Expat Tax Blog

FBAR Penalties

Written by Gregory A. Fallon on Sunday, 12 July 2015.

FBAR Penalties

On 7/25/2012 a 64 year old man named Luis Quintero of Miami Beach recieved 4 months in prison, 250 hours of community service, a criminal fine of $20,000, and a civil penalty of  $2 million. Mr. Quintero failed to report his Swiss UBS accounts, valued at $4 million, from 2005-2007.  Any US persons with a financial interests or signing authority over bank accounts, brokerage accounts, or other financial accounts valued at $10,000 during a calendar year is required to file an FBAR by June 30th of the following year.  Taxpayers that do not file their FBAR when required will be subject to severe penalties and even jail time. Taxpayers Non-willful FBAR violation (filing errors or mistakes) can result in a civil penalty of up to $10,000 for each violation (per account).  However, if the Taxpayer willfully violates FBAR they will be subject to civil penalties that are the GREATER of $100,000 or 50% of the account balance at the time of violation. Therefore, a Taxpayer that willfully violates FBAR by not reporting a $20,000 account could be assessed a $100,000 civil penalty. The statue for assessing this penalty is 6 years.  The IRS is also allowed to apply both criminal and civil penalties. The criminal penalties for willfully violating FBAR can lead to a fine of up to $250,000 or imprisonment for not more than 5 years.

In 2009 the IRS obtained a list of over 4,450 accounts held by US taxpayers from UBS so we should continue to see more FBAR cases in the future.

If you need help with your FBAR requirements contact us.

Expats and the Affordable Care Act (Obama care)

Written by Gregory A. Fallon on Wednesday, 01 July 2015.

Expats and the Affordable Care Act (Obama care)

Many US expatriates have been asking about how the Obamacare penalty will apply to them.

If you can take the IRC 911 foreign earned income exclusion (Form 2555) as a bonafide resident or under the physical presence test (330 days), you will be exempted from the Obamacare penalty. Also, taxpayers working abroad that are covered by the Group plan of a US employer or covered by medicare are exempt from the penalty.

Taxpayers who work abroad temporarily for a few months and then return to the US are not exempt and will need to maintain health insurance in order to avoid the penalty. However, taxpayers who only lack coverage for one month in a year do not need to pay the penalty. To calculate your penalty click the link below.


Healthcare Penalty Calculator

Nonresidents who are not permanent residents (usually 183 days or more) are not required to obtain health coverage.

For More Information

Rules for each State on How to Stop Filing and Paying State Income Taxes when a US Expat Moves Abroad.

on Tuesday, 14 July 2015.

Great article from BNA including a chart listing tax laws and rules for each state in the US stating their individual rules (vary a lot from state  to state) on how to successfully terminate your state tax domicile when moving abroad. The chart at the end is a great reference tool to use when you want to stop paying state income taxes when you move to live and work abroad. DOWNLOAD PDF HERE

If you need guidance on how to avoid paying state income taxes after moving abroad we can put together a strategy for you.  CONTACT US

 

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