I have been living abroad for 10 years and owe tax returns for 6 years. I don't owe any taxes due to the FEIE, but I have not yet filed the returns. The interest on the unreported bank accounts is about $300 for one of the years and only about $20 for the other years. I will of course declare this when I file my returns. I just found out about FBAR and now I am terrified. Am I going to end up owing $30,000 or more for the three years I should have filed a FBAR? How should I proceed? Thanks.

You are NOT the only person in this situation, and, quite frankly, the IRS cannot realistically enforce those fines for everyone who failed to file a FBAR, given the number of extensions allowed and a rather haphazard methodology of announcing the requirement.

File the tax returns as soon as you can, then submit the FBAR for each year you had, in aggregate, over $10,000 in foreign financial accounts.

If you explain in a cover letter your ignorance on this issue, I doubt the IRS will take any punitive action against you, especially if you keep up with the FBAR now that you are aware of the requirement.

If you need professional help in filing the returns or the FBAR, contact me at [email protected].

Thank you for your quick and very helpful reply and I will definitely contact you if I need professional tax help. Right now I think I may need professional psychiatric help, as I haven't been able to sleep for two days because of this! :-/

I have another question: for one of the years I crossed the $10,000 threshold in one account while at the same time I OWED over $10,000 in a credit account with the same bank. Does the aggregate value then become zero (or is that wishful thinking?) Or even better: can I count the $200,000 I owe to my mortgage bank against the $10,000 in another account?

Thanks very much again.

Sorry, but you cannot use the loan or credit account to debit the savings accounts when it comes to FBAR reporting minimums.