FBAR filing requirements? ‘What is an FBAR?’ in simple words
Many Americans overseas may have heard that they could have FBAR filing requirements. So let’s take a moment to explain what an FBAR is in simple terms.
As a US citizen or resident with a foreign bank or financial account located outside the United States, you may have heard that you have a requirement to file the so-called FBAR.
As part of the US government’s monitoring of our offshore accounts, a US person must file an annual FBAR to report his or her financial interest in, or signature or other authority over, financial accounts located outside the United States if the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year.
The FBAR, or more formally the “Foreign Bank Account Report,” is an annual report, filed with the Department of the Treasury using the FinCEN Form 114. The form is due on April 15th in the year following your tax year. You are allowed an automatic extension to October 15th if you fail to meet the FBAR annual due date; you do not need to request an extension. You can file FinCen Form 114 electronically through the Treasury’s Financial Crimes Enforcement Network website.
If you fail to file the report or file it incorrectly you may be subject to civil monetary penalties as well as criminal penalties. For non-willful failure to file, the fine can be $10,000 per violation. If it is determined that you deliberately avoided filing, the fine can be $100,000 or 50% of the balance of the account at the time of the violation – whichever is greater. You can also face time in prison.
If you are within the group of US persons that did not get this information before, do not worry, there is an IRS program to help you get up to date with your FBAR filings: the “Streamlined Filing Procedures”. This procedure can also be used to bring you income tax filings up to date.
We have been helping thousands of Americans residing abroad to file their FBARs, go ahead and take advantage of it. Contact us.