If you do then it may be necessary to report this income on a U.S. tax return. Most foreign countries have a guideline that requires you to include a report all personal and business assets in the tax return. With the globalization of the world, countries are starting to share information included in this information are tax returns for better taxation and financial tracking. Some “taxable residents” have already been questioned by custom agents at international ports of entry and exit.
It is required by law to file foreign tax returns with the United States Internal Revenue Service. Failing to declare foreign assets with a Report of Foreign Bank and Financial Accounts (FBAR) and in your US tax return can result in severe penalties. Additionally, the FBAR deadline must be strictly adhered to; unlike the annual tax return deadline the FBAR deadline is not extendable. For 2015 fiscal year, the FBAR deadline is June 30th, 2016.
Are you required by law to file an FBAR?
According to United States tax regulations, all United States citizens who own a reputable foreign financial account are required to file a Report of Foreign Bank and Financial Accounts (FBAR). Here is a brief rundown of who should themselves also consider themselves as United States citizens and need to file both an FBAR and Form 1040 which is used by both United States citizens and legal “tax resident” filers.
- Persons who have been residing in the United States for a period that exceeds 120 days in the 3 last calendars.
- Persons who have resided in the United States for a period that exceeds 183 days in a year.
What is considered as a business asset?
According to United States tax regulations business assets may include:
- Corporate ownership
- Bank accounts affiliated with entrepreneurial investments
- Real estate investments owned by a business
- Valuable business possessions such as automobiles, electronics, artwork and other collectibles that can be appraised.
- It is also necessary to include Intangible business assets such as trademarks, patents, computer programs and copyrights in the tax report.
What is considered as a personal asset?
According to United States tax regulations a person’s personal assets may include:
- Personal bank accounts
- Personal real estate investments (not required in foreign asset declarations)
- Stocks that are personally owned
- Valuable possessions that a person owns such as automobiles, electronics, jewelry, boats, antiques and other collectibles that can be appraised.
If you have any foreign assets and need to file a Foreign Bank Account Report, or not sure whether you need to file one, give us a call. At Rosillo & Associates, we take care of your tax needs for long term financial success.