48.7 Penalties for Not Reporting Foreign Financial Accounts

If you have financial interests in foreign bank accounts or other foreign financial accounts or assets, you may be required to file Form TD F 90-22.1, Form 8938, or both. The Form TD F 90-22.1 requirements have been in effect for many years, whereas the Form 8938 requirements generally took effect in 2011. Check the filing requirements for both forms, as you may be required to file both depending on your holdings. Failure to file a required form may result in substantial penalties.

Form TD F 90-22.1(FBAR).

Form TD F 90-22.1 is generally referred to as the “FBAR”, the Report of Foreign Bank and Financial Accounts. You have to file a FBAR if you have a financial interest in or signature authority over foreign bank or other financial accounts and the aggregate value of the accounts at any time during the year exceeds $10,000. The FBAR, if required, is not filed with your income tax reurn. It is filed with the Department of the Treasury by June 30 of the year following the year in which you had the foreign financial interest. Thus, the FBAR for 2012 foreign holdings must be filed by June 30, 2013.

On Schedule B (Form 1040 or 1040A) you must tell the IRS if you had a financial interest in or signature interest over a financial account located in a foreign country. If you answer yes, you are directed to the FBAR instructions to determine if you must file the form, and if you do, you are asked to enter in Part III of Schedule ...

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