The IRS Warns You May Need to Do This 3 Days Before the Tax Deadline
Meanwhile, your taxes aren't due this year until April 18.
April 15 sticks out as a date for most people because it's typically their deadline for filing taxes every year. This year, the Internal Revenue Service (IRS) switched things up just slightly. The agency moved the tax deadline in 2022 to April 18 because of the Emancipation Day holiday in Washington, D.C. But even though you have a few extra days to file your 2021 return, that April 15 date could still be important. The IRS just sent out a new reminder, warning some people that they might be facing another deadline in the coming weeks. Read on to find out what you may need to get done three days before your taxes are due.
You could face a filing deadline soon if you have foreign financial accounts.
The IRS posted a new alert on March 31, warning "U.S. citizens, residents aliens, and any domestic legal entity" that they might have a filing deadline hit soon. The warning explained that the deadline to file your annual Report of Foreign Bank and Financial Accounts (FBAR) is April 15—which is sooner than this year's cutoff for filing a 2021 tax return.
According to H&R Block, the FBAR exists to help the IRS combat tax evasion by having U.S. citizens report money and assets from non-U.S. banks. "The law requires U.S. persons to report their overseas financial accounts because foreign financial institutions may not be subject to the same reporting requirements as domestic institutions," the IRS further explained.
The IRS says you should check to see if this filing requirement applies to you.
The Bank Secrecy Act, which was put into place in 1970, requires some people to file an FBAR if they have financial interest in, signature authority, or other authority over at least one account in a foreign country and the total value of all their accounts exceeded more than $10,000 at any point in the last calendar year.
"Generally, an account at a financial institution located outside the United States is a foreign financial account," the IRS advised. And because the threshold is so low, the agency said it encourages anyone or any entities with foreign accounts—even small ones—to check to see if the FBAR filling requirement does apply to them.
If you don't file by April, you'll get an automatic extension from the IRS.
The IRS said that filers who miss the April deadline will automatically receive an extension until Oct. 15 to file their FBAR. "They don't need to request the extension," the agency noted. But this doesn't mean there might not be consequences for missing the April 15 deadline.
"Those who don't file an FBAR when required may be subject to significant civil and criminal penalties that can result in a fine and/or prison," the IRS warned. But the agency added that it will not "penalize those who properly reported a foreign account on a late-filed FBAR" if it is able to determine there was reasonable cause for your late filing.
You can get heavily penalized for failing to file this report at all.
If you're required to file an FBAR, you must do so. The IRS said that failure to file this record could be a criminal violation that has the potential to land you five years in prison. And according to H&R Block, not filing can subject you to penalties of up to $10,000 per violation—even if you were not aware you had to file an FBAR. Knowing failing to file, on the other hand, can push you up to a $100,000 penalty per violation or higher.
If you've never filed an FBAR but realize you were supposed to as a result of the requirements, you might be able to quality for IRS Streamlined Filing Compliance Procedures. This process allows Americans to get caught up on their past FBARs without penalties, H&R Block explains. And it is "available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part," the IRS said.