It is a normal practice for people to have bank accounts at a bank near their homes for convenience. This is also true for many American expatriates living abroad as well. Most expats set up a foreign bank account in their host country to make it easier to deal with living abroad.
The IRS makes this process a bit more cumbersome for expats by requiring the filing of Form TD F 90-22.1 by June 30 of each year. This is an information report that will not require or incur the payment of any taxes. This form is not eligible for an extension as with many other IRS forms.
The information that must be reported includes foreign bank accounts, brokerage accounts, mutual funds, securities, trusts, or any other financial account that would be considered a cash or cash equivalent account, which contains the U.S. Dollar equivalent of $10,000 or more in aggregate at any time during the tax year.
Example #1: Bob has a checking account with a balance of $7,500 and a savings account with a balance of $3,500. Bob is required to report both accounts because the aggregate amount is $11,000.
Example #2: Sally has two checking accounts with $675 in each of them and a savings account with $8,500. Sally will not be required to file because the aggregate amount for all accounts is only $9,850.
The TD F 90-22.1 is NOT filed with your tax return. The only connection that this form has with your tax return is a check box on line 7a on the Schedule B if you are required to file that with your return. If you do not have interest or dividend earnings or your interest and dividend earnings are less than $1,500, you will still need to file a Schedule B with your return.
You can download a copy of the TD F 90-22.1 form from the IRS website at http://www.irs.gov/pub/irs-pdf/f90221.pdf if you choose to complete the form on your own. If you are an InTaxAct client, we will prepare the form for you as part of our preparation process for no additional charge.
The IRS office that handles the processing of the FBAR forms is located in Detroit, Michigan. You can mail it to them at:
U.S. Department of the Treasury
P.O. Box 32621
Detroit, MI 48232-0621
If you are a little behind on getting your form prepared and need to get it to the IRS quickly, you can send it via courier delivery to:
IRS Enterprise Computing Center
ATTN: CTR Operations Mailroom, 4th Floor
985 Michigan Avenue
Detroit, MI 48226
Telephone: (313) 234-1062
If you have any questions regarding the FBAR and TD F 90-22.1 or any other expatriate tax issues, please contact an InTaxAct CPA today!