Is this the year you will finally disclose the foreign bank account you didn’t know you had?

You may wonder why anyone would have a foreign bank account. If you look around your neighborhood, there are at least a couple of people who are either not born in the United States or who have spent time overseas studying or working for multinational corporations. Just imagine how many people at Microsoft started out as non-U.S. citizens.

So what are your obligations if you do have a foreign bank account? First, you need to make sure you check the correct box on Schedule B on Form 1040. If your account earned any interest, you should add it to all the other 1099-INT you have in that folder properly named Taxes 2013 and report it under interest on the same Schedule B as mentioned above.

Next, you add up the total amount you have in your foreign bank accounts, and if the amount (in U.S. dollars) does not exceed $10,000 on any given day of the year, your obligations most likely end here. If your balance is more than $10,000, you are obligated to file the FBAR (report of Foreign Bank and Financial Accounts), or FinCen Form 114. This form can only be filed online through the BSA (Bank Security Act) e-filing system: bsaefiling.fincen.treas.gov/NoRegFBARFiler.html.

Your return, on which you must report whether you have a foreign bank account, is due April 15, without extension; the FBAR is due June 30, and no extensions are available. This is presumably to allow you to collect any foreign bank-account statements you may need to properly file the FBAR.

Past-due filing

Should you be in a situation where you have had a foreign account for several years and did not know you were supposed to file, there are currently some programs that you may want to consider. The current one is referred to as OVDP 2012 (www.irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program). There are some exceptions to the program, so it is recommended that you contact a professional before you make a decision.

Should you happen to have relatives or friends who live abroad and also were unaware of their obligation, they have additional options, mainly a lower penalty, or if they meet what the IRS considers low audit risk, they may be able to enter the streamlined program.

U.S. law requires all U.S. citizens and U.S. persons to file their annual tax return every year, regardless of where in the world they work or live. This is quite different than almost all other countries in the world; however, ignorance of the law is no excuse.

Your reporting obligations may not end here. A fairly new tax form (IRS Form 8938, Statement of Specified Foreign Financial Assets) requires you to tell the IRS about other foreign assets you may have. Depending on your filing status, as well as your country of residence, the filing thresholds vary. If you have foreign assets, make sure you review the rules for Form 8938, which is due with your return.

Foreign inheritances

Finally, should you be so fortunate to inherit some money from your long-lost aunt in Spain whom you never met, you may want to see if you need to file IRS Form 3520. While an inheritance from a non-U.S. person is most likely not taxable in the United States, you (as the recipient of this inheritance), as a U.S. citizen or U.S. person may be under an obligation to report it to the IRS. Failure to do so can result in stiff penalties.

Generally, the reporting threshold is receipt of more than $100,000 from related parties in a tax year.

Once again, Benjamin Franklin’s famous saying is proven true: “The only things certain in life are death and taxes.”

MONICA LANGFELDT is founding partner at Queen Anne-based Langfeldt Law PLLC (www.langfeldtlaw.com). To comment on this column, write to QAMagNews@nwlink.com.