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Form 4868 - Artha https://ravikotra.com Smart Financial Solutions Fri, 14 Apr 2023 05:22:08 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.4 https://ravikotra.com/wp-content/uploads/2023/10/cropped-owl9-sq-32x32.jpg Form 4868 - Artha https://ravikotra.com 32 32 Form 8938 vs FBAR: Reporting Your Foreign Assets https://ravikotra.com/2023/04/14/form-8938-vs-fbar-know-about-reporting-your-foreign-assets/?utm_source=rss&utm_medium=rss&utm_campaign=form-8938-vs-fbar-know-about-reporting-your-foreign-assets https://ravikotra.com/2023/04/14/form-8938-vs-fbar-know-about-reporting-your-foreign-assets/#respond Fri, 14 Apr 2023 04:08:13 +0000 https://ravikotra.com/?p=63 If you have money or assets in foreign countries, you may need to fill out two forms: Form 8938 and FBAR. They are not the same thing and they have different rules and limits. Form 8938 goes with your tax return to the IRS, while FBAR goes to a different agency called FinCEN and you […]

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]]> If you have money or assets in foreign countries, you may need to fill out two forms: Form 8938 and FBAR. They are not the same thing and they have different rules and limits.

Form 8938 goes with your tax return to the IRS, while FBAR goes to a different agency called FinCEN and you have to file it online.

  • Form 8938 is for certain people and businesses that have money or assets in foreign countries that are worth more than a certain amount. The amount depends on whether you are single or married and whether you live in the U.S. or abroad.
  • FBAR is for anyone who has access to or control over foreign bank accounts or other accounts that are worth more than $10,000 in total at any point during the year.
  • The kinds of money or assets that you have to report on Form 8938 include foreign bank accounts, stocks, trusts, pensions, and contracts or instruments. The kinds of accounts that you have to report on FBAR include bank accounts, brokerage accounts, mutual funds, and other types of accounts with a foreign financial institution.
  • You may have to fill out both Form 8938 and FBAR if you have enough money or assets in foreign countries to meet both limits. Filling out one form doesn’t mean you don’t have to fill out the other one.
  • There are some exceptions and exclusions for both forms. For example, you don’t have to report an account on Form 8938 if your spouse already reported it on a joint FBAR.
  • The deadline for Form 8938 is the same as your tax return deadline (including extensions), while the deadline for FBAR is April 15 (but you can get an automatic extension to October 15).
  • The penalties for not filling out Form 8938 or FBAR can be very harsh, from $10,000 to $100,000 or more per mistake for Form 8938 and $10,000 to $50,000 or more per mistake for FBAR.

References

BSA E-Filing System (treas.gov) – File FBAR

Form 8938 (irs.gov), Statement of Specified Foreign Financial Assets

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]]> https://ravikotra.com/2023/04/14/form-8938-vs-fbar-know-about-reporting-your-foreign-assets/feed/ 0 Avoid Tax Filing Mistakes! https://ravikotra.com/2023/04/13/avoid-tax-filing-mistakes/?utm_source=rss&utm_medium=rss&utm_campaign=avoid-tax-filing-mistakes https://ravikotra.com/2023/04/13/avoid-tax-filing-mistakes/#respond Thu, 13 Apr 2023 06:39:48 +0000 https://ravikotra.com/?p=1 Reporting Foreign Financial Accounts and Assets A U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report a financial interest in or signature or other authority over at least one financial account located outside the United States if the aggregate value of those foreign financial […]

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  • A new law gives the IRS more resources to enforce tax compliance, so it’s important to avoid errors and keep documentation for all expenses.
  • The limit for mortgage interest deduction is now $750,000, and deductions for state and local taxes are capped at $10,000
  • Reporting self-employment income or losses on Schedule C can increase IRS scrutiny, especially if you claim expenses for a home office without adequate documentation
  • You can reduce your taxable income by contributing to a retirement account, such as an IRA or a 401(k), or by donating to a qualified charity.
  • Double-check information from W-2s and 1099s, especially the cost basis for securities you’ve sold. Verify you have included all of your income, including salary, dividends, interest, rental income, capital gains, foreign income and crypto transactions.
  • Keep receipts, invoices, mileage logs, bank statements, and other records to support your claims.
  • Use the IRS Tax Withholding Estimator to check if you need to adjust your withholding or make additional payments.
  • Consider donating appreciated securities instead of cash to a qualified charity. You may be able to deduct the fair market value of the securities and avoid paying capital gains tax on the appreciation.
  • File an extension if you need more time. You can get an automatic six-month extension by filing Form 4868 by the due date of your return. Taxes are still due on regular filing date.
  • Seek professional help if you have a complex tax situation or need guidance on specific issues. A tax professional can help you avoid costly mistakes and find solutions tailored to your needs.

    • Reporting Foreign Financial Accounts and Assets

    A U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report a financial interest in or signature or other authority over at least one financial account located outside the United States if the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

    Certain U.S. taxpayers holding foreign financial assets with an aggregate value of more than the reporting threshold (at least $50,000) must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. The reporting threshold is higher for certain individuals, including married taxpayers filing a joint annual income tax return and certain taxpayers living in a foreign country.

    Those who don’t file an FBAR / Form 8938 when required may be subject to significant civil and criminal penalties that can result in a fine and/or prison.

    References

    File an extension using Form 4868 (IRS Link)

    BSA E-Filing System (treas.gov) – File FBAR

    Form 8938 (irs.gov), Statement of Specified Foreign Financial Assets

    IRS Tax Withholding Estimator

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