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Tax Reporting Required For Foreign Accounts And Assets


U.S. citizens, resident aliens, and some nonresident aliens are required to report certain kinds of foreign financial assets on their yearly tax returns if the value of those assets exceeds specific thresholds. Fulfilling this obligation often requires the completion of a lot of paperwork and compliance with numerous deadlines. If you are unsure about your next steps, consider speaking with an experienced tax attorney, who can help ensure that you comply with these important filing requirements and deadlines.

Reporting Requirements for Qualifying Taxpayers

There are special reporting requirements for individuals with foreign bank or financial accounts. Often referred to as the FBAR requirement, this reporting rules apply to anyone who had an interest in, or who had authority over a foreign financial account with a value of $10,000 in 2021. The FBAR must be filed electronically with the Treasury Department on Form 114. Qualifying taxpayers may also need to complete and attach Schedule B and Form 8938 to their returns.

Important Filing Deadlines

The original deadline for filing the annual FBAR was on April 18th, but filers who missed that deadline were granted an automatic extension until October 17th. Taxpayers who may require even more time to file can request additional extensions online. Members of the military also qualify for an additional extension of a minimum of 180 days if:

  • They serve in a combat zone; or
  • They serve on deployment outside the U.S. away from their permanent duty station, while engaging in a contingency operation.

The IRS also automatically extends deadlines for non-military members who serve in combat zones, like Red Cross personnel, correspondents, and some civilian personnel.

Reporting Foreign Income in U.S. Dollars

The FBAR requires taxpayers who earn any income, or who paid deductible expenses in foreign currency, to report those amounts on their tax returns in U.S. dollars. When completing Forms 114 and 8938 and reporting these transactions, taxpayers must use the December 31st exchange rate. This is true regardless of what the actual rate was on the date of the transaction. To ensure that these payments are credited as quickly as possible, taxpayers should consider making them electronically.

Expatriate Reporting May be Required

In the event that a taxpayer relinquished his or her citizenship, or stopped being a permanent U.S. resident in 2021, then he or she will also need to file a dual-status alien tax return and complete Form 8854 as soon as possible. For help determining whether you fall under this category, reach out to our legal team today.

Set Up a Meeting with an Experienced Florida Tax Return Preparation Attorney

If you have questions about your own tax filing obligations, including whether you need to report foreign income or assets, call dedicated tax return preparation lawyer, CPA, and former FBI Special Agent Ronald Cutler, P.A. for help. You can schedule a free consultation with a member of our legal team by calling 386-490-9949, or by completing one of our online contact forms.