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- June 24, 2023
The Ex-pat’s Ultimate Guide to US Tax and FBAR Tax Return Filing
If you’re an American residing overseas, it’s time to tackle the topic that often induces a double-take: US taxation. Even if you’re sipping coffee at a Parisian café, hiking the Great Wall, or living it up Down Under, Uncle Sam still expects you to file taxes. Why so? Because of the US’s unique citizen-based taxation system. Yes, you are reading it right!
Citizen-based Taxation: The Basics
The United States stands as one of just two countries in the world with a unique tax policy. It levies taxes on the worldwide income of its citizens and permanent residents, irrespective of their living location. This taxation principle even applies to Accidental Americans – individuals born abroad to US parents who, despite not having solid legal or financial ties to the US, may still have to file a return.
Deciphering the FBAR
One area that leaves many ex-pats puzzled is the Foreign Bank Account Report. Let’s say you have a foreign financial account that’s more than $10,000 in the year. In such case, it’s mandatory for you to file an FBAR, even if the amount is distributed across multiple accounts. Foreign financial accounts aren’t just your usual bank accounts; they extend to investment accounts and foreign pension plans. So better take them into account while filing FBAR.
Navigating FBAR Filing
FBARs don’t get filed with the IRS but the Financial Crimes Enforcement Network (FinCEN). You need to file FinCEN Report 114, which is available on the BSA E-Filing System. You’ll need to provide details about each of your foreign accounts, including the account name, number, type, name and address of the financial institution, and the maximum account balance during the tax year.
Important Deadlines
FBARs for the 2023 tax year align with the US federal tax return filing deadline – which was April 18, 2023. So that’s gone now.
However, for ex-pats, there’s an automatic extension to October 15, 2023. But watch out! Deadlines only consider business days, bypassing legal holidays. So, in 2023, the actual deadline shifts to October 16, 2023.
What if You Miss the Deadline?
If you miss the deadline, don’t panic. There’s a silver lining in the form of the Delinquent FBAR Submission Procedures, an amnesty program that allows you to catch up on your FBARs without hefty penalties, provided your late filing was unintentional. All you need is a specialized accounting service from experts to ensure you don’t get penalized.
Consequences of Non-compliance
On the flip side, willful failure to file an FBAR can attract severe financial penalties, potentially up to fifty percent of your account balance or $100,000 – whichever is higher. In extreme cases, there might even be criminal penalties.
Reporting of Foreign Assets
Living abroad with foreign financial assets exceeding $200,000 at year-end or $300,000 at any time during the year? These need to be reported, but not through FBAR – instead, you use IRS Form 8938.
Finding the best Remote Staffing for quality Tax Return Filing
The US tax and FBAR filing can appear daunting, but with accurate information and diligent adherence to deadlines, you can navigate this landscape successfully. Crown Globe, with its team of seasoned experts, Remote staffing and quality tax return filing services, is here to provide personalized guidance.
Remember, knowledge is power! At Crown Globe, we are committed to providing you with the clarity you require to navigate international taxation complexities with our top-notch accounting services. We turn daunting into the doable. So, happy globe-trotting while we manage your financial obligations!
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