Foreign Asset Reporting Services | FBAR Forms and More

If you are a US citizen or resident, you may have heard that you need to file an FBAR (Foreign Bank Account Report) each year if you had foreign bank accounts with more than $10,000. But did you know that this is just the tip of the iceberg? The IRS also requires annual reporting of a wide range of assets held outside the US, including:

  • Foreign life insurance and mutual funds
  • Pensions you expect to receive from foreign employers (even if you don’t currently receive distributions)
  • Ownership in foreign companies (including family businesses), partnerships, or trusts
  • Ownership of personal retirement accounts (e.g., ISAs) or Superannuation Funds

And you should disclose your ownership of foreign accounts and assets each year, even if there is no tax impact of owning those assets. Not reporting your foreign financial assets could result in penalties of $10,000, $25,000, or $100,000 per missing, incomplete, or improperly filed form—even for “regular people” who didn’t know they needed to report. These penalties are also being assessed automatically for the late filing of the informational forms.

We can help you determine your filing requirements, determine the US tax treatment of your assets, and properly complete each required form for you. If you are late in reporting, we can help you minimize your penalties.

Examples of Foreign Assets Subject to Annual Reporting

Assets to Report Form Name Annual Penalties for Not Filing or Incorrect Filing
Foreign Bank Accounts or Financial Accounts (including signature accounts); certain foreign pensions FBAR/Form 114 $10,000 (or if intentional, greater of $100,000 or 50% of maximum balance)
Foreign financial accounts, bank accounts, pensions, securities, etc. Form 8938 $10,000 – $60,000
Foreign mutual funds or pooled investments Form 8621 Keeps statute of limitations open; interest charges may apply
Contents of certain foreign retirement accounts or life insurance policies Form 8621 Keeps statute of limitations open; interest charges may apply
Certain foreign retirement accounts and foreign trusts (owner) Form 3520-A Late or incorrect filing penalty: greater of $10,000 or 5% of owned trust assets
Certain foreign retirement accounts and foreign trusts (owner or beneficiary); certain foreign life insurance policies Form 3520 Late or incorrect filing penalty: greater of $10,000 or 35% of trust distributions or contributions or 5% of trust assets
Recipient of foreign gift or inheritance > $100,000 Form 3520 5% to 25% of value of gift or inheritance
Ownership in foreign corporation Form 5471 $10,000 – $60,000; reduction of 10% of foreign taxes available for credit
Ownership in foreign partnership Form 8865 $10,000 – $60,000; reduction of 10% of foreign taxes available for credit
Ownership in foreign sole proprietorship Form 8858 $10,000- $60,000; reduction of 10% of foreign taxes available for credit
Transfer of cash or property to a foreign entity Form 926 10% of transfer or $100,000
Calculation of the GILTI Tax Form 8992 $10,000 – $60,000
FDII Deduction for GILTI Tax Form 8993 Loss of Deduction

Facts About Foreign Asset Reporting in the US

FACT: Most informational reporting of foreign assets does not have an impact on the amount of tax you owe.

The IRS calls the reports “informational disclosures” because that’s what it’s collecting—information. By reporting your foreign assets, you are creating transparency with the IRS for a possible future tax event. The IRS has routinely found high error rates in the tax returns of US taxpayers with foreign assets and income.

By forcing taxpayers to report on their foreign ownership, the IRS has a mechanism to identify where these same individuals may be under-reporting their taxable income on other parts of their tax returns, now or in the future.

To force taxpayers to take these forms seriously, the IRS imposes failure-to-file penalties of $10,000 to $100,000 per form per year! Also, failing to file these forms leaves your tax returns open for audit indefinitely.

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FACT: The IRS has become smarter about who has unreported foreign assets or foreign income.

Since 2009, the IRS has collected large amounts of data on US taxpayers with foreign assets and income. The data have come from foreign banks, IRS amnesty program filings, tax returns and FBARs, and disclosures under the Foreign Account Tax Compliance Act (FATCA).

Now, the IRS is increasingly using data analytics to identify people who likely have undisclosed foreign income and assets. Check out our blog post on this topic.

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FACT: Failing to file informational reports about your foreign assets is a bad idea.

If you know the rules and intentionally do not comply, the IRS takes harsh action. You could be banned from using most IRS amnesty programs and even face criminal charges. The good news is that you have options to minimize your reporting requirements. We can help you understand those options, avoid common pitfalls, and identify alternative actions or investments that meet your needs without unduly increasing your reporting.

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Fact: IRS amnesty programs exist to help you.

If you haven’t filed all the right forms, it’s generally in your best interest to immediately take steps to resolve the issues voluntarily through an IRS amnesty program. These programs allow you to:

  • Fix your foreign income and asset reporting under more favorable circumstances
  • Avoid the numerous $10,000 per-form penalties that you would incur had you corrected certain foreign asset reporting problems by filing regular amended returns
  • Significantly reduce penalties related to your unreported income
  • Fix only a few years’ worth of returns instead of all of the returns with problems
  • End the IRS’s ability to go back and audit you for certain (older) prior-year returns that were missing the same foreign information

We’ve assisted hundreds of clients with their amnesty filings, guiding them from start to finish.

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How We Can Help You

We help clients do all the proper reporting the first time. And we also help new clients correct their prior filings (or lack of filings) using the best options available for their circumstances. We specialize exclusively in international tax, so all our staff works daily with the numerous foreign asset reporting forms required by the IRS. We know the nuances, the pitfalls, and what the IRS is looking for.

Our services include:

  • Preparation of tax returns with all required international informational filings
  • Preparation of original or amended prior-year income tax returns with required international informational filings
  • Preparation of standalone informational reports, including those for foreign corporations and foreign trusts
  • Advice regarding the various amnesty options
  • Preparation of IRS amnesty program tax packages, including tax returns, FBARs, and international informational reports

We get your foreign asset reporting done right the first time, and we stand behind our work.

Why The Wolf Group?

Since 1983, we’ve worked with clients in the United States and abroad on international tax matters. We have a long history of “cleaning up” complex tax returns, reporting foreign assets, and reconstructing financial records.

Check out our extensive team of CPAs, all with vast international tax experience.

Looking for a Nexia International Partner?

We’re an active member of Nexia International, a global network of independent accountancy, tax and business advisors with over 250 firms around the globe.

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What our clients say

“The Wolf Group has been doing our taxes for over 20 years. They are excellent professionals, very pleasant and helpful, and I highly recommend them to anyone–particularly to those with complex international tax situations, such as G-4 Visas, foreign holding, and /or off-shore accounts.”

“This was the first time I had to file taxes in the US. There was some complexity to it because my wife’s pension is paid and taxed in another country. I was grateful for the expert help that I received from The Wolf Group.”

“The tax professionals I have worked with at The Wolf Group have been extraordinary. They have been clear, helpful, endlessly patient, hugely knowledgeable, and just amazing. The advice has been excellent, and the communication has been very clear. Subjects that feel so daunting have were explained with great clarity. I trust TWG completely and would not know how to manage without them.”