Taxpayers with foreign financial accounts may have several different reporting requirements, depending the type of account and the amount of funds in the accounts. The first of these requirements comes from the 1040 tax return, specifically Schedule B.
Schedule B requires the disclosure or any interest or dividends received by the taxpayer, including interest from foreign accounts. Part III specifically asks about foreign accounts, including whether the taxpayer had an interest in signature authority over any foreign financial accounts, and whether the taxpayer has a Foreign Bank Account Report (FBAR) filing requirement or received a distribution from a foreign trust. A failure to answer these questions honestly could result in tax fraud penalties, and possibly lead to other penalties related to a failure to file FBARs.
Foreign Bank Account Reports (FBARs)