The 411 on FBAR
Following increased IRS regulation, we’ve kept you in the know about how to report hidden money overseas, which includes using the special form known as FBAR, and still holds true in order to maintain a clean financial record. Hopefully you’ve done due diligence in reporting! Here’s a deeper dive into the form, as it’s utilized by a growing number of taxpayers – not just businessmen stashing their profits. The 411 follows.
Who files? Why should I file?
Any U.S. citizen, resident, corporation, etc. that is the owner, nominee, person with access to the distribution of funds of a foreign account(s) that totalled $10,000 or more at any point during the year. Even if your accounts total tip the scale for a day, you are required to file. Accounts types include standard bank accounts, securities accounts, and some foreign retirement arrangements.
Now for the why – in short, to avoid hefty fines. If you do not file or file incorrectly, you can be incur penalties up to $10,000 per violation; ignorance cannot be cited as reason for an exception. You can then be fined for much larger sums, depending on the balance of your foreign accounts.
How do I file and when is it due?
To file, you must do so electronically through FinCEN’s BSA E-Filing System. The FBAR is due June 30th of each year, to report the year preceding. There is no extension for filing!
What else do I need to know?
You can file one FBAR for a single account if it is a joint account with your spouse.
You will also need to fill out Schedule B, Part III of your return, which asks about your foreign accounts and where they are located, and potentially Form 8938, if the aggregate value of your foreign assets exceeds the threshold. These forms complement, and do not replace, the FBAR.
If you’re still not sure if you are required to file, consult your tax professional – but there are very few exceptions for filing the FBAR.