| In
the historical past, Americans living and working abroad would
open bank accounts with a local bank in whatever country they were living
and working, and if it earned any interest at all would never show it on
their U.S. income tax return. This was part of the unofficial
benefits of living in outside of the U.S. and everyone thought it
was fun.
Then things
started to change. The U.S. Department of Treasury created the form
TDF 90-22.1 for reporting on foreign financial, bank and other investment
accounts but never paid much attention to whether taxpayers living abroad
filed it or not. Then money laundering connected with drugs
and terrorists became items of concern. The IRS told Congress lately about
the 300 billion of tax dollars the IRS was not collecting from cash businesses
in the US and Americans living abroad who were not paying taxes on
their taxable investment and other income.
The TDF
form must be filed when you have at any time during a calendar year more
than $10,000 in one or more foreign bank and financial accounts. |
|
|
|
That
means all foreign accounts are combined on any day during the year to determine
if the over $10,000 figure is reached. The IRS has held that financial
accounts includes bank accounts, certificates of deposit, stock market
accounts, gold or collectibles held by another for your benefit, and even
credit
balances in offshore credit card accounts.
The TDF form
is not a tax form and has no effect on your income taxes. You are
already suppose to be reporting the earnings of these investments on your
US tax return.
When you fill
out the form you must list the name of the financial institution, country
of location, highest balance during the year, and the account number.
For each account you must also state the name and US tax identification
number of any co-owner of the account.
If you sign
on the account belonging to your employer, your foreign corporation, trust,
or LLC or another individual or entity, you must also file the form and
report all of the requested information unless the accounts belong to a
publicly traded corporation.
Though the
TDF 90-22.1 form has existed for many years prior to 2004 there were no
serious penalties for failing to file it that were enforced. |
| In
2004 the law changed r when Congress enacted a $10,000 penalty for
“without
regard for willfulness” for failing to file the form by the June
30th deadline or not filing it for any year when it was required.
There are also
even greater monetary penalties and criminal penalties ( jail time) for
failing to file the form that the IRS may impose on anyone they catch that
has not filed or filed the form late.
This report
on foreign bank accounts and financial accounts is not filed with your
personal US tax return, but is mailed to the US Treasury at a separate
address. It is not due on April 15th, but must be filed on June 30th
following the end of the calendar year it is reporting.
The due date
of this form cannot be extended for any reason. If you have not filed
for past years, or are filing late, you can get the penalty abated if you
can show “reasonable cause” for your late filing. |
|
|
 |
|
|
|
 Escape
From America Magazine - The very best way to get
the most current and up to date information on overseas retirement is to
subscribe to our free eMagazine. We have a hassle free unsubscribe policy,
and we don't spam, period. If you want to find out how to live overseas,
where to live overseas, where to find retirement havens, where to find
the best bargains in real estate overseas, how to live a quality international
lifestyle, and how to move your cash and your life offshore; then do subscribe
to our eZine. Close to half million people already have and over 100 more
sign up every day. Find out why. |
|
|
|
|
|
|
