With just a few days to go until the Foreign Bank Account Reporting (FBAR) deadline, you’ll want to make sure you’re aware of the requirements of this important US Treasury form. Here’s everything you should be aware of.
Breaking Down FBAR
The FBAR, also known as FinCEN Form 114, is the form you use to report your foreign bank account information to the US Treasury, if you meet the filing threshold. FBAR is technically not a tax form, as it does not generate taxes or amounts due. It is used for informational purposes, and must be filed by any individual or US company who own or have an interest in foreign bank accounts that exceed a certain threshold for the calendar year. The purpose of FBAR is to prevent the hiding of offshore assets and income in an attempt to avoid US income tax.
Do I Need To File?
Any US person – citizen or Resident Alien (Green Card holder) – must file an FBAR if they have one or more foreign financial accounts with a total balance exceeding the threshold at any point during the calendar year. This includes all US persons, regardless of age or circumstance. Guardians of minors and those unable to file for themselves must file the FBAR form on behalf of their charges.
Joint Account Holders
Generally, joint account holders will need to file separate FBAR forms, with each person reporting the entire balance of the jointly held account. However, a married couple with only jointly held accounts (meaning no separately held accounts of their own) may file a joint FBAR. There are also certain exceptions to filing for spouses of jointly owned accounts and foreign accounts maintained on overseas military banking facilities.
Any US company which has a foreign financial account exceeding the threshold must file an FBAR. A US company is categorized as any corporation, partnership, LLC, trust or estate that is formed or organized under the laws of the United States.
What Is The Filing Threshold?
As mentioned above, there is a specific threshold that determines if you must file an FBAR. If any of your foreign bank or financial accounts exceed $10,000 during the calendar year (whether it’s a single account or multiple accounts that total $10,000), you will need to file an FBAR.
Which Accounts Do I Need To Report?
Most people will have foreign bank account balances to report, but note that any type of foreign account must be included on FBAR reporting. These include:
- Foreign mutual funds
- Foreign accounts held at a foreign branch of a US bank
- Foreign stock or securities held in a financial account at a foreign financial institution
- Foreign-issued life insurance or annuity contract with cash value
What Should I Know About Deadlines?
For the 2015 reporting year, the FBAR deadline is 30 June. There are no extensions available, so being aware of the deadline is crucial.
For the 2016 reporting year and beyond, the filing deadline will be Tax Day (15 April), and US expats will receive an automatic two-month extension if living overseas on the due date. Expats can also request an additional extension until 15 October.
You should be aware that there are quite severe penalties for not filing your FBAR in a timely manner, so it’s very important to be aware of your requirement to file and gathering the necessary documents ahead of the deadline.
What If I Need To Catch Up On My FBARs?
Fortunately, the IRS has two amnesty programs to help US taxpayers get caught up on their FBAR reporting. For expats, the most relevant program is the Streamlined Filing Procedures. If you’re a US citizen who failed to submit FBAR filings due to lack of knowledge, you may be eligible for the Streamlined program. In order to take advantage of this program, you’ll need to file the past three years of Federal Tax Returns and past six years of FBARs.
Note that you should get caught up as soon as possible, since if the IRS finds your delinquency before you take action to catch up, you may face serious penalties.
Next Steps To Meet The FBAR Deadline
First things first, review your foreign bank account information to see if your balance exceeds the filing threshold. If so, you’ll need to file an FBAR. It’s always a good idea to connect with an expat tax professional so you can be sure you’re prepared and have the necessary documents in order to properly file your FBAR form on time. via expatnetwork.com