Financial Planning Quotes Beth Kaufman on Filing Gift Tax Returns and FBAR

The tax filing season is in full swing, and things look different on several fronts this year. 

Most Americans will see smaller refunds due to the expiration of pandemic credits and rebates. Many investors face jolting capital gains bills on mutual fund distributions, even as their funds lost money in the horrible stock and bond markets that were 2022. 

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"Many high-net-worth clients don't realize that they may have an obligation to file a gift tax return as well as their income tax return," said Beth Shapiro Kaufman, a Member in law firm Caplin & Drysdale's private client group. "Moreover, once she has an obligation to file, she must report all of her gifts, including those under $16,000 and including her gifts to charitable organizations."

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Taxpayers with foreign bank accounts won a massive reprieve on Feb. 28 when the Supreme Court ruled that a dual American-Romanian citizen who failed to disclose all of his foreign bank accounts as required by U.S. law would not have to pay more than $2.7 million in penalties levied by the IRS. Instead, he's on the hook for just $50,000.

The high court's ruling said the taxpayer owed a single penalty for all the accounts, not a collection of penalties for each account.

Still, Kaufman said, clients may not realize they still must file the forms, even if they owe no tax on the accounts.

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