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Declaring an overseas account.

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JGb412

Junior Member
I have an account that I declare each year on my 1040, but I have not been filing an fbar because I was under the impression that the account was under $10,000. It was an account I opened 7 years ago while traveling in New Zealand and I get no notifications from them so it was left and sort of forgotten. I recently was able to access my account online and saw that it was over $10,000. Because I wasn't seeing or thinking about the interest being earned I also wasn't declaring it on my tax returns. The account has been open about 7 years and has been earning $300-500 interest a year. I've been reading some of the options to try and get my account back up to code, but it is a little intimidating and I'm not sure which option to choose.

Any suggestions based on the information I gave?

Thanks
 


davew128

Senior Member
Honestly you need to sit down with someone. The process isn't THAT bad but the problem isn't the unreported income, its the mandatory penalty for OVDP for non-filing the FBAR. I think the new procedures make a person in your situation more likely to do it, and certifying that the failure wasn't willful SHOULD be enough but there are never guarantees.
 

LdiJ

Senior Member
Honestly you need to sit down with someone. The process isn't THAT bad but the problem isn't the unreported income, its the mandatory penalty for OVDP for non-filing the FBAR. I think the new procedures make a person in your situation more likely to do it, and certifying that the failure wasn't willful SHOULD be enough but there are never guarantees.
I agree. You need to sit down with someone who is familiar with the amnesty program regarding failure to file the FBAR. You will also need to amend your returns to include the interest income formerly omitted.

A first step would be to get bank statements going back to when you first opened the account. You will then be able to determine what year was the first year that you should have filed the FBAR.
 

JGb412

Junior Member
Ok. Thanks for the help so far. When you say sit down with someone, do you mean a tax lawyer? Should I contact the IRS? I have heard that they will sometimes help guide you through the situation, but I'm afraid of exposing my situation to them if I could maybe do a "quiet disclosure" or something similar.

Any advice as to where to contact people with expertise in this area?
 

STEPHAN

Senior Member
What kind of money was on the account? Where did it come from?

Did you earn any significant interest on it?
 

JGb412

Junior Member
The money is New Zealand Dollars, it was wired there when I was going to travel there. I think I may have wired some more money there after I return to the states, but I am not positive. I am currently trying to get my bank statements from the account. I believe I have been earning between $300 and 500 a year based on the amount it has brown, but can't be sure until I see the account statements.
 

LdiJ

Senior Member
The money is New Zealand Dollars, it was wired there when I was going to travel there. I think I may have wired some more money there after I return to the states, but I am not positive. I am currently trying to get my bank statements from the account. I believe I have been earning between $300 and 500 a year based on the amount it has brown, but can't be sure until I see the account statements.
Do not forget to take the exchange rate into consideration. The 10,000 is in US dollars. Right now every NZ dollar is worth .76 US dollars. So an account with say 12,000 in NZ dollars would be worth 9120.00 US dollars and would be under the reporting level. You would have to research historical exchange rates for prior years.
 

JGb412

Junior Member
I know its probably not smart, but after reading a little more, it looks like New Zealand is only has to declare accounts over $50,000 to the FATCA authorities. If I went and closed the account what is the likelihood they look into an account of that size being closed? Or would they even see it was being closed. Like I said I know this is probably not the smartest move, but I don't want to pay fines worth the entire amount of the account just for the little bit of tax liability I had no accounted for.
 

LdiJ

Senior Member
I know its probably not smart, but after reading a little more, it looks like New Zealand is only has to declare accounts over $50,000 to the FATCA authorities. If I went and closed the account what is the likelihood they look into an account of that size being closed? Or would they even see it was being closed. Like I said I know this is probably not the smartest move, but I don't want to pay fines worth the entire amount of the account just for the little bit of tax liability I had no accounted for.
It might not even be as much as an issue as you think if you research historical exchange rates and figure out just what year it was that you might have had to start reporting the account.
 

JGb412

Junior Member
I have taken the exchange rate into effect, I think that it one of the things that caused the confusion in the first place, I thought I had left $10,000 NZD (about 7,200 at the time) but I guess it was closer to 10k USD. I wish I would have been more on top of my situation, but I thought since I wasn't receiving any notifications from the bank or IRS that I must have still been in compliance. I still have never been contacted by anyone regarding this account.

I've gained access to my account online, but they only have statements back to 2009, it looks like I was over the limit at that point. Should they have records prior to that if I request them?

LDiJ, you mentioned researching the exchange rate, should I do that for each year individually or just use the current rate to value the account at certain points in time?

Any thoughts on closing the account and keeping quiet? It's about 15k USD value right now. Like I mentioned in a previous post, NZ does not have to declare accounts under $50k to FATCA, but would I be screwed anyways because I have been marking that I have a foreign account on my 1040, but not filing any of the interest as earned income? Would a transfer of that amount raise any "flags"?

Also what are your thoughts on contacting the IRS? Will the be "helpful" or try to fine for the maximum amount possible iwhen they hear my situation? The account and case seem pretty small time for the IRS to worry about, but to me it as actually a large amount of money and I would hate to lose it all because I messed up when filing my taxes.

Thanks, JGB
 

LdiJ

Senior Member
I have taken the exchange rate into effect, I think that it one of the things that caused the confusion in the first place, I thought I had left $10,000 NZD (about 7,200 at the time) but I guess it was closer to 10k USD. I wish I would have been more on top of my situation, but I thought since I wasn't receiving any notifications from the bank or IRS that I must have still been in compliance. I still have never been contacted by anyone regarding this account.

I've gained access to my account online, but they only have statements back to 2009, it looks like I was over the limit at that point. Should they have records prior to that if I request them?

LDiJ, you mentioned researching the exchange rate, should I do that for each year individually or just use the current rate to value the account at certain points in time?

Any thoughts on closing the account and keeping quiet? It's about 15k USD value right now. Like I mentioned in a previous post, NZ does not have to declare accounts under $50k to FATCA, but would I be screwed anyways because I have been marking that I have a foreign account on my 1040, but not filing any of the interest as earned income? Would a transfer of that amount raise any "flags"?

Also what are your thoughts on contacting the IRS? Will the be "helpful" or try to fine for the maximum amount possible iwhen they hear my situation? The account and case seem pretty small time for the IRS to worry about, but to me it as actually a large amount of money and I would hate to lose it all because I messed up when filing my taxes.

Thanks, JGB
You need to sit down with a tax professional (not necessarily a tax attorney) who is familiar with the amnesty program. The penalties are much higher if you get caught, than they are if you come forward voluntarily. DO NOT contact the IRS about it.
 

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