Most international tax errors do not start with some big strategy.
They start because someone says, “You should open this account,” and nobody talks about what happens next.
A friend suggests opening an investment account in another country. A family buys property overseas and needs a local bank account. A parent helps a child studying abroad. A business owner expands personal investing and ends up with an account outside the United States.
At that point, many people assume the same thing: if the account is legitimate and there is little or no income, there is probably nothing important to report.
That is the mistake.
For U.S. taxpayers, foreign accounts can create reporting requirements even when there is no bad intent and, in some cases, no extra tax due. In my experience, the problem is usually not some elaborate plan. It is that someone did something fairly normal, then found out later there was reporting attached to it.
Even if this does not apply to you today, it may apply sooner than you think. And if not, there is a good chance you know a friend, family member, or colleague who has already stepped into this without realizing it.
Why this catches people off guard
Most business owners think in terms of income tax. Did the account earn interest? Was there a gain? Did I actually make money?
That is a reasonable way to think. It is also where people get tripped up.
With foreign accounts, the government may want disclosure based on the existence and value of the account, not just the income it produced. That is why this area creates so much confusion. Someone can do something perfectly ordinary and still miss an important filing requirement.
The two forms people mix up
The first source of confusion is that there may be two separate reporting systems involved.
FBAR
The FBAR is a report for foreign bank and financial accounts. In general, it may apply when the combined value of foreign accounts crosses a reporting threshold at any point during the year.
Form 8938
Form 8938 is filed with a federal income tax return and applies to certain specified foreign financial assets when the value exceeds reporting thresholds.
The key point is that these are not interchangeable forms. Filing one does not automatically satisfy the other. This is one of the most common places people assume too much and find out too late that the rules were not as simple as they sounded.
How family business owners end up here
This is rarely about hidden money. More often, it looks like this:
- You bought property overseas and opened a local account to handle expenses
- You opened a foreign brokerage account because someone recommended it
- You have authority over an account connected to a family business or family investment
- You helped a child or relative maintain funds abroad
- You invested in something outside the U.S. and now have related foreign financial assets
None of that automatically means you did anything wrong. It does mean you should not assume your regular tax process is catching it.
What to do next to avoid international tax errors
Start with a simple review.
Make a list of every non U.S. account you own, control, or can sign on. Pull statements that show year end values and, if possible, the highest balance during the year. Then ask your tax preparer a very direct question: do any of these accounts or assets trigger FBAR, Form 8938, or both?
That is a much better conversation to have before a deadline than after one.
Staying ahead of your obligations
The biggest international tax errors are not always sophisticated. Very often, they start with a decision that sounded harmless at the time.
That is what makes this topic relevant for family business owners. You can create a foreign reporting obligation without ever thinking of yourself as someone dealing with international tax.
If you have money, authority, or investments tied to accounts outside the United States, it is worth reviewing now. And if you do not, keep this on your radar. These situations have a way of showing up through opportunity, family, travel, or advice that sounded simple in the moment.
If you would like help figuring out whether a foreign account creates a reporting obligation, Boris Benic & Associates can help you sort through the practical accounting and tax implications before a small oversight becomes a larger issue.