# Fbar Delinquent filing advice



## jaybirdd

Hi all
I am from the UK, now living in the US with my wife for 6 years. I have just realized i am supposed to report my UK bank account if it is more than $10k.

For those 6 years my wife filed income tax returns on time but not knowing any better innocently has selected 'no' on having no foreign accounts. 

During those 6 years i have had about $16k in total sitting in a UK bank savings account. 

In 2014, i wired it across to our USA joint bank a/c. So now i have less than $5 in a UK bank.

I am wondering if I should now file the FBAR for this year? And if so should i file the Delinquent FBARS for the last 6 years.

I should note, that the interest made over the entire 6 years is maybe at most between $100 -$400, so at best, and i mean at best maybe it earned about $40 a year.

If I do file the Delinquent FBARS do I then also need to go back and refile past tax returns to add that small amount of interest?


Should I be looking into doing a streamline process?

Any help, experience or advice is much welcomed. I really dont know if i am making a big deal out of nothing, or this is something i need to be onto!

Thank you in advance

J


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## BBCWatcher

jaybirdd said:


> For those 6 years my wife filed income tax returns on time but not knowing any better innocently has selected 'no' on having no foreign accounts.


That sounds correct, assuming she did not have foreign accounts. Was she a joint account holder?



> During those 6 years i have had about $16k in total sitting in a UK bank savings account.


Yes, but during those 6 years were you a U.S. person? It doesn't sound like it. If you weren't a U.S. person, you didn't have a U.S. filing obligation.



> In 2014, i wired it across to our USA joint bank a/c. So now i have less than $5 in a UK bank. I am wondering if I should now file the FBAR for this year?


1. Are you a U.S. person? Yes, now you are -- and you were in 2014 I assume. 2. Did your foreign accounts have a total aggregate value at any moment in time of $10,000 or more? Yes.

So, yes, you'll need to file a FinCEN Form 114 for 2014. It's due June 30, 2015.



> And if so should i file the Delinquent FBARS for the last 6 years.


Not unless you were a U.S. person.



> I should note, that the interest made over the entire 6 years is maybe at most between $100 -$400, so at best, and i mean at best maybe it earned about $40 a year.


Were you a U.S. person for any of those years?



> If I do file the Delinquent FBARS do I then also need to go back and refile past tax returns to add that small amount of interest?


Did your wife file "Married Filing Separately," or did you both file together "Married Filing Jointly"?

If the former, and assuming they were not joint accounts, it wasn't her interest. She had no income from the accounts, and (assuming you weren't a U.S. person), you didn't have a filing requirement.


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## jaybirdd

BBCWatcher said:


> T
> 
> Yes, but during those 6 years were you a U.S. person? It doesn't sound like it. If you weren't a U.S. person, you didn't have a U.S. filing obligation.
> 
> .


Hi BBCwatcher, 

thanks for taking a look at my question...
Yes, I was a US Person / Resident during those years and we were married so we filed jointly. However the Uk bank account was in my name only.


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## BBCWatcher

OK, let's keep the separate issues separate.

1. You and you alone are responsible for the delinquent FBARs. One good way to clean up this issue is to file FinCEN Form 114 for all of the years you're missing. The form provides a drop-down menu to indicate why you are filing late (2013 and prior years). As long as you answer truthfully, that should be the end of the matter.

2. You are both jointly and severally liable for the omission of the interest income from your joint tax returns. That interest is U.S. taxable, though you can credit any U.K. income tax paid on that interest via the Foreign Tax Credit (FTC). In principle the IRS can go after you, your wife, or both, as it prefers. (That's what a joint return means.) You can't blame her any more or less than you blame yourself. You signed the tax returns, too -- you're equally liable.

To fix this problem you (together) can file amended tax returns (IRS Form 1040X) for the affected years. If the FTC doesn't fully offset the additional income tax owed, you'll owe some income tax plus interest and penalties. However the additional tax, interest, and penalties should be quite small. You can ask the IRS to waive the penalties (but not the interest), especially if you have a good reason, though they don't have to.

There's also a Streamlined Compliance Program to address both #1 and #2 in one process. Take a look at that program to see if it looks attractive. This might be one of the rare occasions when it makes better sense to follow the normal processes for late filing since that might be the better deal.

Hope that helps.


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## Bevdeforges

OK, quite honestly for that small amount of bank interest income, I wouldn't bother amending the prior returns. Given that you didn't transfer the money out of the UK account until 2014, you technically probably "should" file a FinCEN (FBAR) declaring the account - but practically speaking, I don't think they're going to pursue someone for an account that is only nominally over the threshold and that is closed now, anyhow.

