Filling out FBAR

annual interest ?  Please help.   Savings acct that pays annual interest.   list account on FBAR.  No interest was paid 2010.  What do I put on Schedule B? 

annual interest ?  Please help.   Savings acct that pays annual interest.   list account on FBAR.  No interest was paid 2010.  What do I put on Schedule B? 

No interest was paid in 2010 so you do not list the account in Schedule B Part I.  However, you'll check "yes" in Schedule B Part III 7a if that applies, and specify the country in 7b... that would be my opinion.

Yes, he is USC and I am UKC and I assume he filed as married filing separately.
 
Couple more questions - where can I find the exchange rate? And am I okay to send this off using royal mail air sure or should I fedex it over?

If you have kids he'd be better off filling as Head of Household. Otherwise it might be worth applying for a ITIN (W-7) to file as Married Filing Jointly.

I always Fedex everything to Austin, but maybe it's just paranoia - I trust them more than Royal Mail. You could consider e-filing (this is the first year that you can e-file with a foreign address).

The exchange rate from UK£ to US$ for 2010 is 0.64. This is the treasury exchange rate, and IRS recommends its use, although there is no official exchange rate.

I am a US/UK Tax Preparer/Adviser based in Manchester, so let me know if you need any help

With regards

Andrew

The unofficial IRS exchange rate can be found on the IRS section on the London Embassy website and is 1.54.  See here:  http://london.usembassy.gov/irs/irsxchng.html

E-filing from outside the United States has been common for several years...however you can still never efile if you have a NRA spouse...so paper filing will be required.

The FBAR cannot yet ever be efiled.

The exchange rate from UK£ to US$ for 2010 is 0.64. This is the treasury exchange rate, and IRS recommends its use, although there is no official exchange rate.

The unofficial IRS exchange rate can be found on the IRS section on the London Embassy website and is 1.54.

If you understand the difference between the rates of 1.54 and 0.64 in this thread, then this post isn’t for you (the vast majority of readers). But I fear there may be a passerby or two who haven’t quite got their heads around this, and may be reluctant to ask given two professionals came up with two different numbers (they aren’t in my opinion). Simply, one figure is £’s to the $, and the other is $’s to the £. One is an unofficial yearly average. One is a figure given at 31 December 2010.

In the case of 1 Pound to the Dollar, £1.00 = $1.54. (IRS unofficial rate)
A figure of £10,000 = $15,400 (10,000 multiplied by 1.54)

In the case of 1 Dollar to the Pound, $1.00 = £0.64. (Treasury rate at 31 Dec. 2010)
A figure of £10,000 = $15,625 (10,000 divided by 0.64)

Are both $15,400 and $15,625 correct answers? Could the Treasury use 1 Dollar to the Pound, and the IRS use 1 Pound to the Dollar or 1 Dollar to the Pound? Are the professionals (and others) allowed to use OANDA with different figures in some circumstances? Since there is no official rate, could another rate (more to your advantage) be valid if it can be substantiated? Could you, at times, be required to use a different rate? Why is the answer to all of these questions YES? Who ever said the Treasury/IRS doesn’t have a love of riddles and a sense of humour.

For basic returns using Form 1040 (with Form 2555 and Schedule B), it would be best to keep it simple. Use £1 = $1.54 (from the IRS London Embassy site) for Form 1040, etc. The FBAR instructions say to use the Treasury site ($1.00 = £0.64), the 31 December 2010 figure, when determining FBAR amounts.

As for Form 8938, when it eventually comes into existence, it’s anyone’s guess.

Disclaimer: The above is my interpretation only. Others with more knowledge may rightly disagree. I’m not a tax professional. I don’t have a site on the inter-webby. I don’t want to do a tax return for anyone else: for pay, for free, or for the hell of it. So, take my comments with that in mind.

I'm really confused by the FBAR. I've been in the UK for four years, and I didn't realize we had to do this. Searching for the topic online, I found several people saying they just don't file it out of fear it could create problems (I guess if they hadn't filed it when they were supposed to because they didn't know). Not sure if that's good advice.

We file US taxes each year and list interest from our UK account. It's very minimal interest to say the least, but we do have a little more than $10,000 in there at times, I think. So I don't know if I should file this year, and if I should file for past years, too. Will I get fined or in other trouble?

Also, we have one UK bank but it has 3 accounts: Checking, instant savings, and online saver. Our paycheck goes directly into instant savings, and from there I move some into checking and some into online saver, leaving instant savings at 0. So I guess I'd have to list all 3 accounts? If I list the most money each account had in there all year it looks like we've got a lot more than we do, because the money in the Instant Savings account is taken out within a day and moved to other accounts, leaving it at 0. It's like it's getting reported twice if I list the other accounts I immediately moved it into and the instant savings account. The instant saver doesn't accrue interest, btw.

Any ideas on if I should file for past years, will I get into trouble for not having filed before, and how to handle listing my 3 accounts?

