to date, not the proper streamlined procedure (especially if I have filed my previous tax returns)?


Stream line procedure in only for those that have not filed at all. This leaves people like you who did file in the dark as to what to do. 

I think the best course is to file back fbars with a letter explaining why you never filed them before. Do nothing about the 1040's since there is no material change in your tax liability. Then wait to see what happens and my guess is nothing will become of it and you will have complied for the missing years, and explained why.


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## Bevdeforges

As I understand it, the "streamlined procedure" applies only to income tax filings. The FBARs are not income tax filings, nor are they income tax related.
Cheers,
Bev


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## ironflyer

Just going through this myself. I've passed through the discovery and feel like vomiting stage and thanks to the calm words on here have put this all in to perspective and I am just doing the streamline paper work. I'll keep you updated as to what I hear.

Are there any good books for expat tax returns?

I've lived in the UK for 10 years I have zero financial connection to the USA. We rent in the UK. My total worldwide income is from a UK cash ISA that collects less than £250/yr interest. Unfortunately this JUST pushes me over the $10,000 FBAR requirement. I have now started work so have a pro doing the 2012 return, I knew I would have to file when I started work but didn't know about the past years or this FBAR issue - hence the initial shock.

I want to make sure I've done the past returns correctly. Given I have never claimed foreign tax credit, and the gross income is less than the standard deduction , I have just put zero's from line 43 onwards. Infact line 8a is the only line with 'my' numbers in and then the standard deduction (line 40) and exemption (line 42), everything else is zero. Does that sound reasonable? Given the prices I've been quoted to do these past returns I keep thinking I must be missing something.

Any other words of wisdom before I send the streamline paperwork off? The other option is to file 2012 and just send the past FBARs with sorry note. However as the streamline process seems made for people like me I'm worried doing anything else is not correct. I have nothing to hide from them - I just want to do it correctly.


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## ironflyer

Bevdeforges said:


> As I understand it, the "streamlined procedure" applies only to income tax filings. The FBARs are not income tax filings, nor are they income tax related.
> Cheers,
> Bev


Bev

Do you think given


> My total worldwide income is from a UK cash ISA that collects less than £250/yr interest.


 that I need to streamline? Was there any requirement for me to file, with such little income? I've done the paperwork now so no problem sending it, but feel I'm entering into the unknown.

Thanks


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## Bevdeforges

ironflyer said:


> Bev
> 
> Do you think given that I need to streamline? Was there any requirement for me to file, with such little income? I've done the paperwork now so no problem sending it, but feel I'm entering into the unknown.
> 
> Thanks


To be honest, if your entire worldwide income is only 250 GBP a year, then you don't need to file. Threshold even for filing "married, filing separately" is something north of $3500 and 250 GBP doesn't even put you at $1000. I'd skip the income tax returns altogether until and unless you "need" to (like, if you want to move back to the US and bring your UK spouse on a green card).

Being just nominally over the $10,000 threshold, I think you could probably get away with just starting to file your FBAR for 2012 and doing so annually in the future. They aren't really going to go back on accounts that are right at the threshold to "go after" you if you exceeded the threshold by $100 or so.

Personally, I'd just file going forward and forget about the back filing, simplified or not.
Cheers,
Bev


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## ironflyer

Thanks all food for thought.

I like the idea of just filing going forward, but now I know of the FBAR requirement (and penalties!!) it feels dishonest not back file these.

Given how simple those back tax returns are (if I've done them right) I feel I might as well just bundle everything to the single streamline address and let them sort it out. Given I represent no risk to them, that will be the end of it. If I just file going forward they could claim penalties as by typing this I've acknowledge that I should have sent them prior FBAR info.

hmmm I'll have a think.


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## Stuart35

I have a pension plan via my employer, they set it up and whatnot but it is a personal pension plan that I can access online, and I can add extra cash to it as I choose (though I think that is the case with any pension plan in the UK). I assume this doesn't need reporting on the FBAR? I'm confused as to the distinction between ones you don't (employer) and ones you do.


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## Bevdeforges

Stuart35 said:


> I have a pension plan via my employer, they set it up and whatnot but it is a personal pension plan that I can access online, and I can add extra cash to it as I choose (though I think that is the case with any pension plan in the UK). I assume this doesn't need reporting on the FBAR? I'm confused as to the distinction between ones you don't (employer) and ones you do.


