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THIS WEEK ABROAD
Do you have a bank account abroad?
If the answer is yes, you should know everything about FBAR. That stands for Foreign Bank Account Reporting.
Now if you own a foreign bank account and haven’t heard of FBAR? In that case, the last three letters of the acronym should be changed to Beyond All Repair (we’ll let you guess what the “F” stands for).
Read all about it in this week’s newsletter.👇
MUST-KNOW NEWS
ELDERLY EXPAT FIGHTS $400,000 IRS FINE
An 88-year-old former expat currently stands on the verge of losing his entire life savings to the IRS. Not for tax evasion, but because he never once filled out the annual one-page FBAR form.
Tuncay Saydam, a Turksish-American academic who moved to the U.S. in 1980, spent a considerable portion of his life as an expat in Switzerland. Over the years, he accumulated a significant nest egg, which he kept in Swiss and Turkish banks.
Saydam didn’t realize that he was breaking U.S. law. After an IRS audit, the agency assessed a $437,000 fine for years of missing FBAR filings, plus another $40,000 in penalties and interest. Although Saydam is fighting the fines, he faces long odds; U.S. courts have repeatedly upheld the IRS to impose monster penalties.
• FBAR Requirements: The Basics
Here’s what you need to know: if the combined total of all your non-U.S. financial accounts exceeds $10,000 at any point during the year, you must file an FBAR (FinCEN Form 114).
That threshold was originally implemented in 1970, and it has not been adjusted upward for inflation. With each passing year, more and more expats find themselves in IRS crosshairs.
Failure to file required FBARs is no joke. A non-willful violation (that is, you dind’t realize you were violating the law) can trigger fines of over $16,000 per missed year. For cases like Saydam’s, those penalties can snowball over decades into staggering sums.
A willful violation is even more severe: $165,000 or 50% of the account balance per year.
Note that FBAR penalties apply even if you owe zero U.S. tax. Many Americans abroad legally owe nothing due to the Foreign Earned Income Exclusion or Foreign Tax Credit, yet still face massive reporting penalties if forms are missed.
• The Takeaway
If you’re behind on filing taxes, the IRS offers catch-up programs like the Streamlined Filing Procedures. This can allow eligible expats to file past returns and FBARs with reduced or even zero penalties, as long as mistakes were non-willful.
TAX & MONEY CORNER
JUNE 15 TAX FILING DEADLINE: WHAT’S NEXT?
Wait—wasn’t tax filing due two months ago?
Normally, yes. Most American taxpayers know April 15 as Tax Day, but overseas filers automatically received a two-month extension to June 15.
That means if you're an American living abroad, your tax deadline is rapidly approaching.
But what if you're not ready, the good news is that June 15 doesn't have to be your final deadline. If you need more time to complete your return, you can file Form 4868, which extends your filing deadline until October 15.
The extension can be filed electronically or by mail and is relatively straightforward. Once accepted, it gives most taxpayers until October 15 to submit their completed federal return.
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