It’s 48 Hours Until FBARs are Due – Do You Know Where Your Children Are?

eleventh hour
At one minute to midnite, there will be 72 hours left for ALL US Persons to get their affairs in order and get their FBARs filed. And don’t forget, you cannot get an extension for FBAR.
 
 

Let’s take a moment to review just exactly what it is that FinCen does:
 

fin cen
FinCEN’s mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.
 
 

 
“Whaaaat? My chequeing account at Scotiabank is related to possible illicit use of funds, money laundering or other crimes that will affect the financial system and even worse, the national security of the United States? That must make me a criminal.”

Let’s review what is required:

Who Must File an FBAR
United States persons are required to file an FBAR if:

  • the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
  • the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.
 
Checking where to file, I see this on the FinCen site:
 
child fbar
 
 
f u bar for kidsYes indeed, you read correctly. If any of your children have more than $10,000 total of all their accounts combined then, yes, your US Person children must file an FBAR.Don’t forget your US-born adopted child. Imagine- “alien” parents helping out by filing US tax forms for their children. Now that’s looking out for your kids!
“Well ‘hey now,’ as my grandma would say, any kid can deal with figuring out how to get the pdf file to open up in their browswer – it’s a cinch for them! Oooooo lookey here, now they can do it on an
online fillable form!”

After that, all they have to do is:

  • Download, open and complete your FBAR
  • Validate FBAR –
  • Sign your FBAR
  • Save your FBAR
  • Upload your saved FBAR
  • Monitor your email for an acknowledgement email within 2 business days

And guess what, if your child is unable to put his/her signature on it, you, as their legal guardian, must electronically sign the child’s FBAR. In item 45 Filer Title enter “Parent/Guardian filing for
child.”

“So, let me get this straight… not only is it perfectly acceptable to have a guardian act on behalf of the child, its a requirement. Just like a new immigrant who cannot take the oath on their own, the oath is waived. However, when an adult child (or any other infirm individual) cannot form requisite intent, no one can waive the oath of renunciation for him/her or renounce for them?”

“Oh good gawd, if my kid has to file an FBAR what about…..???” yep, regular taxes too!

What Parents Should Understand
When it comes to filing their children’s income taxes, parents need to know the following:

  • Legally, children bear primary responsibility for filing and signing their own income tax returns.
  • Children can receive tax deficiency notices and even be audited.
  • If children are otherwise required to file a tax return and their only income consists of interest, dividends and capital gains (unearned income), parents may elect to include the child’s income on their own tax returns
  • Children who earn net self-employment income above the filing threshold are required to pay self-employment tax for Social Security and Medicare, even if no income tax is owed.

And make sure you know in time for next year; if your child has $2,000 or more of unearned income, they must file file an 8615 form.

Who Must File Form 8615

Any child who meets all of the following conditions:

  • 1. The child had more than $2,000 of unearned income.
  • 2. The child is required to file a tax return.
  • 3. The child either:
    • a. Was under age 18 at the end of 2014,
    • b. Was age 18 at the end of 2014 and did not have earned income that was more than half of the child’s support, or
    • c. Was a full-time student at least age 19 and under age 24 at the end of 2014 and did not have earned income that was more than half of the child’s support. (Earned income is defined later. Support is defined below.)
  • 4. At least one of the child’s parents was alive at the end of 2014.
  • 5. The child does not file a joint return for 2014

 
“Whew……is there anymore?” Of course!

Alternative Minimum Tax

A child whose tax is figured on Form 8615 may owe the alternative minimum tax.
For details, see Form 6251, Alternative Minimum Tax—Individuals, and its handy instructions.
 
And here are some reassuring reasons for why your kids should start now:
 

As children move toward adulthood, parents face several milestone decisions. In each case, part of the decision involves a desire to help children become more independent and responsible. But, there is another milestone that parents might not anticipate, even though it will be part of almost every child’s growing-up experience and (unlike car keys and credit cards) it is legally required. It’s the filing of the first income tax return in a child’s name.

As parents should realize, income tax filing is not taught in schools and it’s not a subject that captivates teens’ attention on TV. Most children have only a dim idea of what income taxes are, let alone the specific rules they are required to meet. Therefore, the parent’s role is to initiate this rite of passage by evaluating tax-filing requirements and/or obtaining guidance from tax professionals. This article is designed as a parent’s “quick guide” to this subject. It covers the basic rules that you should know for determining when your child must (or should) file. It also offers suggestions for helping children take responsibility for their own tax chores in the future.

 

And just before you put the little darlings to sleep, don’t forget to read them the interactive FinCen Story, sure to warm their little hearts and give them the sweetest dreams ever.

moremoneydreams
moneytree

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