Your clients may find assets overseas during a divorce. One example is that a spouse may have visited a bank while on a ski vacation in Switzerland or a dive vacation to Cayman Islands. The party could be found out. The United States has taken steps to stop some of this fraud and several foreign banks have been disclosing account holders’ names to US authorities.
The INDIVIDUAL TX RETURN, FORM 1040, SCHEDULE B (PART III FOREIGN ACCOUNTS & TRUSTS) is the best place to start your search for FOREIGN BANK ACCCOUNTS.
- If the taxpayer has more that $1,500 in taxable interest or ordinary dividends or they have a foreign account, if they were a grantor or transferor to a trust, this section must be completed. For credit for income taxes paid overseas, taxpayers must file Form 1116. The taxpayer must file Form 1116.
- The penalty for failing to file an FBAR (Foreign Bank and Financial Accounts Report) is 50% of the account’s annual value. One party can choose to put their house in order by taking advantage of the Voluntary Disclosure Program.
- Refer the client to a tax professional who can help them with filing the proper forms and paying past taxes and penalties.
- People’s financial affairs can be exposed when assets are found offshore during a divorce. This gives them the opportunity to make things right. These matters can be handled by our international family lawyers.
Summarized from an article by Walzer Melcher & Yoda LLP.
