FinCEN Form 114: Everything You Need to Know to File the FBAR Form

FinCEN Form 114: Everything You Need to Know to File the FBAR Form

The FBAR form reports foreign (non-US) bank accounts to form FinCEN 114, the Financial Crimes Enforcement Network, an agency of the US Treasury Department. Learn all about this form, including if you need to file, upcoming deadlines, and penalties.

Key Takeaways

  • The FBAR form is technically not a tax form because it does not generate taxes or amounts due although the US Treasury Department administers it.
  • The FBAR is a purely informational tax form and does not create a tax liability.
  • Failing to file an FBAR when required could result in severe penalties.

What is the FBAR Form?

The name FBAR is an old name for the form FinCEN 114. This form reports your foreign bank information to the US Treasury each year. The FBAR form is technically not a tax form because it does not generate taxes or amounts due although the US Treasury Department administers it. Its purpose is to be informational and must be filed by many people. This form is required to be filed by individuals and US companies who own or have an interest in foreign bank account(s) or financial account(s) if the balance of the account(s) exceeds a threshold during the year.

According to FinCEN’s website, the definition of a financial account is as follows:

A financial account includes, but is not limited to, securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).

The purpose of the form is to prevent the hiding of offshore assets and income and thus avoid US income tax.

Who Must File FinCEN Form 114?

Individual Foreign Bank Account Holders – US persons, either US citizens or Resident Aliens (Greencard holders), must file an FBAR if they have one or more financial accounts located outside the US and the total of the balances of those accounts exceeds $10,000 USD at any time during the calendar year. ALL US persons must file the FBAR form, regardless of age or circumstance. The guardians of minor children and those unable to file for themselves must file the FBAR form on behalf of their charges.

For example:

  • If you open a savings account for your 2-year-old child at a non-US bank and keep joint ownership to manage the account with a balance of $12,000 at the end of the year. Then, you and your child will each need to file separate FBAR forms for the year, each declaring the bank account and the full balance of $12,000 on the form. 

Joint Foreign Bank Account Holders – Joint account holders must each file separate FBAR forms, each reporting the full balance of the jointly held account. Spouses with only jointly held accounts may file a joint FBAR form, but only if the individuals do not have any separately held foreign accounts. There are some exceptions to filing, including spouses of jointly owned accounts and foreign financial accounts maintained on overseas military banking facilities.

For Example:

  • If you and your spouse have a joint checking and savings account at the local HSBC branch in London, where you live, these accounts are the only non-US financial accounts you own. Then you can file a joint FBAR form for the year.  
  • If you and your spouse jointly held checking and savings accounts in a non-US bank. But you two also own separate investment accounts, which manage your foreign pensions. Then, you will each need to file separate FBAR forms detailing the information from the checking and savings accounts and the information for your separate investment accounts. Only the investment account attributable to the individual needs to be reported on the separate FBAR form. 

US Companies with Foreign Accounts – US companies are also subject to this rule. A US company is any corporation, partnership, LLC, trust, or estate formed or organized under the laws of the United States.

What About Exchange Rates?

FinCEN requires that you convert the balance of your foreign financial account to US dollars before entering it on the FBAR form. You do not need to convert your financial funds to USD, just the total balances on paper.

FinCEN requires you to use the US Treasury foreign exchange rate as of December 31st of the year in question. The US Treasury publishes this rate here.

What Are the Requirements?

If you own or have any interest in any foreign financial accounts, you must assess their balances each year to determine if you are required to file an FBAR form. The FBAR form must be filed each year if the total balance of your foreign financial accounts exceeds $10,000 during the year.

Foreign financial accounts include, but are not limited to, checking, savings, securities, brokerage, deposit, or any other account held with a financial institution. Foreign financial accounts include annuities with a cash-out value, mutual funds, or whole-life insurance policies.

What Information Do You Need to Prepare the FinCEN Form 114?

In order to complete the FBAR form, you will need the following information:

  • Your name, Social Security Number or ITIN, and address
  • The name, address, and social security number (if any) of all joint owners of the account
  • Your foreign banks’ names and addresses
  • The type of account – bank, securities, or other
  • Your foreign bank account number for each account
  • The maximum balance of your foreign financial account during the year is converted to US dollars.
Pro Tip

Ensure you enter all phone numbers and identifying numbers in a single text string without characters (i.e., a phone number would not be entered as 111-222-3333 but 1112223333).

When recording your maximum account balances, record all amounts in US dollars, rounded up to the next whole dollar. If your accounts are held in a different currency, convert the maximum account value for each account into United States dollars. Convert foreign currency using the Treasury’s Financial Management Service rate (select Exchange Rates under Reference & Guidance at www.fms.treas.gov) for the last day of the calendar year. If no Treasury Financial Management Service rate is available, then use another verifiable exchange rate and make sure you provide the source of that rate. In valuing a country’s currency that uses multiple exchange rates, use the rate that would apply if the currency in the account were converted into USD on the last day of the calendar year.

How to File FBAR and When?

FinCEN requires that all FBAR forms be electronically filed through their website. So, how to file FBAR, and when? Most professional tax preparers are able to file electronically using their software as well.

The FBAR form is due April 15th. An automatic extension is available for US citizens living abroad, which extends the due date to October 15th.

Confused about when you need to file? We can help.

When you live in the US, tax day is simple: April 15th! When you move abroad, it’s not so straightforward! Learn about all the expat deadlines and extensions you need to know to file.

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Is There a Record Retention Timeframe?

Those who are required to file an FBAR form must keep the records of their bank information to prove their form entries to FinCEN in the event of an audit. You must keep the following information for 6 years:

  • Name that the account is held in
  • Account number
  • Name and address of the foreign financial institution
  • Type of account
  • Max value of the account during the year
  • Keeping a copy of the FBAR filed each year will help fulfill the requirement.

Are There Any Penalties?

The penalty for not filing an FBAR form, if required, is up to $12,921. This penalty is not assessed if there is reasonable cause for not filing and the account balance is properly reported.

Willfully failing to report an account or account number may be subject to a penalty greater than $129,210, or 50% of the account’s balance, at the time of the violation. Willful violations may also be subject to criminal prosecution.

Pro Tip

If you have failed to file an FBAR when required, don’t panic. You can use the IRS Streamlined Filing Compliance Procedures to get up-to-date without facing any penalties.

Can I Have Someone File FinCEN 114 for Me?

FBARs may be completed and filed on your behalf and/or the owner of the foreign account(s) by a third-party preparer, such as a professional tax preparer. The filer or owner using a third-party preparer must complete and maintain a record of FinCEN Form 114a, FinCEN BSA E-Filing Signature Authorization Record, to authorize the third-party filing. You don’t need to file or send the completed Form 114a to FinCEN—you hang onto that form in case the IRS requests it. Spouses filing a joint FBAR also may use Form 114a to approve/designate which spouse will sign the report.

What if I Need Help or an FBAR Example?

If you need assistance during the filing process, you can contact the E-Filing Help Desk by calling 1-866-346-9478 (option 1) or via E-mail sent to [email protected].

You can also contact the expert CPAs, and IRS Enrolled Agents at Greenback to file on your behalf. We are always here to help, with countless FBAR examples for reference. Our expat accountants have helped hundreds of expats successfully file their FinCEN 114 and are happy to assist you too.

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