Question: Nazish just realized that she inherited money from her mother in India. The funds are in an Indian bank account with a balance over $10,000 USD. She did not report it on her 2021 Form 1040, U.S. Individual Income Tax Return, nor did she file a 2021 FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Her accountant filed her 2021 Form 1040 in June 2022. Can Nazish still correct the inadvertent omission of this account on her Form 1040 and timely file the FBAR?
Answer: Yes, Nazish can correct her Form 1040 and timely file the FBAR for 2021. She can amend her Form 1040 to include interest from the bank account on Schedule B, where she will correctly answer “Yes” to both questions under Part III, Line 7a, indicating that she did have signatory authority over a financial account in a foreign country. She’ll include the name of the foreign county (India) for question 7b.
Although the FBAR is required to be filed annually by April 15, the return is automatically extended to Oct. 15, with no extension form required to obtain the additional time to file. Even though she did not file an extension, as long as the FBAR is submitted by Oct. 15, her return will be considered timely filed for 2021. The FBAR is not an IRS form and can only be filed electronically through the BSA E-filing system, unless an exemption is granted by calling the FinCEN Regulatory Helpline, which will send a paper version of the return.
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.