The FBAR (Foreign Bank Account Report) has been around for many years as an informational tool for reporting foreign financial account balances. Starting this year, though, a big change is coming for FBAR reporting – the deadline is moving up to fall in line with Tax Day. Fortunately, this change should make it easier for US expats to stay compliant with their reporting requirements – read on for the details you need to know about Foreign Bank Account Reporting.
Understanding Foreign Bank Account Reporting
Otherwise known as FinCEN Form 114, the Foreign Bank Account Report is the form used for reporting all of your foreign bank account information to the US Treasury Department each year. The FBAR is simply a reporting tool and does not generate taxes, but must be filed by all individuals and US companies who own or have an interest in foreign bank or financial accounts that exceed a certain threshold in the calendar year. The purpose of Foreign Bank Account Reporting is to prevent the hiding of offshore assets and income as a way to avoid US income taxes.
Any US person (citizen or Resident Alien – regardless of age or circumstance) must file an FBAR if he or she has one or more foreign financial accounts with a total balance exceeding $10,000 at any point during the calendar year. Guardians of minors and those unable to file on their own will need to file the Foreign Bank Account Report on behalf of their charges.
If you have a joint bank account, typically, you and your significant other will file separate FBAR forms – with each reporting the entire balance of the joint account. However, if you only have jointly held accounts (no separate foreign accounts), you may be able to file a joint Foreign Bank Account Report.
Additionally, US companies who have foreign financial accounts must file a Foreign Bank Account Report. A US company is classified as a corporation, partnership, LLC, trust or estate that is formed or organized under the laws of the US. You can read more about FBAR filing requirements on the IRS website here.
Reporting Your Accounts
In most cases, US expats will have foreign bank account balances to report – however, any type of foreign account must be included on the Foreign Bank Account Report. These include:
- Foreign account(s) held at a foreign branch of a US bank
- Foreign mutual funds
- Foreign stock or securities held in a financial account at a foreign financial institution
- Foreign-issued life insurance or annuity contract with cash value
Download a US expat tax guide to learn more about filing your FBAR and other expat tax requirements.
A big detail that you won’t want to overlook this year is the change to the FBAR filing deadline. In the past, FBAR forms followed their own timeline and were due at the end of June.
Starting this year, though, the FBAR will be due on Tax Day (April 18th this year), which makes it a bit easier to keep track of, since you’ll have fewer separate deadlines to remember!
As a US expat living abroad, you’ll also receive an automatic extension for Foreign Bank Account Reporting just as you do for your US taxes – making both due on June 15th. There is also an extension available, making your FBAR due October 16th.
Be Aware of Penalties
Failing to file your FBAR can lead to serious penalties and interest, but if your lack of filing was non-willful (meaning you had no idea you had a filing requirement), the fine could be $10,000 per violation. On the other hand, if your lack of filing FBAR is considered willful (meaning you knew you had a reporting obligation but didn’t do so), the fine can be $100,000 or 50% of the balance of the account at the time of violation (whichever is greater). FBAR penalties can add up very quickly, so it’s very important to stay on top of the deadline and reporting requirements. Fortunately, the deadline changes are in your favor, since you can now receive an extension if you need more time to prepare.
Need Help Filing Your FBAR or US Expat Taxes?
Our expat-expert accountants are here to help make filing expat taxes a hassle-free experience, so you can stay compliant on your obligations with the IRS and get back to your adventure abroad. Get started on your expat taxes and FBAR with us today!