Found a possible mistake in 1040 while doing Fbar forms - help!

I only recently found out about having to file the foreign bank account forms. I'm a dual UK/US citizen who has lived in the UK for most of my life. I only realized a few years ago that I had to do tax returns at all, and the person I spoke to on the phone at the embassy then said nothing about this other form.

So, I'm now filing form TDF 90-22.1 for 2003 - 2008 inclusive, by Sept. 23. Now that I've checked all my old bank statements more closely, I've discovered I may have missed some interest that should have been reported on form 1040 for one of those years. I still don't owe tax, but it could be a few hundred dollars worth of interest. I've also realized I should have reported UK child benefit on there for three of the years. Again, it wouldn't push me over my personal allowances, but from a post on this board I've realized it should have gone on the form.

What should I do? The IRS pages say that if you reported and paid all tax up to 2008, you don't have to do the 'voluntary disclosure' - you just file the delinquent forms with copies of tax returns and everything will be OK. But if you do do 'voluntary disclosure' they suggest you hire a tax attorney first - it seems much more serious.

I don't owe tax, but I don't want to send the forms in without amending the 1040s because now that this interest-paying account (it was a temporary joint account and not even really my money) is on the Fbar form, the amount of interest on the 1040 form may look like it's too low. I'm not trying to hide anything, but will it look like I am?

Does anyone have any suggestions? My name says it all really!

If I were you, I would just file the TDF 90-22.1 ASAP as a matter of priority.  These forms go to the Treasury, not the IRS, and are not really tax-related; just a declaration of the ownership of one or more foreign accounts.  As you know, the only dollar amount you fill in is the maximum value of the account during the year in question.  Interest received is not reported.  I'd get the TDF 90-22.1 off in the mail, and worry about some minor amendment to your 1040 for a former year, later.

No one who analysed your TDF 90-22.1 could possibly infer how much tax you earned in a given year, from the information in the TDF 90-22.1.

No one who analysed your TDF 90-22.1 could possibly infer how much tax you earned in a given year, from the information in the TDF 90-22.1.

This is absolutely not correct.  The Treasury and the IRS are beginning to sync this data and is going to be a huge area of investigation going forward.  

The OP is talking about using the voluntary disclosure program to file these delinquent FBAR forms.  A condition of doing so is declaring that all interest has been reported correctly on the 1040.  A further condition is that you provide a copy of your 1040 with the FBAR forms.  The issues go hand in hand and to ignore it is not possible in this instance.  


Tearinghairout -- I will PM you otherwise.

Thank you for our replies (and again for the pm Sara).

I really don't know what to do. The couriers for the forms are going to cost enough without adding money for legal representation. Also, how would I go about finding a US tax attorney in the UK? Are there any?

The language all seems so severe, suddenly. Just having my normal everyday bank account here (I'm a UK citizen too) now seems to count as 'squirreling money away in a foreign bank account'. It seems as though just having a foreign bank account at all is seen as suspicious, but how could someone like me not have one??

Just a quick update to say I'm looking into the voluntary disclosure idea and I think it may indeed be the best thing to do for me. Thanks again everyone for your help. I'm still very worried about penalties and so on, but I'm a bit happier now that I've got a possible plan of action.

Just a quick update to say I'm looking into the voluntary disclosure idea and I think it may indeed be the best thing to do for me. Thanks again everyone for your help. I'm still very worried about penalties and so on, but I'm a bit happier now that I've got a possible plan of action.

Hi, I'm just curious how all this worked out for you? I've lived in the UK for a few years and while I did file U.S. taxes, I only recently realized I needed to do the FBAR, so I'll be filing some overdue forms, too.

Hi, I'm just curious how all this worked out for you? I've lived in the UK for a few years and while I did file U.S. taxes, I only recently realized I needed to do the FBAR, so I'll be filing some overdue forms, too.

You would be best getting some professional advice. Sorry I can't be more reassuring.

This story might be relevant:

http://hodgen.com/another-voluntary-disclosure-tragedy-with-added-irs-sandbagging/

You would be best getting some professional advice. Sorry I can't be more reassuring.

I did, and I was told in my situation I shouldn't have any problem filing it myself without repercussion. But I'm still interested in how it worked out for others and what the circumstances where in their cases so I can compare it to my situation and try not to miss any vital info. I forgot you were the one who sent me the pm on my question on a different thread, lol, and since you didn't explain the particulars of your situation then (which is fine by me, I wouldn't expect someone to share anything they were uncomfortable with), I kept looking through the forums and ended up replying to your old post. Doh!

That poor lady in the other post that was linked above had filed through voluntary disclosure. That's not what I need to do, and I have read about it causing problems for people who did when they shouldn't have.

Here's the info on who shouldn't use the Offshore Voluntary Disclosure Initiative (http://blogs.forbes.com/irswatch/2011/02/09/deja-vu-yet-another-irs-fbar-voluntary-disclosure-initiative/):
"Taxpayers who reported and paid tax on all their taxable income but did not file FBARs, should not participate in the OVDI but should merely file the delinquent FBARs with the Department of Treasury, Post Office Box 32621, Detroit, MI 48232-0621 (and attach a statement explaining why the reports are filed late). The IRS will not impose a penalty for the failure to file the delinquent FBARs if there are no underreported tax liabilities and the FBARs are filed by August 31, 2011 (FAQ 17)."

Cases like that are why it's good that you've got some advice. Personally, in your position I'd get advice writing the statement about why the reports are late, too. (I'm sure that seems like overkill, it would have to me at one time, but it's not something I'd take any chances with now.)

Tearinghairout, did you decide that you needed to go through the voluntary disclosure program because of the changes to prior year 1040s?

Tearinghairout, did you decide that you needed to go through the voluntary disclosure program because of the changes to prior year 1040s?

Yes in that perfect 1040s might have made the FAQ option mentioned above available. No, in that my 1040 mistakes were not related to the fbars - I owe no tax, and I only didn't file the fbar because I didn't know about it, not because I had anything to hide.

So you did the voluntary disclosure but you were not able to file under the procedure for FAQ Q17? And no penalties I hope?!

So you did the voluntary disclosure but you were not able to file under the procedure for FAQ Q17? And no penalties I hope?!

I think it was FAQ Q9 (for 2009).