Discover all the tax services we offer
Get an instance service estimate
Comprehensive guides on everything you need to know from planning your expat journey to filing your expat taxes with ease.
Our Country Guides will help you understand the ins and out of your specific U.S. expat tax requirements.
Access up-to-date articles, breaking news, deadline information and in-depth case studies on US expat taxes.
Get the answers to all your questions and browse Greenback’s most frequently asked customer questions.
Sign up for one of our live webinars hosted by our expert accountant team or watch one on-demand today.
Subscribe to our monthly newsletter to get money-saving tips, expat tax news, and exclusive promos.
Learn how our straightforward pricing, easy process, and an expert team makes us uniquely qualified to simplify the hassle of expat tax filing.
We’ve assembled a team only the most experienced, knowledgeable, and friendly CPAs and IRS Enrolled Agents our clients can trust.
Read our client testimonials to get a feel for the Greenback experience straight from the expats we’ve worked with.
We’re featured in many reliable news sources thanks to our reputation as experts on US taxes abroad.
Whatever your expat tax needs, wheverver in the world, we’d love to hear from you.
Financial Accounts & Investing Abroad
While filing US tax returns is a well-known responsibility of Americans living abroad, requirements such as the Foreign Bank Account Report (FBAR) are often forgotten. What’s the big deal, you ask? Failing to file the FBAR can draw the attention of the IRS and lead to harsh penalties. To ensure you stay compliant (and off the IRS’s radar!), we have compiled the things you need to know about FBAR reporting.
The Foreign Bank Account Report (FBAR) is an annual report that all U.S. citizens, residents, and certain other persons must file with the United States Treasury Department in which the person has a financial interest in, or signature authority over, a financial account in a foreign country with an aggregate value of more than $10,000 at any time during the calendar year.
Keep in mind that those filing FBAR aren’t taxed on the balance of the accounts or anything of the sort. This is a reporting requirement, so the IRS knows what money lies overseas.
If you’re an expat with foreign financial accounts, ignoring your requirements can result in penalties and legal consequences. The United States government has stepped up efforts to investigate and prosecute expats who fail to report their foreign-held financial assets. This means that the risk of non-compliance with FBAR regulation is more significant than ever.
Thankfully, there are plenty of easy ways to comply with your requirements. This guide will explain everything you need to know about the FBAR, including:
Any US person (that is, any person considered a US tax resident) with a foreign account balance of $10,000 or more at any point during the tax year will need to file the FBAR. This requirement is triggered even if the balance hits $10,000 for just one day (or one minute)!
The FBAR filing threshold is also an aggregate amount—meaning, if you have multiple accounts, the total balance of all of your accounts is what would trigger a filing requirement. So, if you think that keeping $4,000 in one account and $7,000 in another will enable you to avoid filing, this isn’t the case.
FBAR filing requirements apply to all foreign financial accounts in which you have a financial interest or signature authority.
So, for example, if you were a signatory on one of your employer’s bank accounts, this account should be reported on your form. You should also report joint accounts with your spouse on the FBAR.
The IRS says that the FBAR is required for “United States persons” who meet the reporting threshold. The term “US persons” refers to:
There are some exceptions to the FBAR reporting requirement. For example, U.S. citizens living abroad who own certain types of foreign financial accounts including those maintained by a government or international financial institution are not required to report them on an FBAR. Consult with an expert CPA to know if you qualify.
The FBAR is a separate filing from your federal tax return. It must be submitted separately to the Department of the Treasury, not the IRS. To file the FBAR, you’ll use FinCEN 114 and submit it electronically through the BSA e-filing site.
The process is straightforward and requires you to gather all pertinent account information and enter it into the online system. You can have a third party prepare it for you (i.e., a certified tax preparer), but you must file FinCEN 114a to give the party authority.
Most filers will just be reporting their foreign bank account balances. However, you must also report any of the following that applies:
If you and your partner only hold joint accounts, have your spouse sign FinCEN Form 114a to allow you to file the FBAR on their behalf.
If your spouse has other accounts that you are not on (i.e., individual foreign financial accounts), they must file their FBAR separately. When filing separately, you must both include your joint accounts on each of your individual forms.
Recordkeeping is essential to keeping up with how you file the FBAR. Submitted forms must contain the following information:
Many expats also find that they have to file one year and not the next. For this reason, it is essential to make good record-keeping a habit.
The FBAR must be filed by April 18th, 2023 (as the 15th falls on a Saturday). If you miss this deadline, there is an automatic extension to October 16, 2023 (as the 15th falls on a Sunday)
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.
The penalties for failing to file an FBAR when required can be severe.
The penalties for willfully failing to file accurate and/or timely tax returns are severe. A non-willful failure (for which no criminal charges will be brought) carries a $10,000 penalty per violation or an even higher penalty, depending on your account balances at the time of the violation.
Previously, the IRS wasn’t clear on whether these FBAR penalties were per-form or per account. Per-form means that a single penalty would apply for each FBAR form that wasn’t filed per year. For example, let’s say John Expat failed to disclose his six foreign accounts for three required years because he didn’t know it was required. If the penalty was levied on a per-form basis, then John would be fined the non-willful penalty of $10,000 for each of those years. That comes to a total of $30,000 (3 x $10,000 = $30,000).
However, court rulings have now made it clear that the IRS is applying penalties on a per-account basis. That means that violators are fined separately for each account they fail to report. In the example above, John Expat would now be facing a fine of $180,000 (6 x $10,000 x 3 = $180,000).
As you can see, penalties can add up quickly if you are years behind in your FBAR filing!
And with the introduction of the FATCA legislation in 2010, the chances of getting caught have increased, as foreign financial institutions are now required to notify the IRS of their foreign accounts. Basically, the IRS will assume you were hiding the foreign account(s), and you will be at their mercy. No one wants that!
First off, don’t panic! Millions of Americans have FBAR forms that are past due, and the IRS has created two amnesty programs to help you get caught up:
Both tax amnesty programs let expats comply with US tax law without paying any penalties. Let’s take a closer look at each.
The Streamlined Compliance Procedures are meant for US expats who have failed to file an annual income tax return as well as any required FBARs. To use the Streamlined Compliance Procedures, all you have to do is:
If you’re only behind on filing FBARs while being up to date on your annual tax returns, you can use the Delinquent FBAR Submission Procedures instead. To do this, you must simply:
In most cases, this should be sufficient to bring you into compliance with IRS standards.
These tax amnesty options are generally only available if you initiate the process yourself. If the IRS discovers your delinquency and contacts you first, you may be ineligible for these programs and thus subject to penalties.
Years ago, some expats got comfortable evading the FBAR because it was hard for the IRS to track down violators. The FBAR is required for US citizens because foreign banks don’t have the same reporting requirements as institutions in the US, making it harder for the US to investigate potential non-compliance cases.
The Foreign Account Tax Compliance Act (FATCA) changed all of that. FATCA requires individuals or businesses with foreign accounts meeting the reporting threshold of $50,000 to file Form 8938 with the IRS.
FATCA is different from FBAR on multiple levels:
This last point is critical. Because foreign financial institutions report directly to the IRS, the government can easily find out about your unreported foreign assets. This greatly increases the chances that the IRS will catch you if you fail to file an FBAR when required.
While foreign financial accounts containing stock and securities must be reported, the contents within them do not have to be reported separately.
We hope this guide has helped you understand what the FBAR means for Americans living abroad. If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.