Safer to report it on the FBAR. There's a question as to whether or not there are other reporting requirements (under the FATCA regulations), but at least if you report it on FBAR they can't accuse you of hiding anything.
Cheers,
Bev


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## Stuart35

For the high amounts for previous years, is it ok to just take the balance at end of month (say 30/31st) and use that for determining the high balance?

Nearly at the end of my saga, I think...so scared of it all to be honest.


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## Stuart35

I should say - this is for accounts that I have statements for.

There are months where x came in on the 12th, X left on the 15th, leaving Y at the end of the month. Is it ok to report Y instead of X? The FBAR instructions seem to imply that this is only ok if it is the figure on the statement, but this would be ideal to avoid double-reporting income (since X then made its way into a different account where it is reported...).


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## Stuart35

One more thing - did you guys justify where the monies have come from in your cover letter? I am wondering if I should not only apologise for not being aware but also explain the different sums etc.

Thanks again. Nearing the end of all this drama!


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## Bevdeforges

When dealing with the IRS (or any government agency) answer ONLY the question asked. Do NOT volunteer any additional information. If they need or want to know, they will ask.
Cheers,
Bev


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## amphitecna

I just wanted to add my 2cents since I just went through this gut-wrenching game in October. My profile is similar to yours, but I don't work and have little income, but my NRA husband does.

What Bev and BBC are saying is true. Bev offered me MANY reassuring words while I was going through this, but I also actually called the Treasury office, in tears and talked to the two women who answer the phone. They both told me "it didn't sound like I fit their profile, but [of course] they couldn't gaurantee anything".

They did expressly tell me to send an explanation letter WITH EACH FORM (I think a pp suggested not to bother), identifying the year the letter was explaining, giving my SSN and saying that "I was unaware of the filing obligations, and thus am coming into compliance now." Simple as that, a one liner. I think I wrote a bit more than that, but copied it for each form, changing the year and whatever other identifying information. On another F-bar thread in here somewhere, someone who seems to be an expat-taxpreparer suggested respectfully requesting that penalties and fines be waived. Since this was after I mailed it in, I didn't, not sure how much of a difference it would make.

I sent it all in one envelope and registered it, although that was more for me than anything else. 

Hopefully I'm not now jynxing myself (will let you know if I did), but so far so good (knock on wood). It's just shy of 6months since I sent it in. Obviously, there's another 5.5 years on the statute of limitations, but I sleep at night, and don't sweat checking the mailbox. 

One thing I did do, that I regret is that I put my husband's name and SSN (he's NRA, but lived in the US for about 7 years) on the form. Not sure if I can "all of a sudden" change to "NRA-Spouse" for this year, but am contemplating it. I'm not sure they get bogged down in those details, but who knows, maybe they're bored/feeling spiteful. I just don't want them to have him on their radar.

And finally, I've been looking into this quite a bit, and while there's certainly a lot of scare-mongering going on with "financial armageddon", there are no first hand reports of anyone who has actually been come after. I feel like someone getting unfairly bankrupted by Uncle Sam would have vented somewhere on the internet. Unless I missed something? So, yeah, like Bev and BBC say try to relax about it, and as someone suggested to me (I'm paraphrasing)- file every itsy bit of paper you can, just, well, just because there's some sort of satisfaction in burying them in mounds of useless paper, given the mounds of useless filing they ask us to do.

Good luck- this too shall pass!


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## Cara123

amphitecna said:


> They did expressly tell me to send an explanation letter WITH EACH FORM (I think a pp suggested not to bother), identifying the year the letter was explaining, giving my SSN and saying that "I was unaware of the filing obligations, and thus am coming into compliance now." Simple as that, a one liner. I think I wrote a bit more than that, but copied it for each form, changing the year and whatever other identifying information. On another F-bar thread in here somewhere, someone who seems to be an expat-taxpreparer suggested respectfully requesting that penalties and fines be waived. Since this was after I mailed it in, I didn't, not sure how much of a difference it would make.
> 
> I sent it all in one envelope and registered it, although that was more for me than anything else.


Thanks so much for the part about an explanation letter for each form; I was going to send only one. Not too long ago I also posted a question regarding FBAR as no expat in Europe (that I know of) has ever heard of this. I'm still trying to get all the numbers in order as I dig up bank statements and do the euro-dollar conversion, but I aim to get everything in the mail asap.


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## KeithCAN1

Stuart35 said:


> The problem here is that the streamlined procedure is not available if you have any amended 1040s... I thought they only want amended ones anyway if there would be a change in the tax itself (which mine would not)? I guess technically if FBARs have not been sent before most would in theory need to redo the 1040 because of a missing schedule b part 3 but I guess this is not normally done.
> 
> I thought the preferred procedure was to just get up to date, not the proper streamlined procedure (especially if I have filed my previous tax returns)?


