Do You have Foreign Financial Accounts?
As a U.S. taxpayer, you might be aware of filing your federal tax return annually.
But did you know about the FBAR? Here’s what you need to know.
What Is FBAR?
Foreign Bank Account Report (FBAR) or FinCEN Form 114 is a requirement under the Bank Secrecy Act.
If you are a U.S. taxpayer, you must file an FBAR to report foreign financial accounts.
These accounts include bank accounts, brokerage accounts, and mutual funds held outside the United States.
Key Points
- Informational Form: FBAR (FinCEN Form 114) is for reporting, not imposing taxes.
- Reporting Threshold: In US Dollars, aggregate value exceeding $10,000 triggers FBAR reporting.
- Strict Penalties: Non-compliance can lead to consequences.
- Civil Law Penalty:
- Non-willful violation: $10,000 per instance.
- Willful violation: Greater of $100,000 or 50% of account balance per violation.
- Each year without filing counts as a separate violation.
- Civil Law Penalty:
- Criminal Law Penalty:
- Fine up to $250,000 and 5 years imprisonment.
- Violating other laws (often tax-related) can escalate penalties to $500,000 fines and/or 10 years in prison.
Foreign Accounts Covered
- Foreign assets like stock that’s held by foreign financial institutions
- Assets in a foreign branch of a U.S. financial institution
- Foreign mutual funds, life insurance or annuity contract
- Foreign retirement accounts
- Accounts that you don’t own but are able to control
Who Must File?
If U.S taxpayer have a foreign account or signature authority and
the combined balance of all foreign accounts is more than $10,000 at any time during the calendar year.
For example> You live in Nederlands. You have one ABN AMRO bank account with $4,000 balance and one ING Bank account with $7,000 balance during 2023. The combined balance is $11,000 during the calendar year. In this case, you must file an FBAR even if each account held $4,000 and $7,000 separately.
Filing Deadline?
The deadline for filing the annual FBAR is April 15, 2024. However, FinCEN grants those who missed the April deadline an automatic extension until Oct. 15, 2024. There’s no need to request this extension
Where to File FBAR?
Use FinCEN’s online filing system for e-filing
