Due to precautions related to COVID-19, we have expanded our options for remote consultations. Please contact our office to discuss whether a full phone consultation or video conference is appropriate for your situation.

Federal forms, foreign accounts and failure to’s

Not everyone has the need or desire to open up a foreign bank account, but they are fairly common for some individuals in Minneapolis. These accounts are held offshore, in another country and under different rules, so how are they treated under the Federal Tax Code? And what are the reporting requirements? 

Even the saaviest businessman or woman can find the complexity of the Federal Tax Code frustrating, so the need to discuss individual circumstances with a tax attorney is important. Attorneys will ensure that an individualized solution protects a client’s financial interests, but information is never a bad thing. 

So how about those foreign bank accounts? Is there a reporting requirement? There sure is, but it depends on the taxpayer’s accounts. First, there is a threshold value amount that triggers the reporting requirement. Those with less than $10,000 in overseas accounts may not need to report them.

Two “little” details to note about this requirement. First, it is not a per-account threshold. The sum of all accounts must be below $10,000 to avoid reporting. Also, the threshold can be triggered at any point throughout the year — when the value goes even a single cent over the threshold and then back down again.

It is also important to note that income earned from these accounts should always be reported to the federal Internal Revenue Service.

Taxpayers certainly find the reporting requirements helpful to know, but what often affects their lives in a big way are the consequences for a failure to follow the intricate requirements. Our next post will focus on the “what ifs” that could result in relation to a foreign bank account.

Source: Forbes, “Will IRS Find Your Small Foreign Bank Account?” Robert W. Wood, June 25, 2013

Findlaw Network


Office Location

Edina Tax Law Office
Pridgeon & Zoss, PLLC
7301 Ohms Lane, Suite 420
Edina, MN 55439

Telephone: 952-835-8320
Fax: 952-835-0201
Edina Law Office Map

St. Anthony Tax Law Office
Pridgeon & Zoss, PLLC
2812 Anthony Lane South, Suite 200
St. Anthony, Minnesota 55418

Telephone: 612-455-8948
Fax: 612-788-9879
Map & Direction