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Significance of Timely FBAR Reporting

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					                           Significance of Timely FBAR Reporting

There are numerous tax payers who skip filing the FBAR forms despite owing foreign bank
account as their accounts are not earning income or interest. However, it is essential to note
that the FBAR reporting guidelines do not do away with these cases. It is essential to file an
FBAR form even if foreign bank accounts of individuals are not generating much income. The
FBAR is a yearly reporting and not a tax reporting requirement.


There is yet another common mistake that many taxpayers make by thinking that they can
attain FBAR reporting extension just by extending the date their income tax returns are due. It
is important to know that FBAR form is separate from income tax returns and is an additional
attachment. Hence, attaining an extension to the income taxes has to influence on whether the
foreign bank account is due. Today there are extensions granted for the FBAR but it is essential
to file this request individually prior to June 30th of any year.


The reportable financial accounts on FBAR include the following:


   ● Bank accounts i.e. saving, current, fixed deposit and the like.
   ● Securities or brokerage account
    ● An account with a person that acts as a broker or dealer for futures or options
       transactions
   ● An account with a person in the business of accepting deposits as a financial agency
   ● Insurance or annuity policy with cash value like LIC, ULIP
   ● Public provident fund
   ● Shares in a mutual fund or similar pooled fund
   ● Gold kept in locker facility provided by the bank


However, for proper FBAR filing and better suggestions it is best to partner with a tax planning
agency that helps resident individuals, green card holders and other taxpayers with:
   ● Total compliance
   ● Consultation and Impact Analysis
   ● Analysis and planning to minimize FBAR Penalty
   ● AMT Strategies, Foreign Tax Credit
   ● Review of 2009, and 2010 OVDI cases
   ● Mutual Fund or PFIC computations
   ● Preparation of forms required to participate in the OVDP program
   ● Preparation of Tax Amendments and Delinquent FBAR
   ● IRS Representation by Enrolled Agents or Affiliated CPAs and Attorneys
   ● Last but not the least, all this for a fraction of the cost charged by other firms


The moment an entity or an individual is deemed to be non-compliant with FBAR reporting
guidelines, the IRS generally communicates the same by sending a non compliance taxpayer
a 30 day letter. However, if an individual is cooperative the FBAR fines and penalties can be
minimized by the IRS.


Read More About: IRS Amnesty, Entity Formation, Overseas voluntary disclosure

				
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Description: It is important to know that FBAR form is separate from income tax returns and is an additional attachment. Hence, attaining an extension to the income taxes has to influence on whether the foreign bank account is due.