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A late FBAR can be worse than a late US tax return. What to do.
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First, it’s not too late for 2022
You can still file a timely 2022 FBAR if you complete it by Oct 17. That’s the extended deadline for Americans living abroad.
Even if your 2022 information is incomplete or crappy, file what you have by the 17th. Filing late will expose you to the risk of an FBAR penalty, and tax authorities aren’t known for being “chill” about deadlines.
Fortunately, you can fix any shortcomings in your October submission with a later amended 2022 FBAR. That amended filing won’t trigger a penalty.
Why a late FBAR could be a big deal
If you file FBARs, you probably file US tax returns. If so, you know that being late on your 1040 filing leads to penalties. With taxes, the degree of lateness matters. The later you are, the more you’ll owe.
For FBARs there are no degrees to being late. It’s binary. Your FBAR was late or it wasn’t. FBAR penalty size won’t be affected by the degree of lateness. A little late is as bad as a lot late.
Moreover, and as I explained in an earlier post, all FBAR penalties are bad. You won’t be getting an FBAR penalty bill for $27.
There are 2 buckets
FBAR penalties fall into one of two buckets, non-willful or willful. Being in the willful bucket is far worse than being in the non-willful. More on the gruesome details are here.
If you filed your first FBAR late because you had never heard of FBARs, your penalty would be considered non-willful. After all, you didn’t know about FBARs, and your failure to file can be easily viewed as unintentional.
But if you filed your next year’s FBAR late, the “I didn’t know” defense probably wouldn’t fly. To avoid a willful violation, one would need to make an “I forgot” or alternative defense.
What to do
Experts on expat American money hassles say that FBAR penalties are rarely applied. Apparently they are triggered when expat Americans move back to the US and then fail to report their foreign accounts.
That said, the sure way to eliminate FBAR penalty risk is to file your FBAR on time. To help you I’ve created a handy Guide to Easier and Faster FBAR Filing.
The Guide will:
→ highlight FBAR rules in plain terms;
→ organize your info for fast online filing;
→ correctly convert currency to US$;
→ tell you if you reach $10K & must file;
→ teach a hack for speedy form entry;
→ guide you thru FBAR form completion;
→ detail steps for filing & getting receipts;
→ explain & provide recordkeeping tools;
→ help you set up next year’s worksheet; and
→ save you time now & more in the future.
If FBARs are new to you, read this WARNING
Despite widespread beliefs to the contrary, US citizens living abroad are required to file both US income tax returns and FBARs – unless they have almost no income and no savings.
Many American expats file neither tax returns nor FBARs. They may believe, incorrectly, that non-US income isn't taxable by Uncle Sam. They may not have even heard of the FBAR.
If you're one of those Americans who hasn’t filed a US tax return or an FBAR, don’t just start. First consult someone with expertise on US citizenship and taxation.
Filing a 1040 or an FBAR will enter you into the US tax system with many long-term negative consequences. Understand those consequences before you file anything.