Don't know what tax bracket you're in, but it sounds like you're talking a maximum of $20 to $50 of tax for the years you neglected to report interest from the account. It's highly unlikely they'll pursue you over that. (And actually more likely that it would cost the IRS more than they could get out of you in back taxes and interest charges.) 
Cheers,
Bev


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## TommyTurk

Hello Everyone.

I am in a similar position to the OP.


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## TommyTurk

However, I moved back to my home country before reading about FBAR & FACTA.

This whole thing is quite confusing & upsetting.....


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## jaybirdd

BBCWatcher said:


> OK, let's keep the separate issues separate.
> 
> 1. You and you alone are responsible for the delinquent FBARs. One good way to clean up this issue is to file FinCEN Form 114 for all of the years you're missing. The form provides a drop-down menu to indicate why you are filing late (2013 and prior years). As long as you answer truthfully, that should be the end of the matter.
> 
> 2. You are both jointly and severally liable for the omission of the interest income from your joint tax returns. That interest is U.S. taxable, though you can credit any U.K. income tax paid on that interest via the Foreign Tax Credit (FTC). In principle the IRS can go after you, your wife, or both, as it prefers. (That's what a joint return means.) You can't blame her any more or less than you blame yourself. You signed the tax returns, too -- you're equally liable.
> 
> To fix this problem you (together) can file amended tax returns (IRS Form 1040X) for the affected years. If the FTC doesn't fully offset the additional income tax owed, you'll owe some income tax plus interest and penalties. However the additional tax, interest, and penalties should be quite small. You can ask the IRS to waive the penalties (but not the interest), especially if you have a good reason, though they don't have to.
> 
> There's also a Streamlined Compliance Program to address both #1 and #2 in one process. Take a look at that program to see if it looks attractive. This might be one of the rare occasions when it makes better sense to follow the normal processes for late filing since that might be the better deal.
> 
> Hope that helps.


First let me thank you BBC for your feedback and time, i can see you are a busy man on these forums.

I have come to realize that my wife (and myself) filed the tax return form "1040ez" on that form there is not one mention of foreign banks accounts. There is not one mention of FBAR filing. the closet thing on that form is line 2:

"Taxable interest. If the total is over $1,500, you cannot use Form 1040EZ."

Our interest for any year was noway near $1500. 
Granted looking back it looks like this line was left blank, but if so it would have been because any interest made would have been extremely small.

Knowing this new information, Do i still need to file these FBARS and late FBARS? Because honestly I would never have heard of such a thing, it does not even tell us on the tax return form.

Thank you again

J


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## jaybirdd

Bevdeforges said:


> OK, quite honestly for that small amount of bank interest income, I wouldn't bother amending the prior returns. Given that you didn't transfer the money out of the UK account until 2014, you technically probably "should" file a FinCEN (FBAR) declaring the account - but practically speaking, I don't think they're going to pursue someone for an account that is only nominally over the threshold and that is closed now, anyhow.
> 
> Don't know what tax bracket you're in, but it sounds like you're talking a maximum of $20 to $50 of tax for the years you neglected to report interest from the account. It's highly unlikely they'll pursue you over that. (And actually more likely that it would cost the IRS more than they could get out of you in back taxes and interest charges.)
> Cheers,
> Bev


Hello Bev,
Like BBC, i want to thankyou for your time and input, i know too that you are a busy woman on this forum.

Like i just mentioned to BBC, i made a mistake in my original post, we filed tax return forms "1040ez"! Not "1040" or "1040a".

Basically on 1040ez, they do not mention listing foreign bank accounts or FBAR's etc. The only thing it asks for is 

"2. Taxable interest. If the total is over $1,500, you cannot use Form 1040EZ."

This line has always been left blank, as any interest made would be like you said "$20 to $50".

Going on this new information, would you file the on time FBAR for 2014, and all the Delinquent ones? Because moving to the US how would anyone know about this required FBAR filing, it does not mention it on the tax return.
And now i am thinking if i file it now with all the late one's it will kick off alarms and make a big deal out of nothing.

Again thanks for your time Bev


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## jaybirdd

TommyTurk said:


> However, I moved back to my home country before reading about FBAR & FACTA.
> 
> This whole thing is quite confusing & upsetting.....



Hi Tommy

Just curious, did the interest you make from the offshore accounts make more than $1500 per year?

The reason i ask is because i read an article on ex-pats who were late on filings...and i wont post the link as i assume its against the forum rules,, but here are some quotes..


