Ask the tax adviser
How the government tracks foreign bank accounts
Dear Tax Talk:
Due to an oversight, I incorrectly stated "no" to the
question of holding a foreign bank account on last year's return.
This resulted in me not filing the TD F 90-22.1.
How do I correct it? Will I have to file an amended
return? Isn't it correct that my tax won't change because the foreign
bank account interest reporting is actually separate from 1040?
Or should I file just a separate TD F 90-22.1 for last year, along
with this year's filing?
Thank you in advance.
This is a grave and unforgivable tax sin; I don't know how you can
sleep at night. Your thoughtful inquiry and sleepless nights will
probably work to keep you out of jail. While it is not illegal to
have a foreign bank account, the Treasury Department, of which the
Internal Revenue Service is a branch, requires taxpayers to report
certain information about these accounts.
F 90-22.1, Report of Foreign Bank and Financial Accounts
(you would think they could come up with a simpler name) is used
by U.S. residents, citizens and domestic corporations to report
information about foreign bank or brokerage accounts.
U.S. taxpayers are obligated to report these accounts
on this separate form if they have a financial interest or signature
authority accounts with a value greater than $10,000. The separate
form must be filed by June 30 of each year. There are penalties
for failing to file the report, but in practice I have not seen
the Treasury Department assess these penalties for late filing.
Filers are required to report earnings and gains and
losses on these accounts on their individual income tax returns,
such as on Schedules B and D. In addition, Line 7A of Schedule
B requires you to disclose the account. If you forgot to report
the account earnings on your Form 1040 for 2000 or did not disclose
the account on Schedule B, you should prepare an amended tax return.
-- Posted: April 5, 2002