Tax Season Overseas: U.S. citizens may need to file foreign bank account with IRS
January 26, 2010
GRAFENWAfaEUR"HR, Germany -- The U.S. Internal Revenue Service (IRS) wants United States citizens living and working overseas to know they must file a "Report of Foreign Bank and Financial Accounts" form with the Treasury Department by June 30th if the aggregate value of their foreign accounts exceeded $10,000 at any time during the previous calendar year.
According to the IRS Web site, "a foreign country" includes all geographical areas outside the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the territories and possessions of the United States (including Guam, American Samoa, and the United States Virgin Islands).
"Filing the form, called a TD F 90-22.1, assists the Treasury Department in keeping tabs on money laundering and related banking activities," said Brad Huestis, Chief of Client Services Division at the 7th Army Joint Multinational Training Command (7A JMTC) Office of the Staff Judge Advocate. "The form is not a tax form and should not be included with IRS income tax returns."
The IRS assists the Treasury Department in cracking down on taxpayers who fail to file the form, and there are civil and criminal penalties for failure to file, said Huestis. "Accounts held in military banking facilities such as Community Bank or on-base credit unions are not considered "foreign bank accounts" for the purpose of filing."
However, Huestis says it is important because some families have purchased homes here in Bavaria, which requires them to bank on the economy.
For example, Americans might have a Postbank or Sparkasse account to pay a home mortgage or to pay local bills. Given the exchange rate, having 6,800 Euros in a German account or in multiple German accounts, would be enough to trigger the requirement to file a TD F 90-22.1. The filing requirement exists even if the amount(s) deposited into the accounts do not generate any additional income, such as interest.
Additionally, if a person has a foreign bank account that does not exceed $10,000 at any time during the year they do not need to file the TD F 90-22.1. Instead, they would simply check an appropriate box on Form 1040 Schedule B of their tax return, which satisfies their reporting obligation.
The form is available at http://www.irs.gov/pub/irs-pdf/f90221.pdf. Once completed, the form should be mailed to the U.S. Department of Treasury, P.O. Box 32621, Detroit, MI 48232-0621.
The eight page form includes three pages of detailed instructions. After reviewing the instructions, if you have questions about the requirement to file, please contact your local tax center or legal assistance office. The 7A JMTC tax centers will open February 1st, 2010, and tax preparers can help.
Tax center professionals are available in Ansbach, Illesheim, Bamberg, Grafenwoehr, Hohenfels, Schweinfurt and Vilseck to assist military I.D. cardholders with questions.
The 7A JMTC tax centers offer free Federal and state income tax preparation and e-filing. For more information on the Report of Foreign Bank and Financial Accounts see http://www.irs.gov/businesses/small/article/0,,id=210244,00.html#FR1
Note: Special thanks to Tracy Cooklin, JMTC tax center coordinator, and Brad Huestis, chief of client services division at the JMTC Office of the Staff Judge Advocate for compiling the facts used in this article.