WASHINGTON – Strong and sustained growth of taxpayers complying with
foreign financial account reporting reflects improving awareness and
compliance of this important part of offshore tax rules, the Internal
Revenue Service said today.
“Taxpayers here and abroad need to take their offshore tax and filing
obligations seriously,” said IRS Commissioner John Koskinen. “Improving
offshore compliance has been a top priority of the IRS for several
years, and we are seeing very positive results.”
By law, many U.S. taxpayers with foreign accounts exceeding certain
thresholds must file Form 114, Report of Foreign Bank and Financial
Accounts, known as the “FBAR.” It is filed electronically with the
Treasury Department’s Financial Crimes Enforcement
Network (FinCen).
In 2015, FinCen received a record high 1,163,229 FBARs, up more than 8 percent from the prior year. In fact,
FBAR filings have grown on average by 17 percent per year during the last five years, according to FinCen data.
Filings of IRS Form 8938, Statement of Specified Foreign Financial
Assets, are another sign of growing awareness of foreign reporting
requirements. Taxpayers filed more than 300,000 Forms 8938 with their
tax returns for tax year 2014, roughly the same as
the prior year and up from about 200,000 for tax year 2011, the first
year of the form.
Form
8938 resulted from the Foreign Account Tax Compliance Act, known as
“FATCA.” The filing thresholds are much higher for this form than for
the FBAR.
Filing Requirements
Taxpayers with an interest in, or signature or other authority over,
foreign financial accounts whose aggregate value exceeded $10,000 at any
time during 2015 must file FBARs. It is due by June 30 and must be
filed electronically through the
BSA E-Filing System website.
Generally, U.S. citizens, resident aliens and certain non-resident
aliens must report specified foreign financial assets on Form 8938 if
the aggregate value of those assets exceeds certain thresholds.
Reporting thresholds vary based on whether a taxpayer
files a joint income tax return or lives abroad. The lowest reporting
threshold for Form 8938 is $50,000 but varies by taxpayer. See the
form’s instructions for more information.
IRS.gov
provides the best starting place for international taxpayers to get answers to their important tax questions. The
International Taxpayers page on IRS.gov is packed with information. The web site also features a
directory that includes overseas tax preparers.
International taxpayers will find the online
IRS Tax Map and the
International Tax Topic Index to be valuable sources of answers. The IRS also has videos to assist international taxpayers. See
IR-2016-03 for more.
By law, Americans living abroad, as well as many non-U.S. citizens,
must file a U.S. income tax return. In addition, key tax benefits, such
as the foreign earned income exclusion, are only available to those who
file U.S. returns.
The law requires U.S. citizens and resident aliens to report
worldwide income, including income from foreign trusts and foreign bank
and securities accounts. In most cases, affected taxpayers need to
complete and attach Schedule B to their tax return. Part
III of
Schedule B asks about the existence of foreign accounts, such as
bank and securities accounts, and usually requires U.S. citizens to
report the country in which each account is located.
More information on the tax rules that apply to U.S. citizens and resident aliens living abroad can be found in,
Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
