FBAR From FINCEN 114 – reporting your foreign bank accounts -all you need to know
If you have a foreign financial account that you have a financial interest in or that you have signature authority over – and that account or those accounts exceed $10,000 at any point during the year, then you will need to file a FinCEN (Financial Crimes Enforcement Network) FBAR (Foreign Bank Account Report) form. These accounts include bank accounts, mutual funds, brokerage accounts and trusts, to name a few.
What You Should Know
The following are some of the important things that you should know about filing an FBAR:
- It’s important to understand that even though your foreign financial account may not have produced any taxable income for the year, you may still have an obligation to report it. You can meet this reporting obligation by answering certain questions on a tax return about foreign accounts as well as by filing an FBAR.
- The FBAR is an end of the year report that needs to be filed either on or before June 30th in the year following the calendar year that you are reporting. You can file your FBAR electronically through the FinCEN BSA E-filing system.
- You do not file the FBAR as part of your federal tax return. It is separate. This means that if the IRS provides you with an extension for filing your income tax return, it does not include an extension of the FBAR deadline. In fact, there is no way to obtain an extension for filing your FBAR.
- Not filing an FBAR by the deadline or improperly filing a complete FBAR could result in a civil penalty of up to $10,000 a violation. This is for unwillful violations only. If you are found to have willfully violated the deadline, the penalty could end up being over $100,000 or a sum that amounts to half of the balance in the foreign financial account. There are a few exceptions in regards to these violations in the event of a natural disaster that prevents the timely filing of your FBAR.
Exceptions to FBAR Reporting Requirements
There are a few filing exceptions to the reporting requirements of FBAR. These exceptions include the following:
- If you jointly own certain foreign financial accounts with your spouse
- If you are included in a consolidated FBAR
- If you have a correspondent or nostro account
- Any financial accounts owned by a government entity or international financial institution
- If you are the owner or beneficiary of a U.S. IRA
- If you are a participant or a beneficiary of a tax-qualified retirement plan
- If your foreign financial account is maintained on an American military banking facility
- If you have the signature authority of a foreign financial account but have no financial interest in that account
If you have a foreign financial account and need advice or guidance regarding the FinCEN Form 114 FBAR, then be sure to contact us at Valezar & Associates. We can provide you with professional accounting, bookkeeping and tax planning services to ensure that you abide by all laws and that you meet all rules and regulations.