Tax time comes and goes every year, and residents in New York may wonder if filing taxes on foreign accounts on-time is always the best thing to do. Typically, the answer to that question is yes, but those with a first time FBAR, or Foreign Bank Account Report, may benefit from waiting to avoid tax issues. As the deadline for FBAR filings just recently passed, account holders — particularly those who are new to foreign accounts — may wonder how filing now will affect them.
To avoid tax issues, such as the need to amend a return shortly after filing, it is always beneficial to have all necessary information and documents in place. Sometimes, the required information needed to file simply isn’t available in time. While submitting a tax filing after deadline may result in penalties, the cost would be far less than not filing at all.
Some may worry that filing a FBAR is akin to admitting to committing a crime, but that is not the case. While there are those who try to use offshore accounts to hide money — the IRS has collected billions of dollars from these accounts — those that are honest in their transactions should have nothing to worry about. Certain legal protections can be taken to protect these funds from undue tax issues such as fines and audits.
Tax issues regarding foreign accounts can be confusing. No one wants to be subject to penalties or be perceived as a criminal because they choose to utilize the benefits of offshore accounts. Resident of New York who use foreign accounts may seek legal protections to ensure tax laws are being followed and their money is being protected from unnecessary fines.