Hi Stuart,
What did you end up doing? Did you just file FBARs only? I am in the same exact boat as you. I filed my 1040s but no FBARs and I didn't report my foreign interest gained (and other things like pension which need additional forms, etc). I was thinking of filing 1040x in addition to FBARs even though it is unlikely I owe that much (if any) taxes. Was wondering what you decided to do.

Advice I've gotten on this has been pretty broad from file 6 years back of FBARs and 1040x to "just leave it all alone and same, they aren't after you" and everything in between (file just 3 years of FBARs or just file FBARs going forward).

I don't feel comfortable leaving it all alone, simply because now I know of an issue. I'd rather try to make some amends but just trying to decide how much to do.


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## Bevdeforges

FBARs and Income tax forms (i.e. 1040s and related forms) are two separate filing requirements. File 1040x's for whatever period you need to. (There is normally a 4 year statute of limitations - except in the case of unreported income, which remains "open" forever.) FBARs have a 6 year statute of limitations, so file the last 6 years.
Cheers,
Bev


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## KeithCAN1

Thanks Bev for the reply.
Yep, I know 1040x (IRS) and FBAR (Treasury) go to two diff groups. I've just heard some people say as long as you don't owe taxes to the IRS, don't bother with the 1040x and just submit the FBARs to the treasury and you are fine. Others say your returns and FBARs must square up. Just curious which side most people lean towards.


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## Bevdeforges

It may start to change with all this new FATCA stuff going on, but for the 20 years I have been filing the forms, it doesn't appear that they match up the FBARs with the 1040s at all. Certainly not as to balances reported. I know I have made a point of listing the same banks on my list of interest income (Schedule B) as on the FBARs - but nothing about the individual accounts. But my situation is really simple and probably doesn't draw any attention whatsoever, no matter what I report.
Cheers,
Bev


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## KeithCAN1

I guess in my case I'm trying to figure out if filing 6 years of amended 1040x will make it worse for me. I talked to some buddies and they say just send in the old FBARs and not bother with the rest. I'm leaning to trying to fix everything by filing those 1040x also (I have not been sending in a schedule B at all on my original 1040 since I never reported Canadian account income) but they say I'll just cause more trouble if I don't owe anything. I'm torn.


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## BBCWatcher

I think this is an easy decision. You won't owe a dollar more if you report the truth, but you can be prosecuted or sanctioned for not telling the truth.

I'd tell the truth.


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## KeithCAN1

BBCWatcher said:


> I think this is an easy decision. You won't owe a dollar more if you report the truth, but you can be prosecuted or sanctioned for not telling the truth.
> 
> I'd tell the truth.


I'm with ya, BBCWatcher. Some people say "why rock the boat" if you don't need to (pay any back taxes) but I'll feel better coming clean.


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## snalion

*Scared*

Hey guys, I'm in this mess too. Unfortunately none of the accounts were created by me. I left India to come here at 19, so had never worked etc in India. However, my parents had created some accounts under my name (probably while I was a minor) - checking/savings, life insurance, tax-savings fund - (yes I did sign for the Insurance Policy recently as they matured, but wasn't fully aware of the problems, nor how it worked, as nothing was ever transferred) For the past 15-16 yrs, I've been filing taxes but not the FBAR since I wasn't aware of it. I came to know of it last year and on my 1040 mentioned I owned foreign accounts, however my parents told me the amount was less than $10K, so I didn't worry about it. 
This year they mentioned there was a fund (the tax-saving fund-called PPF) that itself is about 25K, so the total in my name now is about $37K. So I'm totally freaked out along with my US citizen wife who is in tears (and angry that I didn't pay much attention to the stuff I was signing when my dad asked me to -- yes I agree it's my fault, but theres a cultural aspect to this that I should have ignored since it's hurting my life now!) 
We're going to be submitting the 1040 soon, along with the box that says you have to file FBAR, and will be talking to a tax consultant after April 15 to file the FBAR before June 30th, but I've come here to get more information as to what should I be ready for - Other than freaking out and having sleepless nights, and maybe emptying out all of our savings. Any help, advice, suggestions would be very helpful. Thanks for reading this long post!