"Today we are announcing a series of common-sense steps to help U.S. citizens abroad get current with their tax obligations and resolve pension issues," said IRS Commissioner Doug Shulman. “The IRS is aware that some US taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1. Some of these taxpayers have recently become aware of their filing obligations and now seek to come into compliance with the law. ... This procedure will go into effect on Sept. 1, 2012.”

The IRS’s statement by Commissioner Shulman acknowledges that those Americans who were non-compliant because they were simply not aware of their US tax obligations, and who owe little or no back taxes, will not be subjected to undue scrutiny or ruinous FBAR (Foreign Bank Account Reporting) penalties.

The executive director of American Citizens Abroad, Marylouise Serrato , said in a statement, “This is an important step forward and we commend the IRS and Commissioner Shulman for working to address the issue … however, ACA believes that IRS regulations should be further eased. In particular, the threshold below which penalties are waived for back taxes owed should be raised from the current low $1,500, and more discretion should be applied in cases of non-compliance by Americans living abroad.”

Not sure if that applies to you


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## Bevdeforges

jaybirdd said:


> Like i just mentioned to BBC, i made a mistake in my original post, we filed tax return forms "1040ez"! Not "1040" or "1040a".
> 
> Basically on 1040ez, they do not mention listing foreign bank accounts or FBAR's etc.


Even the long-form 1040 says nothing about foreign bank accounts. That question only appears on Schedule B - and at the bottom of the form.

If you're talking about small amounts of interest I simply would not bother amending your filings. And if your foreign bank accounts were only a few thousand over the $10,000 threshold, I wouldn't worry about the FBARs, especially if I had moved back to my home country. FATCA and FBAR were instituted to catch big time tax evaders and those laundering money in foreign bank accounts and dubious investment schemes. 
Cheers,
Bev


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## TommyTurk

jaybirdd said:


> Hi Tommy
> 
> Just curious, did the interest you make from the offshore accounts make more than $1500 per year?
> 
> The reason i ask is because i read an article on ex-pats who were late on filings...and i wont post the link as i assume its against the forum rules,, but here are some quotes..
> 
> 
> "Today we are announcing a series of common-sense steps to help U.S. citizens abroad get current with their tax obligations and resolve pension issues," said IRS Commissioner Doug Shulman. “The IRS is aware that some US taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1. Some of these taxpayers have recently become aware of their filing obligations and now seek to come into compliance with the law. ... This procedure will go into effect on Sept. 1, 2012.”
> 
> The IRS’s statement by Commissioner Shulman acknowledges that those Americans who were non-compliant because they were simply not aware of their US tax obligations, and who owe little or no back taxes, will not be subjected to undue scrutiny or ruinous FBAR (Foreign Bank Account Reporting) penalties.
> 
> The executive director of American Citizens Abroad, Marylouise Serrato , said in a statement, “This is an important step forward and we commend the IRS and Commissioner Shulman for working to address the issue … however, ACA believes that IRS regulations should be further eased. In particular, the threshold below which penalties are waived for back taxes owed should be raised from the current low $1,500, and more discretion should be applied in cases of non-compliance by Americans living abroad.”
> 
> Not sure if that applies to you



Hi jaybirrd,

Thanks for replying to me. The information you listed is very interesting.
I have started a thread that covers my situation here:

Non-US citizen, non-US resident Delinquent FBAR Filing Advice requested

(yes, Person A is me & the European country is the UK)

Looking at a few statements from my bank account it seems that I haven't received any interest payments for a while now. My account must follow the UK rate, which is very low. I am 100% sure that I have never received anywhere close to $1500 per year in interest payments.

I hope you find a pathway out of you situation.

Regards, Tommy


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## BBCWatcher

I'm going to disagree with Bev.

There is presently no reported penalty levied for filing deliquent FinCEN Form 114s with a valid excuse. ("I didn't know" is popular.) I can't think of a good reason why you wouldn't file. It's only prudent to stay in the good graces of a government just in case you need to ask them for something in the future.

As for the deliquent interest income, if you file amended returns you'll owe a bit more tax, some interest, and possibly a penalty. You can easily calculate how much that will be, worst case. (The IRS publishes the formulas for voluntary, unprompted amendment.) But the fact is you lied on a U.S. tax return -- you put zero when the truth was otherwise. We're not talking a 16 year prison sentence to clean up that mistake (yet). We're talking a restaurant meal or two. I'd clean up the mistake, now.

Adults can make their own decisions, but that's what I'd do.


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## perryf

That seems a bit strong as it was not intentional.


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## BBCWatcher

OK, if unintentional, "made a false representation on a tax return."


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