# FBAR - Only just realised I should have been filing it - lots of questions



## Mutsey87 (Sep 11, 2015)

Hello,

I have basically not slept since last night when I had this realisation and have read through most of this forum. Other situations are slightly different to mine, I think mine is very straightforward and am hoping people will not mind me asking some direct questions. Apologies for any repetition. I have been an active poster over the years asking questions/answering questions in the UK Expat section having gone through the Set(M)/ILR/naturalization UK via process and this resource has been incredible.

My overview:


I am an American citizen and moved to the UK in 2013, but only began employment in 2017
My Dad loves doing taxes so has always filed my taxes via Turbo Tax as they have always been very simple as I am employed by a UK employer and only have basic UK checking and savings accounts and a Help to Buy ISA. My taxes have always been filed by my Dad since moving and he has reported my annual income since 2017 when I started working. My annual income has never been higher than £40,000 so nowhere near the threshold where I'd need to pay tax on it
He nor I never realised I had to report my foreign bank accounts. He has looked back at the form and realised where he ticked 'no' in regard to the question about funds/interest in foreign accounts and if he ticked 'yes' then it turns up a result saying I do not need to take further actions as I do not hold/make over $300,000 a year. Sorry, I am sort of paraphrasing that. But basically, due to neither of us realising I needed to do FBAR's I have only been filing my taxes with my annual UK income(s) proven through my P60s and wage slips, which again, have always been well below the threshold (Note: I file that i am married in my US taxes but filing separately as my husband is a UK citizen with no ties to the US)
However, last night I went back through our accounts and from 2017 with the totals across my personal checking account (previously basic NatWest account with basically 0% interest, and now a basic NationWide checking with normal interest, mine and my husband's joint checking and savings account (both basic TSB accounts in terms of interest rates) and my personal Help to Buy ISA with Nationwide (interest of around 2.5%?) - I have realised that I have been over the $10,000 since 2017. I would say the maximum amount of funds combined across all acounts would have been in 2021 totalling around $46,000 (after GBP conversion) and would have been slightly less each year going back to 2017, due to us saving regularly each year and would not have been relevant in 2016 as, thus far, it looks like we were well below the £10,000 then. Also, that $46,0000 number is not fully accurate as it takes into the highest numbers across all accounts 2021 and some of those funs will be represented twice (i,e. in my personal account > savings account> Isa, etc.) so is inflated a bit.
I also have UK pensions, but my first I combined into my new defined benefit pension scheme in 2019 when I moved jobs and only had about £1,300 in it total and my newest pension with my new job is also a defined benefit pension scheme (average salary).

So, as you can see, we are nowhere near millions or even hundreds of thousands but I want to correct it and I am now unbelievably stressed as is my husband.

My main questions are:


I have read about 'streamlining' but have read here that this is a 'paper only' process. Am I able to just simply fill out and back file FBAR's for 2017- 2021 tax years now without penalty (and of course fill them out going forward!). Which would be the best course of action? Just back filing FBARS for each year stating I did not know this needed to be provided for 2021-2017 or go via the streamlining process that I need to understand more/is it possible if it is 'paper' (maybe those are old posts)
Do my tax forms filed need to be amended at all, as we believe they have always been done accurately other than the inclusion of an FBAR but I am wondering if a section was not done correctly which is why this form was never triggered to prompt to complete it as we filed.
Will I need to request historic bank statements from 2017 to fill out the form/provide with it? It was with an old bank account that I have now closed so will need to request these, or if I can find an accurate enough summary could to provide the best number that would have been closest in those years where I do not have full statements still.
Does it seem like I should hire an expert to help us sort this out? I feel like no as it seems pretty straightforward as we have no very large accounts, investments, etc so would like to avoid paying someone $1,500 if I can. Our scenario is just simply some basic savings growing as we put money into them to save for a house and I did not realise I had to tell anyone as it's just from our regular income. Or, does it sound like my whole tax filing may have been an issue and that it flags a professional looking into my case.
I am confused how I would report the small interest % of these basic accounts as part of FBAR. Or, because they are so small, do I simply just report the overall figures for the years?
It is correct that I do not need to back date and submit later FBARs for 2016 - 2013 as my accounts were below, $10,000, yes?
Do we feel the likelihood of penalty is small if I work to correct the missing info before this next Oct extension and ensure to do it going forward and even though we tick 'no' I did not have foreign accounts explain we simply did not realise this was what they needed and did not know and that will sort this? I think I will be sure to bring some sort of expert in as our financials continue to grow going forward to ensure I never do anything again as this stress is not worth it.
From posts I have read here, and reading the IRS literature, I think I understand that my UK pensions (both defined benefit schemes) do not count towards FBAR until I look to draw them at retirement, correct? Do you think I need to include details of the small private pension I held from roughly 2017-2019 in my 2017-2019 FBARS I need to file? (to clarify this was a pension that I paid about 3% into and my employer paid 1% into but that I cannot yet draw the funds from and has now been combined into one of my defined benefit schemes, but it itself was not a DB scheme)

After spending 10 years sorting the visa process over here and diligently filing my tax returns I feel like an absolute idiot that I missed this but am glad I found it and just want to correct it. Your help/thoughts/reassurance would be greatly appreciated if you have the time. My husband is terrified we're about to be slapped with a $50,000 IRS fine and I currently am a shell of stress.

