IRS warns report on foreign financial accounts due by April 15
April 15 remains a date for most people, as it is usually their deadline for filing their taxes each year. This year, the Internal Revenue Service (IRS) changed things up a bit. The agency has moved the tax deadline in 2022 to April 18 due to the Emancipation holiday in Washington, D.C. But even if you have a few extra days to file your 2021 return, that April 15 date could always be important. The IRS just sent out a new reminder, warning some people they may face another one deadline in the coming weeks. Read on to find out what you might need to do three days before your taxes are due.
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The IRS issued a new alert on March 31, warning “U.S. citizens, resident aliens, and any domestic legal entity” that they may soon have a filing deadline. The warning explained that the deadline for filing your annual Foreign Bank and Financial Accounts Report (FBAR) is April 15, which is earlier than this year’s deadline for filing a 2021 tax return. .
According to H&R Block, the FBAR exists to help the IRS fight tax evasion by requiring US citizens to report money and assets from non-US banks. “U.S. persons are required by law to report their foreign financial accounts because foreign financial institutions may not be subject to the same reporting requirements as domestic institutions,” the IRS further explained.
The Bank Secrecy Act, which was put in place in 1970, requires certain people to file an FBAR if they have a financial interest, signing authority or other authority over at least one account in a foreign country and the value total of all their accounts. exceeded more than $10,000 at any time during the last calendar year.
“Generally, an account at a financial institution outside the United States is a foreign financial account,” the IRS said. And because the threshold is so low, the agency said it encourages anyone or entity with foreign accounts, even small ones, to check whether the FBAR filling requirement applies to them.
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The IRS said filers who miss the April deadline will automatically receive an extension until Oct. 15 to file their FBAR. “They don’t need to ask for the extension,” the agency noted. But that doesn’t mean there may not be consequences for missing the April 15 deadline.
“Those who do not file FBARs when required may be subject to significant civil and criminal penalties that could result in a fine and/or jail time,” the IRS warned. But the agency added that it will “not penalize those who correctly report a foreign account on a late-filed FBAR” if it is able to determine there was reasonable cause for your late filing.
If you are required to file an FBAR, you must do so. The IRS has said that failure to file this record could be a criminal offense that could land you up to five years in prison. And according to H&R Block, failing to file can subject you to penalties of up to $10,000 per violation, even if you didn’t know you had to file an FBAR. Failure to file, on the other hand, can result in a penalty of $100,000 per violation or more.
If you’ve never filed an FBAR but realize you were supposed to because of the requirements, you may be able to qualify for the IRS’ simplified filing compliance procedures. This process allows Americans to catch up on their past FBARs without penalties, says H&R Block. And it is “available to taxpayers certifying that their failure to report foreign financial assets and pay all taxes owing on those assets was not the result of willful conduct on their part,” the IRS said.
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