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## KeithCAN1

Hi snalion,
If it is just some FBARs that you forgot to file, then from what I hear you are ok. Just file the FABR for 2012 and perhaps some of the prior years also if applicable. The issue is if you earned a lot of interest in your other accounts and didn't report it and owe US taxes on it. Then you may want to also file some 1040x to amend the old returns and pay any back taxes. The word I'm hearing from folks on this forum and other places is that as long as you don't owe a lot and pay up, they may cut you slack.


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## BBCWatcher

And you might not owe any additional tax since you likely already paid tax on the interest in India. That'd be a foreign tax credit against U.S. taxes in most cases.

Yes, I'd go ahead and file this year and 6 years of back FBARs plus this year's tax return and three years of 1040X amendments.


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## ForeignBody

snalion said:


> Hey guys, I'm in this mess too. Unfortunately none of the accounts were created by me. I left India to come here at 19, so had never worked etc in India. However, my parents had created some accounts under my name (probably while I was a minor) - checking/savings, life insurance, tax-savings fund - (yes I did sign for the Insurance Policy recently as they matured, but wasn't fully aware of the problems, nor how it worked, as nothing was ever transferred) For the past 15-16 yrs, I've been filing taxes but not the FBAR since I wasn't aware of it. I came to know of it last year and on my 1040 mentioned I owned foreign accounts, however my parents told me the amount was less than $10K, so I didn't worry about it.
> This year they mentioned there was a fund (the tax-saving fund-called PPF) that itself is about 25K, so the total in my name now is about $37K. So I'm totally freaked out along with my US citizen wife who is in tears (and angry that I didn't pay much attention to the stuff I was signing when my dad asked me to -- yes I agree it's my fault, but theres a cultural aspect to this that I should have ignored since it's hurting my life now!)
> We're going to be submitting the 1040 soon, along with the box that says you have to file FBAR, and will be talking to a tax consultant after April 15 to file the FBAR before June 30th, but I've come here to get more information as to what should I be ready for - Other than freaking out and having sleepless nights, and maybe emptying out all of our savings. Any help, advice, suggestions would be very helpful. Thanks for reading this long post!


You do not make it clear if you have signature authority on these accounts. If you do, then yes FBAR is needed. If not, then you have no concerns.


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## snalion

ForeignBody said:


> You do not make it clear if you have signature authority on these accounts. If you do, then yes FBAR is needed. If not, then you have no concerns.


Yes, I do have signature authority.


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## snalion

Thank you all for your replies. We've mostly been due refunds for the past couple of years, so we're just going to file an extension and then talk to the tax consultant. I'm going to get more information from my folks and the past years information. So if my dad has been paying my taxes in India, what do I need to do? Also, for the FBAR, am I mainly looking at getting the Interest information for the past year? I was reading regarding filing extensions, and it mentions that if you don't owe taxes, you don't have to file by the April 15. You ahve till 3yrs to file. Is that correct?
Thanks.


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## Nononymous

snalion said:


> Thank you all for your replies. We've mostly been due refunds for the past couple of years, so we're just going to file an extension and then talk to the tax consultant. I'm going to get more information from my folks and the past years information. So if my dad has been paying my taxes in India, what do I need to do? Also, for the FBAR, am I mainly looking at getting the Interest information for the past year? I was reading regarding filing extensions, and it mentions that if you don't owe taxes, you don't have to file by the April 15. You ahve till 3yrs to file. Is that correct?
> Thanks.


I wouldn't be losing too much sleep over this. 

FBARs are just reporting the existence of accounts, along with the annual high balance - nothing to do with interest.

I'm not certain how it would work for overseas interest income for a US resident, but in principle, I believe you would work out the US tax owed on that interest or investment income, then credit against the US tax owed any foreign tax paid (i.e. if tax is being paid in India) and if you still owe anything to the US, that's what you'd pay.

In both cases (FBAR and amendment to 1040) I imagine that if you just write a cover letter explaining that you only learned of the existence of foreign accounts, and the amounts are small, there won't be any consequences.

You also have the option to continue ignoring this, but it sounds as though the psychological stress of non-compliance would be fairly high.


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## Bevdeforges

The FBAR is completely different and separate from your income tax return/declaration. The FBAR is basically only a listing of your foreign (i.e. non-US) bank and investment accounts, complete with account numbers and the address of the bank or financial institution. You report the high balance in the account for the year - nothing at all about the interest. If you have to, you can estimate the high balance (and I always add a couple thousand to any estimate, just be be sure). 

They won't fault you for over-reporting.
Cheers,
Bev


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## BBCWatcher

Well, you can't deceive. An Austin Powers-style "one billion trillion dollars in gold" report doesn't work.  But sure, make a reasonable estimate of the high water mark, and make it opposite the Price Is Right philosophy: it's OK to go over (a bit), but don't go under.


