So, you’ve got a Swiss bank account, or recently closed one, and may be wondering if you should report your money to the IRS. Unfortunately, and as you may know, Switzerland is generally closed off for stashing cash, and the IRS has teamed with the UK and Australia to further discourage hiding money abroad. Here’s the how and why for coming clean, Macbeth.
There are exceptions to reporting your overseas income – it all depends on your balance. If your accounts in total are $10,000 or more, you certainly have to file a special form to the US Treasury. Also, you are obligated to report your entire income, wherever it may come from, including interest accrued on a foreign account. This applies if you have signatory authority over another individual’s foreign account.
Well, there are no fees to file your income, inheritance, or accounts, but huge penalties if you don’t. Penalties include but are not limited to: $10,000 and up for FBAR, $10,000-$50,000 for FATCA, $10,000 or 35% of the money received (whichever is greater) plus additional fees for Form 3520. Further, penalties earn interest, and the IRS can demand these filings at any time, now or 15 years in the future, compounding the importance of reporting any and all foreign income.
In some cases, the IRS will waive penalties if you have ‘reasonable cause’ or if you acted in ‘good faith,’ if you weren’t aware of your filing obligations. However, do not count on this exit strategy. These terms are highly subjective and can require a court appearance.
The IRS has collected billions of dollars by detecting taxpayers with offshore assets, thanks in part to snitches that are highly rewarded. Don’t risk the large penalties and legalities of not reporting.
So how do you file and avoid the punches of penalties?
Below are the forms you may have to submit; one or all may apply to your overseas financial situation.
Out damned spot! No guilt trips, no fees. Time to file the forms.