Reporting of foreign bank account for US citizens

Each United States person is required to disclose any financial interest in foreign bank accounts on Form TD F 90-22.1, commonly referred to as FBAR, if the aggregate value of all accounts exceeds $10,000 at any time during the calendar year. Disclosure is mandatory with possible criminal and civil penalties for failure to report or filing a false report.

The interest must be reported on Schedule B, of the current year and under the newest Offshore Voluntary Disclosure Program (OVDP), announced in IR 2012-5, all prior returns are to be amended to report the interest earned on foreign accounts, the tax due and any interest on the amount due for the last eight (8) years. Penalties can be as high as 27.5% of the highest balance during the eight-year period. However, it could be as low as 5% for eligible taxpayers.

According to the IRS website, tax practitioners must exercise due diligence when it comes to determining the accuracy of information obtained either written or orally from our clients including the answers given for questions 7 and 8 on Schedule B, Part III. Practitioners, subject to Circular 230 regulations, must advise the taxpayer of the consequences for noncompliance. If the client refuses to disclose interest earned in a foreign account, the practitioner cannot prepare the return without being in violation of Circular 230.

36 Responses to “Reporting of foreign bank account for US citizens”

  1. US taxpayers can get into trouble by not disclosing foreign bank accounts. Thanks for the heads up, Irit! i need an accountant that is familiar with this tax law. i will call you.

  2. Leandro Code says:

    this is well a set out and interesting information. Honestly i never knew that foreign bank account of US citizens need to be reported. not that i have one but just good to know about it.

  3. This is a great blog. Yes i guess it is better to report foreign account and not hiding it.

  4. Alok Dilon says:

    It is not possible to hide anything this days. Better to report it.

  5. Alok Dilon says:

    This is a good and important to know. I will tel a friend of mine, who i know has a foreign bank account, he will be surprised

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  7. That is the fitting blog for anyone who desires to know about reporting of a foreign bank account. I surprise people in the US need to do this.

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    Hi i need a CPA to file my business tax and i haven’t done my taxes for the last three years, do you do back taxes ?

  9. Hey there! I’m at work browsing your blog from my new iPhone and i just realized that my dad should read about it, i sure he will need to report his many foreign accounts i am going to send him link to this article. Thank you

  10. I found your site site on goggle do you do taxes for independent films, we need a new cpa who work with the entertainment and film industry and looks like you are the one.

  11. beton says:

    My mother is a US citizen so she need to know that because if i understand that article she need to report her bank account.

  12. Just study it and thanks the post again. i think i should tel this to my brother who live in the US but has an account in the UK. Wow this is going to shock him.

  13. Hello there, just became aware of your blog via Google, and located that it is really informative. I would like to get information about international taxation and requirement for US citizens who have duel citizenship. It is so complicated, i never new how to file up this form.

  14. This really answered my problem, i have about $5000 in a foreign account and i wasn’t sure if i need to report on it.thank you!

  15. Bud Gwartney says:

    Wow this is really surprise me, for so many years my dad have a foreign account but i don’t think he have more then $1500 in there.

  16. payday loans says:

    Great information to know i live in the UK and file a US tax return. i never reported on my accounts here because i live in the UK most of the time and never thought that it is something i should do. Thanks

  17. Who has foreign bank accounts only reach people. i am a college student. Thank you for the information.

  18. FAFSA says:

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