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It’s a Puzzle: Filing Offshore Account Taxes

//It’s a Puzzle: Filing Offshore Account Taxes

It’s a Puzzle: Filing Offshore Account Taxes

Filing taxes on your offshore accounts is a complicated puzzle, but start with the right pieces and you can be successful

Jeffrey S. Freeman, J.D., LL.M

Offshore accounts have received a lot of coverage lately from the IRS, but not all offshore accounts are used for hiding funds to avoid paying taxes. You may actually have an offshore account yourself and be wondering if you are correctly reporting your income. It may be a puzzle, but it can be done. Let’s go over the basics puzzle pieces that you need to file taxes if you have offshore income or accounts.

1. Report all your income including foreign accounts and pay taxes on income from those accounts.

2. Fill out and attach Schedule B to your tax return. In Part III you will include where your foreign accounts are located. Depending on the account locations and the aggregate value of those accounts you may need to fill out and attach Form 8938. Additional requirements apply for those with foreign trusts.

3.  If the aggregate value of your foreign accounts exceeds $10,000 at any time during the year you must file Form 114, Report of Foreign Bank and Financial Accounts (FBAR) electronically through FinCEN’s BSA E-Filing System. This is not part of the federal tax return, but must be filed by June 30 each year.

Not reporting your offshore accounts or paying taxes on these accounts can have hefty civil and criminal penalties. Make sure that you verify the current reporting guidelines from the IRS as requirements differ from Form 8938 to FBAR.

At any point during the filing process remember that experienced tax professionals can offer valuable insight to ensure that you pay the right taxes and include the correct documents the first time. With potential civil and criminal penalties on the line it is best to double check before turning you foreign account from an asset into a liability.

About Freeman Tax Law

Freeman Tax Law is equipped to handle all domestic and international tax law matters. At Freeman Tax Law, the attorneys and professional staff have vast experience with foreign tax compliance, international tax planning, and resolving tax controversies involving offshore banking matters. Freeman Tax Law helps taxpayers and foreign entities become in compliance with laws such as Foreign Account Tax Compliance Act (FATCA) and Offshore Voluntary Disclosure Program (OVDP). In addition to handling complex tax controversies, the Freeman Tax Law team has extensive expertise in assisting clients with wealth management and estate planning.

Freeman Tax Law

(855) 935-5945

info@freemantaxlaw.com

www.freemantaxlaw.com

By | 2017-01-01T11:27:34+00:00 July 15th, 2014|Freeman Tax Law|Comments Off on It’s a Puzzle: Filing Offshore Account Taxes