For many Americans, the prospect of navigating the complex world of taxes can seem like a daunting task. In 2012, the IRS implemented the open-ended Offshore Voluntary Disclosure Program (OVDP) to offer citizens the option of disclosing their foreign accounts in order to rectify any tax issues. This program can be a stressful, complex process. JDKatz is here to offer assistance with interpreting the Offshore Voluntary Disclosure Initiative (OVDI) and OVDP laws in the Washington DC area. Our expert tax advice and services can help you to reduce tax penalties and to amend any past tax incongruencies.
Last week, we discussed a few common mistakes citizens make when attempting Report of Foreign Bank and Financial Accounts (FBAR) filing. The Report of Foreign Bank and Financial Accounts, or Form 114, is a disclosure form that is separate from your actual tax files. In most cases, Americans neglect their FBAR returns or incorrectly file them due to misinterpretations of the requirements. Today, we’ll wrap up a few more mistakes that citizens commonly make.
- Accounting For Minors. Children who are US citizens, or who reside in the US, are also required to file FBARs if they meet the minimum threshold laid out on the IRS website. If your kid owns, or has signatory authority over, foreign accounts that exceed the $10,000 aggregate minimum at any point in a given year, then they are required to fill out Form 114. Minors are responsible for submitting their own FBAR. If the child is too young to complete the tasks, their parents or guardians are responsible for the filing. In many cases, parents are either unaware of the FBAR requirements in general or are not informed that their kids fall into the same tax liability category.
- Joint Filing With Spouse. The rules for filing jointly are hard to decipher for many people. In almost all cases, spouses are not allowed joint FBAR filing. Joint filing is only permitted if three conditions are met:
- All the foreign financial accounts that the non-filing spouse owns and is required to report are jointly owned with the filing spouse.
- The spouse that is filing reports the jointly-owned accounts on their FBAR on time and signs it electronically.
- The filers have completed and signed the Financial Crimes Enforcement Network’s (FinCEN) Form 114a, which is the Record of Authorization to Electronically File FBARs
If all of these conditions are met, only one spouse will be required to file their FBAR form on behalf of both parties.
When it comes tax law and foreign account disclosures, many citizens fear the complexity of the tax code and the possibility of dire consequences for failing to file correctly. Most times, people are “non-willful” violators, meaning they are not intentionally avoiding their tax responsibilities. The IRS and FinCen have developed programs such as OVDP to help citizens come forward and clear their financial obligations without the full force of monetary penalties and possible jail time. FBAR is essential for completing this process and must completed if the minimum threshold is exceeded for foreign financial accounts. If you feel that you fall into this category and are looking for an OVDP lawyer, we can help! JDKatz is comprised of the most experienced Maryland tax lawyers and can help citizens who need assistance with OVDP laws in the Washington DC area as well. Contact us today to see how our expertise can benefit your life!