# Fbar and streamlined process



## FRUS (Jun 26, 2016)

Hello,

For people who were born and lived outside of the U.S for most of their life and had a saving account (meant for a large purchase like a home) of about $90K, but moved in the U.S since 2009 and recently became naturalized (so a U.S citizen) but never disclosed through FBAR this account (by not willfully knowing that they should have) and do not file a yearly tax return (as they don’t work in the U.S and get no income – an example a housewife), how can they qualify for the streamlined process since they must amend their tax returns ? how should they handle this situation ? what if they bring this money back into the US for a home purchase ?


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## Bevdeforges (Nov 16, 2007)

FBARs are separate from filing taxes in the US. If you have the accounts outside the US that total $10,000 or more, then you are supposed to be filing FBARs. 

You are supposed to file income tax returns if your income (worldwide income, that is) exceeds the filing threshold for your filing status (i.e. single, married filing jointly, married filing separately, head of household).

If you don't have to file income taxes, you still have to report your overseas accounts for FBAR. But if it's only the FBARs you need to file, you can do pretty much the same thing as the Streamlined process and file six years back plus current year. (If need be, you can estimate the high balance for your accounts for the past years.)
Cheers,
Bev


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## FRUS (Jun 26, 2016)

Bevdeforges said:


> You are supposed to file income tax returns if your income (worldwide income, that is) exceeds the filing threshold for your filing status (i.e. single, married filing jointly, married filing separately, head of household).


Thank you but that's the point, what if people who have no income (jobs or else in the usa) didn't file a tax returns for the past years because they were not aware that their savings account oversea counted as is?

Can they file an 'amended tax returns' ? are they still eligible to participate in the streamlined process ?


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## Bevdeforges (Nov 16, 2007)

If you didn't need to file, you have no need to file. To get right with the FBARs, just file the past years (six, to be safe) and get on with it.

Technically speaking the "streamlined" process is for those who have not been filing tax returns but who should have been doing. It really doesn't apply in your case because you don't need to file. Just do the FBARs, and select the option (for why you are filing them late) that says "I didn't know I had to" (or something to that effect) and you will most likely never hear anything more about it.
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

People who have literally no worldwide income (or even slightly above that) are not required to file U.S. tax returns. They are still required to file FinCEN Form 114 if they meet that form's threshold. But that's an entirely separate report.

It's possible to be required to file a tax return (IRS Form 1040, 1040A, or 1040-EZ) only, be required to file FinCEN Form 114 only, be required to file both, or not be required to file either. All variations are possible. If you are/were only required to file FinCEN Form 114, but you didn't do that, then you can file late FinCEN Form 114 reports.


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## FRUS (Jun 26, 2016)

Bevdeforges said:


> If you didn't need to file, you have no need to file. To get right with the FBARs, just file the past years (six, to be safe) and get on with it.


My apologies, I must not be using a clear description of an 'edge case': so the scenario is that what if people who have had (since their childhood) money in their homeland bank that is outside of the USA : 
- checking account 
- High saving accounts (that generate interest)

The problem would be with the high saving account that increased over time and generates interest (The IRS can treat that as an income right ?)

The second problem is that because these accounts were overseas and because people don't work (or get any wages or interest in the US) they thought that they don't have to file tax returns (though they should have since their overseas accounts generates income through interest ? ) is that right ? What should they do here ?


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## BBCWatcher (Dec 28, 2012)

The interest counts as income, sure. But if that's your only worldwide source of income you need an awful lot of interest income to get to the U.S. tax filing threshold. For example, in tax year 2015 a person with a Single filing status, under age 65, needed at least $10,300 in worldwide gross income to be required to file a tax return. Such an individual would need (for example) a bank account of $515,000 paying 2% interest to generate that level of interest income. That's not most people, although it is a few.

So you assess each requirement separately. (1) Do they have to file a U.S. tax return, yes or no? If they were required to file but didn't, then the IRS's Streamlined Program may be available to them. (2) Do they have to file FinCEN Form 114, yes or no? If they were required to file FinCEN Form 114 but didn't, then they file late reports.


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## Bevdeforges (Nov 16, 2007)

The big question is "just how much interest have these overseas accounts been generating?"

If it's more than $10,000 a year, then you might actually have a tax filing obligation. (It's a lower threshold if you're in the situation of filing as "married, filing separately".) You always have the FBAR obligation if your overseas accounts total more than $10,000 at any point in the year - but 6 years of backfiling is the current "norm" for a good faith attempt to discharge your obligation if you didn't know about it.

On the income tax side of things, under the streamlined program it's "current year plus three years back filing." If you haven't been filing at all, you can't amend anything, so you just file for the current year plus three years back. If you owe nothing over that time period (very likely, especially if you paid any tax on the bank interest to the country where the accounts are located), or only just a little (a couple hundred dollars or so), then you're done. (Actually, even if you just quietly disclosed like that - rather than marking up the back filings the way they tell you to for the streamlined program, chances are you'd be done with the deed, too. Or maybe just a form letter from the IRS saying "you should have followed the streamline program format, but we'll let it go for now.")

Now, if it turns out that you owe hundreds of thousands of dollars of tax on your enormous foreign accounts, that's a different story. But in that case, you probably can afford to hire yourself a good tax adviser.
Cheers,
Bev


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## FRUS (Jun 26, 2016)

Ok that makes sense. I appreciate the details explanation. Very helpful , thank you


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