What tax law says the IRS must know about your foreign financial accounts

If you are a U.S. citizen or resident …

and if you (or your spouse) control a foreign bank/brokerage account, or receive income/payments from a non-U.S. trust, or have refunds deposited to a foreign account, this must be disclosed on your income tax return.

Additionally,  your world-wide income – including interest and proceeds from foreign accounts – is subject to federal income tax. If that income was taxed in another country, the amount of foreign tax paid can be deducted from your U.S. tax liability.  Tax treaties between the U.S. and the other country define the exact taxation.

Be certain to provide foreign account information along with your tax documents at preparation time.