Several filing requirements can apply when you own or are a beneficiary of foreign financial assets. These forms report on the specific assets themselves and are information returns versus income tax returns. However, the penalties for failing to file them are truly draconian, many starting at $10,000. The rules are complex, in some cases overlapping, so you will want to benefit from professional advice in completing all required forms.

The Foreign Bank Account Reporting Form TD.F 90-22.I is required if you have an interest in a foreign account when the total value exceeds $10,000 at any given time throughout the year. The failure to file penalty is $10,000, or for willful failure, the greater of 50 percent of the account balance or $100,000. This form is being superseded by Form 114 this year, which must be submitted electronically and is due June 30, 2014. This form is a stand-alone form. It is not part of your income tax return.

The statement of Foreign Financial Assets Form 8938 must be filed with your income tax return if your foreign financial assets are $50,000 or more on the last day of the year or $75,000 at any time during the year if you are filing single or married filing separate. If married filing joint, the thresholds are $100,000 at the end of the year or $150,000 during the year.

These limits apply to U.S. residents. U.S. citizens living abroad have higher thresholds. Failure to make this required disclosure is $10,000. If this failure continues for more than 90 days after the IRS gives you notice of your failure to file, the penalty is $10,000 for each 30-day period up to $50,000.

If you transfer money or property to a foreign trust, receive distributions from a foreign trust or receive gifts or bequests from a foreign trust you need to file a Form 3520 return and perhaps a Form 3520-A return (Foreign Trust with a U.S. owner).

Form 3520 is due when your income tax return is due, including extensions. (No extension is allowed on this personal return or on Form 3520). Form 3520-A is due the 15th day of the third month after the end of the trust’s tax year. It can be extended via Form 7004.

The Form 3520 failure to file penalty is 35 percent of the gross reportable amount except for returns reporting gifts. For returns reporting gifts, it’s 5 percent per month of failure, up to 25 percent. The Form 3520-A penalty is 5 percent of the trust assets.

Of course, you are required to report income from foreign sources. Failure to do so can result in a 40-percent-of-underpayment penalty. Reporting the income on your income tax return does not relieve you from the requirement to file the necessary information tax returns.

Foreign accounts have been used to evade taxes by some individuals in the past. The government is determined to halt the practice and is receiving information from foreign governments and financial institutions. If you have a foreign account, be sure to enlist the help of a professional who knows all the rules to make the required filings.