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## Zendo

I read somewhere on one of the threads that, for those who are getting compliant, there might be a specific oder in which you submit your forms; i.e. first the 1040s, etc. and then/thereafter the FBARs.

Has anyone heard about this or can comment?


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## Verdande

"Does anyone have access to the Treasury exchange rates for those years? Or will I have to email the Treasury to get them?"

I have a bunch of Fbars ready to send and I used the exchange rates from the IRS webpage - with a note that I used these rates. Wouldn't it be ok to use the official IRS exchange rates?

Another question - since I have already done the IRS and Fbars forms for 2006-2011 before realizing there was a streamlined program with 3 years IRS returns required, does it make any difference which route I use? Is there any advantage to doing streamlined when I already have 2006-2011 returns ready?


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## snalion

Verdande said:


> "Does anyone have access to the Treasury exchange rates for those years? Or will I have to email the Treasury to get them?"
> 
> I have a bunch of Fbars ready to send and I used the exchange rates from the IRS webpage - with a note that I used these rates. Wouldn't it be ok to use the official IRS exchange rates?
> 
> Another question - since I have already done the IRS and Fbars forms for 2006-2011 before realizing there was a streamlined program with 3 years IRS returns required, does it make any difference which route I use? Is there any advantage to doing streamlined when I already have 2006-2011 returns ready?


You can check here for the previous years - fms.treas.gov/intn.html


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## Verdande

snalion said:


> You can check here for the previous years - fms.treas.gov/intn.html


Thank you! Any feedback on whether it is best to send them all 6 years plus 2012 at once or bit by bit - starting with 2012 and going backwards?


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## Bevdeforges

Rule of thumb is not to send the current year's filing with your back filings. And I believe I've read somewhere that you really should send in each year's filing separately. I know they changed the address for filings from overseas a couple years back - and yes, they expect you to send each year's return to the "correct" address for processing. 
Cheers,
Bev


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## KeithCAN1

Bevdeforges said:


> Rule of thumb is not to send the current year's filing with your back filings. And I believe I've read somewhere that you really should send in each year's filing separately. I know they changed the address for filings from overseas a couple years back - and yes, they expect you to send each year's return to the "correct" address for processing.
> Cheers,
> Bev


Hi Bev,
What does "they expect you to send each year's return to the "correct" address for processing. " mean? Is this what you put for your home address (i.e. enter what my home address is for that year?)?

I also got some advice from an accountant who recommended I send everything all at once (current year included) with a cover letter explaining the whole situation.

Also, For my address for each of the past FBARs, do I enter my current address or what my address was for that tax year (i.e my address in 2006 for the 2006 FBAR form)?

Thanks


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## Bevdeforges

No, my post was apparently in error. For back filings, you can (and probably should) send the forms in together. The reference to the "correct" address was because a couple years ago they changed the address for filing from overseas - and frankly, if you didn't bother to read the instructions that year, you probably would have sent things to the "old" address. But the only penalty for that was, I suppose, a "delay" in processing your returns.

File everything with your address at the date that you are filing, not your old address as of the date of the returns. (The IRS does update your current address from your tax filings - no point in confusing them.)
Cheers,
Bev


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## KeithCAN1

Thanks Bev! You're the best!


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## Walkingstick

Hi All,

Thanks for all the great posts. This has been very helpful. My situation is a little different. I moved to the UK in November 2009 and was there for two years. While there I was paying both PAYE and National Insurance (the two UK taxes). I didn't pay or file any US taxes as I wasn't aware of this requirement. While there, I opened a UK Bank Account and have been using that account ever since as my employer is based in the UK. In November 2011, I moved to Kenya to set up an office for the UK company. I paid taxes until November 2012 but according to UK tax law if you are out of the UK for more than a year, you don't have to pay taxes. As such, I got a tax refund and haven't paid tax since November 2012 as it wasn't require be UK tax law. 

I haven't filed FBAR before as I have just become aware of it.

Does anyone have any suggestions for what I should do? I am a bit nervous as I haven't seen anyone who has been in a similar situation and not sure what to do.

Thanks.


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## BBCWatcher

You can use the IRS's "streamlined" compliance procedure since it appears you qualify. You'd file the missing tax returns (starting with tax year 2010) and the missing FBARs (starting with 2009 or 2010 depending on when you opened that account and when it increased to over US$10,000 in value).


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