I'm really confused by the FBAR. I've been in the UK for four years, and I didn't realize we had to do this. Searching for the topic online, I found several people saying they just don't file it out of fear it could create problems (I guess if they hadn't filed it when they were supposed to because they didn't know). Not sure if that's good advice.

We file US taxes each year and list interest from our UK account. It's very minimal interest to say the least, but we do have a little more than $10,000 in there at times, I think. So I don't know if I should file this year, and if I should file for past years, too. Will I get fined or in other trouble?

Also, we have one UK bank but it has 3 accounts: Checking, instant savings, and online saver. Our paycheck goes directly into instant savings, and from there I move some into checking and some into online saver, leaving instant savings at 0. So I guess I'd have to list all 3 accounts? If I list the most money each account had in there all year it looks like we've got a lot more than we do, because the money in the Instant Savings account is taken out within a day and moved to other accounts, leaving it at 0. It's like it's getting reported twice if I list the other accounts I immediately moved it into and the instant savings account. The instant saver doesn't accrue interest, btw.

Any ideas on if I should file for past years, will I get into trouble for not having filed before, and how to handle listing my 3 accounts?

You should definitely file for past years. The IRS says here: "Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both. If you learn you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause."

I'd recommend you just say you were unaware of the filing obligation until recently - that should satisfy them.

You need to list each account and its maximum balance individually. The fact that they are at the same bank makes absolutely no difference.

I'd recommend you just say you were unaware of the filing obligation until recently - that should satisfy them.

I think one should be careful about giving such advice. Not knowing about it doesn't necessarily excuse you. See:

http://blog.pappastax.com/index.php/2010/10/20/19508/

Perhaps it would be to ask for professional advice.

I think one should be careful about giving such advice. Not knowing about it doesn't necessarily excuse you. See:

http://blog.pappastax.com/index.php/2010/10/20/19508/

Perhaps it would be to ask for professional advice.

Yes, agreed, it is never NOT a good idea to get professional advice.

However, I wouldn't recommend getting scared of the FBAR just based on a single blog post - particularly when the writer takes an anti-IRS, anti-government position in nearly all of his other blog entries. We don't know whether he is giving us all the information about his client that he says faces FBAR penalties, or just using the story to make a political point. Also, there simply aren't a lot of similar horror stories out there. While I'm not an expert, I would tend to believe the IRS exercises its discretion most of the time when deciding which FBAR cases to use its resources on.

I have found the following (http://www.irs.gov/businesses/international/article/0,,id=235699,00.html?portlet=7), which is encouraging:

   17. Q: I have properly reported all my taxable income but I only recently learned that I should have been filing FBARs in prior years to report my personal foreign bank account or to report the fact that I have signature authority over bank accounts owned by my employer. May I come forward under this new initiative to correct this?

   A: The purpose for the voluntary disclosure practice is to provide a way for taxpayers who did not report taxable income in the past to come forward voluntarily and resolve their tax matters. Thus, if you reported and paid tax on all taxable income but did not file FBARs, do not use the voluntary disclosure process.
   For taxpayers who reported and paid tax on all their taxable income for prior years but did not file FBARs, you should file the delinquent FBAR reports according to the instructions (send to 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. However, FBARs for 2010 are due on June 30, 2011 and must be filed by that date.

But then this (http://britishexpats.com/forum/showpost.php?p=8928909&postcount=1) is worrying. The person however hadn't filed tax returns either, and I have, but it's still not good news. He ended up paying $6,500 in fines for not filing fbars even though he owed no taxes:

"I'm a dual UK/US citizen. Born in US to British Parents and lived my whole life bar the first 9 months or so in the UK until January 2010.

Got a US PP for the first time late last year and was told that as a US citizen since birth I should have been filing US tax returns and FBARs.

Entered Voluntary Disclosure Programme (VDP) in good faith and sent in all my account information. As expected, my tax returns showed I don't owe any US tax for any period.

HOWEVER, I am now being fined 20% of my highest bank balance on my 'foriegn' bank accounts (UK accounts) for failing to tell the good old IRS that I had money in a different country. I am only being punished for failure to file FBARs, I would not have owed them any money if I had known to file."

So they could do you for not reporting 50 quid in a UK account since 25 years ago? 

So they could do you for not reporting 50 quid in a UK account since 25 years ago? 

I wouldn't think so, you have to have had a total of $10,000 in foreign accounts to require the fbar. Also, I have seen some mention of a 6-year statue of limitations, though I'm not positive on that.

I think one should be careful about giving such advice. Not knowing about it doesn't necessarily excuse you. See:

http://blog.pappastax.com/index.php/2010/10/20/19508/

Perhaps it would be to ask for professional advice.

Who should I be looking for to get advice on the FBAR? As in, what job title should I google? And would it matter if they were in the UK or the US (it might be cheaper to get someone in the US)?

Who should I be looking for to get advice on the FBAR? As in, what job title should I google? And would it matter if they were in the UK or the US (it might be cheaper to get someone in the US)?

Good question. My CPA (in the US) didn't even know about FBAR.