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Foreign Asset Reporting
Having money outside the United States is completely normal and completely legal. Reporting it is where people get hurt — usually not through evasion, but because nobody ever told them the obligation existed.
What We Cover
The disclosure regime that applies once you are a U.S. tax resident with assets abroad.
What non-filing actually costs
Not to alarm you — to explain why we ask so many questions in January. These obligations are penalty-driven rather than tax-driven, which means you can owe nothing in tax and still be exposed.
| Form | If it is not filed | Consequence |
|---|---|---|
| FinCEN 114 (FBAR) | Foreign accounts exceeded the aggregate threshold and no report was filed | Separate penalty regimes for non-willful and willful failures, assessed per year. The willful tier is a multiple of the non-willful one and can reach a share of the account balance itself. |
| Form 8938 (FATCA) | Specified foreign financial assets were not disclosed with the return | A flat penalty per year, escalating if the failure continues after IRS notice, plus an extended statute of limitations on the entire return. |
| Form 3520 | A large gift or inheritance from a foreign person was not reported | A percentage of the amount received, per year, even though the gift itself is generally not taxable income. This is the one that catches down-payment help from parents. |
| Form 8621 (PFIC) | A foreign mutual fund or ETF was reported as an ordinary investment | Falls into a default regime that taxes gains at the highest ordinary rate and adds an interest charge across the whole holding period — often exceeding the economic gain on long-held positions. |
These thresholds are lower than people expect, and the FBAR one has not been adjusted in decades — inflation alone pulls more people over it each year. Ask us where the current lines sit rather than guessing; the answer takes a minute and the exposure for guessing wrong is measured in years. If you are already behind, the Streamlined procedures exist precisely for people who did not know.
Common Questions
My preparer said my fund back home is just a mutual fund. Is that right?
Almost certainly not, and this is the single most common expensive mistake we see. A non-U.S. pooled investment is generally a passive foreign investment company, reported on Form 8621 under rules that are punitive by default. Many investment-linked insurance policies sold abroad fall into the same category. Elections exist that produce much better outcomes, but most must be made early.
My parents sent money to help with a down payment. Do I have to report it?
Gifts from a foreign individual are generally not taxable income to you, but once the total received in a year exceeds the reporting threshold you must disclose it. The penalty for not disclosing is a percentage of the amount — on money you never owed tax on. It is one of the most avoidable exposures in this area.
I am on my mother's bank account back home but the money is not mine. Does that count?
For FBAR purposes, signature or other authority over an account can trigger a filing obligation even with no beneficial ownership. Joint accounts opened for family convenience are a very common source of unreported accounts.
I have not reported these accounts for years. What happens if I come forward?
The Streamlined Filing Compliance Procedures exist for taxpayers whose failure was not willful — which describes most people who simply did not know. It typically involves amended returns, back FBARs, and a certification of non-willfulness, with substantially reduced or no penalties. Coming forward voluntarily is treated very differently from being found.
Will reporting foreign accounts hurt my green card or naturalization application?
Reporting them correctly does not. Tax compliance can come up in naturalization, and a clean, consistent filing history helps rather than hurts. Unreported accounts discovered later are the risk — not the accounts themselves.
Tell us what you have abroad
Accounts, funds, property, family money. We will tell you what is reportable, what is taxable, and what to do if you are behind.
Schedule ConsultationThis page is not immigration advice
We are tax accountants, not immigration attorneys. Where this page mentions a visa or residency status, it is explaining how that status affects a tax question — not assessing your work authorization, your eligibility, or what any of it means for an application. Those consequences are more serious than tax ones and depend on facts we do not evaluate. Please speak with a licensed immigration attorney before acting on anything that touches your status, and bring us in once you know where you stand.