Thank you so much in advance.


----------



## Bevdeforges (Nov 16, 2007)

I understand all the concerns and worries you have at the moment, but net-net what I would do in your situation is simply to start filing your FBARs going forward and forget about the back filing or streamlined compliance or any of that nonsense. You'd have to check the US-UK tax treaty to be sure about how to report your retirement accounts, but even then there are exceptions and uncertainties because of how the treaty is written. 

At this point, just file to the best of your ability going forward. The IRS really does little or nothing with the FBAR information until and unless they find something "off" about your tax returns - and if you're free and clear of taxes, thanks to the FEIE, it's highly unlikely that anyone at the IRS has any interest in your case.

I would stop relying on your father to file your returns for you - in large part because you are the one responsible for all declarations made on your forms and it would be a whole bunch easier if you took the time and effort to file something in "good faith" than to try and plead that "my father did it." And practically speaking, it will be a LONG LONG time before you hear much of anything from the IRS other than perhaps asking after some technicality that can be easily resolved. 

If any of your banks asks you to give them your "tax residency" information or requests that you fill out a W-9 form to inform them of your US "person" status, go ahead and do so. The form is strictly for the bank's use in "covering their butts" regarding which bank accounts they do or don't report - but remember, too, that the criteria for the accounts the bank is supposed to report are different from the FBAR reporting for individuals and so far there is no evidence that the IRS even compares the information they get from the banks vs. individual FBAR reports.


----------



## Mutsey87 (Sep 11, 2015)

Bevdeforges said:


> I understand all the concerns and worries you have at the moment, but net-net what I would do in your situation is simply to start filing your FBARs going forward and forget about the back filing or streamlined compliance or any of that nonsense. You'd have to check the US-UK tax treaty to be sure about how to report your retirement accounts, but even then there are exceptions and uncertainties because of how the treaty is written.
> 
> At this point, just file to the best of your ability going forward. The IRS really does little or nothing with the FBAR information until and unless they find something "off" about your tax returns - and if you're free and clear of taxes, thanks to the FEIE, it's highly unlikely that anyone at the IRS has any interest in your case.
> 
> ...


Thank you so much for your quick reply.

100% agree that I will be doing my taxes going forward - absolutely. He has just always enjoyed doing them but it was my intention to take it back from him this year actually. 

So, to confirm, you think I should just file an FBAR for this past year's tax return that was filed and leave it at that including the current bank accounts and amounts? Do I need to amend how I filed my tax form at all or simply just submit and FBAR by the October extended deadline? They are unlikely to ask questions about how those accounts suddenly exist and the funds in them?

If I did want to back file my FBARs (I know my husband would ask as he is very stressed by this whole thing). Could I file previous years now just form by form, or do I need to go via streamlining to avoid possible penalties? Or would flagging those by doing them now open myself up to potential issues?

Thank you so, so much again for your feedback.


----------



## Moulard (Feb 3, 2017)

Step 1. Breath in.. and exhale and allow all that stress to wash away...

1. You can file the FBAR yourself. The streamlined process is to simply file them. Up to 6 years but you only have to file for those years which you meet the filing requirement. All you need to do is add a reason why they are late. Given your father likes taxes, no doubt you keep paperwork too (goes hand in hand). The simplest way is to to complete one year. and then use it to clone the remaining 5 years... just change the year, and balances. If you don't have the balances for a given year you can approximate or report as "unknown"

2. I personally would probably not bother to file amended returns. In future make sure to file Schedule B, and complete part III 

3. UK tax treaty does not follow the US model and it is probably worth having a read of the UK treaty. Just note the savings clause that allows the US to tax its citizens as if the treaty was not in effect. There are three types of pensions generally defined in a treaty.. Setting aside for a moment the specifics of the UK treaty, which I am not really across in detail, normally with private (ie. employer funded pensions) you would report employer contributions to a pension as income in the year of the contribution. On distribution you would then report the growth.. but again.. the UK has non standard pension clauses in it But it is important to note the difference between reporting income (on a tax return) vs reporting the existance of the account (on an FBAR and if sums are high enough in the tax return)


----------



## Mutsey87 (Sep 11, 2015)

Moulard said:


> Step 1. Breath in.. and exhale and allow all that stress to wash away...
> 
> 1. You can file the FBAR yourself. The streamlined process is to simply file them. Up to 6 years but you only have to file for those years which you meet the filing requirement. All you need to do is add a reason why they are late. Given your father likes taxes, no doubt you keep paperwork too (goes hand in hand). The simplest way is to to complete one year. and then use it to clone the remaining 5 years... just change the year, and balances. If you don't have the balances for a given year you can approximate or report as "unknown"
> 
> ...


Hello! Thank you also for your reply. If I submit them historically now, form by form, is the reason for each year good enough to be "was not aware' or 'did not know I needed to report?' I'm aware we ticked 'no' on the box on my taxes asking about accounts, but that is because we misunderstood the question with the then following questions it prompted and felt it wasn't applicable. So we really did not know. Thank you again for taking the time to reply.

I will research the tax treaties more now. Thank you!


----------

