Declaring Foreign Assets and Income to the IRS
The U.S. citizens and residents are taxed on their worldwide income from whatever source. Some U.S. taxpayers choose not to report their foreign-source income, while other taxpayers are simply unaware of this reporting requirement. The IRS is working more actively than ever before to discover those taxpayers who failed, for one reason or another, to report their foreign income or foreign financial accounts. The taxpayers who fail to report their foreign income or foreign bank and other financial accounts (such as brokerage account, mutual fund, trust, or any other type of foreign financial account) may face heavy fines and in some circumstances even criminal prosecution.
If you have a financial interest in or signature authority over a foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). In addition, the recent rule requires the taxpayer to file a new IRS Form 8938 with their income tax return (Form 1040) to report specified foreign financial assets (SFFAs). This reporting is required under the Foreign Account Tax Compliance Act (FATCA), which was enacted in 2010.
The IRS prefers that you come forward and voluntarily disclose your foreign assets or foreign bank and financial accounts. For this reason, the IRS came up with an Offshore Voluntary Disclosure Program (OVDI). The first OVDI program ran in 2009, the second one in 2011, and the most recent one was announced in 2012. We assisted many taxpayers get more favorable tax treatment of their foreign income via participation in these OVDI programs.
We invite you to contact us today by phone at (425) 289-0629 or contact our Washington tax debt attorney by e-mail, to discuss your case. Find out how we can help.
