On this page, you’ll learn what the FBAR is, whether or not you’ll need to file an FBAR, how you can file without penalties (even if you’ve never filed an FBAR before), and why it is essential that you file your FBARs immediately.
FBAR refers to Form 114, Report of Foreign Bank and Financial accounts. This form is filed with the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the US Treasury Department.
An FBAR report is used to notify FinCEN of interest in, or signature authority over financial accounts outside of the United States. The FBAR filing requirement is not part of an individual’s tax return filed with the Internal Revenue Service (IRS), also a US Treasury Department bureau. FBAR, Form 114, is filed separately and directly with FinCEN as part of an effort to crackdown on money embezzlement and is for information purposes only.
You need to file an FBAR if all of the following are true:
Importantly, your FBAR report must contain information on all of your accounts which are located outside of the United States (even those with a $0 or negative balance).
An ITIN holder who is not a US resident does not have an FBAR filing requirement.
The deadline is April 15th. However, an automatic extension is granted until October 15th each year. Specific requests for an extension are not required.
If you haven’t filed FBARs although you are required to do so you may be hit with serious penalties. Here’s the good news: There is a special program (the Streamlined Foreign Offshore Procedures Program) which will allow you to come clean with the IRS without incurring any penalties at all. Under the Streamlined Program, you will need to file six years back of FBARs, three years of tax returns, and submit a Certification of non-willful conduct (essentially a statement that you did not purposely evade filing your FBARs and tax returns).
Here’s the bad news: The IRS can decide to end this program at any time, which will leave expats who have not filed their FBARs out in the cold.
If you have been filing tax returns annually but were unaware of your FBAR filing requirements, a different procedure may secure your amnesty. Delinquent FBAR procedures allow you to file your FBARS without incurring penalties, a detailed explanation is required to certify that your failure to file was non- willful.
Hence, if you honestly made the mistake of not fulfilling your FBAR filing duties, please contact us immediately to begin the process.
Up to 5 accounts | $130 |
6-10 accounts | $170 |
11 + accounts | $215 |
If the failure to file was due to a non-willful cause (for example, you did not know about your obligation to file this form), you can face a penalty of up to $10,000 per instance of noncompliance (i.e. for each yearly FBAR not filed). If the failure to file was willful, you can face a penalty of the greater of 50% of the total balances in your foreign bank accounts at the time of noncompliance or $100,000. There is a separate penalty for each year in which there was a failure to file. Additionally, the failure to file is considered a criminal offence and can result in criminal proceedings.
If you missed the FBAR filing deadline, you might be wondering if you should file late or not file at all. Failure to file an fbar on time can have penalty ramifications. However, we have seen that the risk involved in not filing at all is higher than that involved in filing late. This is a sensitive subject though, and each taxpayer is encouraged to discuss their specific situation with one of our experts.
If any of the following are true, then you have “Financial Interest” in the account:
The following accounts need to be reported on the FBAR:
If your accounts are owned jointly with your spouse you might be able to file a joint FBAR: If your spouse’s only foreign accounts are those owned jointly with you, then one FBAR suffices for both of you. In this case, the spouses would need to fill out and sign a Form 114a “Record of Authorization to Electronically File FBAR’s”. However, if your spouse has financial interest in or signature authority over any account that is not included in your FBAR, then a separate FBAR would have to filed for him/her.
You might need to complete Schedule B, Part III of your tax return indicating that you have an interest in foreign financial accounts and reporting the countries in which each account is located.
In addition, you may also have to complete and attach Form 8938 to your return. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. To learn more about form 8938 filing requirement, please click here.
Note that filing the Form 8938 does not replace or otherwise affect your requirement to file FBAR.
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