by The TaxResearchPro Team | Apr 21, 2015 | Personal Tax
If your client holds foreign financial accounts with a value exceeding $10,000, it most likely needs to be reported on the report of Foreign Banks and Financial Accounts (FBAR) FinCEN 114. Unfortunately, sometimes clients do not disclose this information to their accountant even if the client questionnaire requests it. What should you do if your client does not report this account until after the filing deadline passes? What if a client does not disclose their foreign accounts? First, it is important to note that the FinCEN 114 is due on June 30th of the following calendar year and is filed via the BSA E-Filing System. If this reporting will be filed late, the client needs to include a reason for filing late on the cover page of the electronic report or enter a customized explanation using the “Other” option. Is there a penalty for filing FinCEN 114 late? The IRS may not impose a penalty for the failure to file the delinquent FinCEN 114 as long as the income from the account has been reported properly and taxes are paid on the US tax return. In addition, the client must not have been previously contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent forms are submitted. Are there any other forms that need to be filed? The client may also need to file Form 8938, if the account was $50,000 on the last day of the tax year or $75,000 at any time during the tax year (higher threshold amounts apply to married individuals filing jointly and individuals living...
