Almost all US residents who have moved to the United States from abroad have overseas bank accounts. There is a complex set of requirements to report these accounts, and the penalties for failing to disclose them are onerous.
The goal of these stringent reporting requirements is to combat tax avoidance. Unfortunately, average law-abiding taxpayers can easily fail to be in compliance with these rules.
For example, certain pensions from abroad are considered a trust, therefore triggering a special reporting requirement as a distribution from a foreign trust on Form 3520 Annual Return to Report Transactions with Foreign Trusts and Receipt of Foreign Gifts. This form has to be filed beyond merely reporting the pension income on Form 1040.
We advise clients on making the correct disclosures to the IRS about their foreign accounts.