# Delinquent FBAR question



## bogoshipgo (Aug 8, 2016)

Hello all, 

This is a question about my parents who currently reside in S. Korea. 
My dad (US Citizen age 72) and my mom (Korean Citizen age 68) have been residing in Korea since 2003. They've been retired and have almost no income with exception of interest from a Korean bank and part-time job here and there from my mom. My dad has not filed US Individual Tax or FBAR since moving back to Korea. 
Recently I found that he would be subject to FBAR because his account in Korean bank held balance of around $50K since 2003. My questions are the following:

1) If my mom (Korean citizen) generated income of $30K in 2005, was my dad (who did not work) supposed to have filed a US Income tax that year? (They were filing married-jointly when they were in US)
2) Assuming interest rate of 3%, it would generate interest income of $1500 annually from dad's Korean bank. My parents has not worked since 2007. In this case, my dad did not have to file US Income Tax because he was under the "who should file US Income Tax" threshold correct?
3) I would like to have my dad compliant with FBAR. Since 2007 my parents has had almost no income, so he should file a Delinquent FBAR not the Streamlined Filing Compliance route correct?
4) Since 2015 due date (6/30/16) has already passed should I wait until 2017 and be compliant going forward or do you recommend to file Delinquent FBAR now? (I believe you need to file last 3 years worth?)

Thanks in advance!!


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## Bevdeforges (Nov 16, 2007)

Don't think for a moment that your folks are the only people in this situation. And quite frankly, they could simply continue to lay low and I really doubt anyone will come looking for them. But, to answer your questions:



> 1) If my mom (Korean citizen) generated income of $30K in 2005, was my dad (who did not work) supposed to have filed a US Income tax that year? (They were filing married-jointly when they were in US)


If you mom isn't a US citizen, then she has no filing obligation. Only your dad does. Normally, if your mom isn't a citizen, your dad would file as married, filing separately. (It doesn't matter how they filed when they were in the US - you can change back and forth as you like.) He would not declare any of your mom's income on his separate return.


> 2) Assuming interest rate of 3%, it would generate interest income of $1500 annually from dad's Korean bank. My parents has not worked since 2007. In this case, my dad did not have to file US Income Tax because he was under the "who should file US Income Tax" threshold correct?


Filing threshold for married, filing separately is around $3500 (and adjusted each year). So yes, it sounds like he would be under the threshold.


> 3) I would like to have my dad compliant with FBAR. Since 2007 my parents has had almost no income, so he should file a Delinquent FBAR not the Streamlined Filing Compliance route correct?


Given that he seems to be under the filing threshold for income taxes, I wouldn't bother with the Streamlined program. You could simply file back FBARs for a few years (six, to play it safe). But there is no evidence so far that they are coming after those folks who neglected to file out of ignorance of the requirement, especially those in the lower ranges (and $50,000 is definitely the low end of the range for these kinds of filings).


> 4) Since 2015 due date (6/30/16) has already passed should I wait until 2017 and be compliant going forward or do you recommend to file Delinquent FBAR now? (I believe you need to file last 3 years worth?)


Pretty much up to you. Filing the FBARs online takes only a few minutes. You could do the whole 6 years of back filings in a good half an hour and be done with it. (And don't worry about getting "precise" figures for the high balance of the account. A good faith estimate will do it - and then add a few thousand, just to be safe.)
Cheers,
Bev


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## ForeignBody (Oct 20, 2011)

bogoshipgo said:


> Hello all,
> 
> This is a question about my parents who currently reside in S. Korea.
> My dad (US Citizen age 72) and my mom (Korean Citizen age 68) have been residing in Korea since 2003. They've been retired and have almost no income with exception of interest from a Korean bank and part-time job here and there from my mom. My dad has not filed US Individual Tax or FBAR since moving back to Korea.
> ...


This link is helpful if you wish to become compliant on the FBARs - look at Delinquent FBAR Submission Procedures towards the bottom of the page. This guarantees penalty free submission if your dad is otherwise tax compliant (which he appears to be).

https://www.irs.gov/businesses/smal...t-of-foreign-bank-and-financial-accounts-fbar


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## JustLurking (Mar 25, 2015)

Bevdeforges said:


> f you mom isn't a US citizen, then she has no filing obligation.


Also not a US green card holder. This would include a green card that has perhaps expired for immigration purposes but which was not officially surrendered.


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## bogoshipgo (Aug 8, 2016)

Thanks for all the feedback. 

Bevdeforges: I recently found out about the FBAR requirement. A month ago my parents received a call from their Korean bank stating that by law, all Korean banks are now required to report accounts held by US Citizens due to FATCA. (over a certain threshold amount I'm assuming). So naturally, my parents got nervous and asked me to look into what FATCA was about. By reading information available on this forum it appears that my parents would be exempted from filing FATCA (Form 8938) since they are exempt from filing 1040 but they are still subject to FBAR. Given the fact that IRS now has information about my dad's account in Korea, do you think it's still wise to lay low and not submit delinquent FBAR?


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## Bevdeforges (Nov 16, 2007)

The FBARs have been around for a long time - several decades at least. Up until now, there is very little indication that Treasury is interested in pursuing individuals for failing to file FBARs as long as their other tax-related matters are in order. The FATCA requirement for the banks came into effect in 2014 or so and it may change things a bit - however the "target group" for this legislation is still those with large offshore holdings. 

Given how easy it is to file a FBAR report, there's no particular reason to lay low - especially if your folks are worried about it. Ten, fifteen minutes, tops, for the first filing and then it's just a few minutes a year to stay up to date. But given the sudden rush of data the IRS has gotten from the foreign banks, I don't honestly think they are going to run any extensive checks on prior years' reports and balances unless they have reason to suspect a person is hiding something that would result in a large amount of back taxes. As always, the choice is yours (or rather, your parents) and you do what lets you sleep well at night.
Cheers,
Bev


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