Most US expats need to file an FBAR (Foreign Bank Account Report) annually. The FBAR filing obligation is triggered when you have a financial interest in or signature authority over financial foreign assets with a value of $10,000 or more at any point during the year. Learn what documents you need for filing an FBAR and the filing deadlines.
Can I file FBAR myself and what documents do I need to file an FBAR?
Yes, you can prepare and file your own FBAR. In order to do so, you will need the following information:
- Name on the account, ITIN (your SSN), and address
- Account number of each account
- Name and address of the foreign financial institution where the account is held
- Type of account (Bank, Securities, Other)
- For jointly-owned accounts, you must provide the name, address and ITIN if applicable for all joint owners of the account
- The maximum value of the account (you can find it on your bank statement)
Tip: All amounts reported on FBAR must be in US dollars, rounded up to the nearest whole dollar. If your accounts are held in a foreign currency, you must convert the figures to US dollars using the Treasury Reporting Rates of Exchange for the last day of the calendar year, 31st of December. If the Treasury Reporting Rates of Exchange is not available, you can use another verifiable exchange rate.
Tip 2: On FinCEN Form 114, you must report foreign financial assets according to certain requirements. Any financial accounts located abroad are considered foreign financial accounts. Even if the foreign financial account did not generate income, you still have the reporting obligation.
They include but are not limited to bank accounts, securities, brokerage accounts, trusts, and financial instruments accounts; mutual funds that you, as the account holder, have an equity interest in the fund; and insurance policies with cash value, etc.
Some exceptions apply to the type of accounts listed below:
- Certain custodial or omnibus accounts
- Correspondent accounts
- Accounts owned by a governmental entity
- Accounts owned by US military banking facilities
- Certain International Financial Institution accounts
Related:10 Quick Facts about FBAR for Americans Abroad
What about cryptocurrency accounts? Do they need to be reported on FBAR?
Currently, a foreign account holding virtual currency is not a reportable account. You are not obligated to report the value of your foreign crypto wallets at this time. However, FinCEN intends on amending the current rules to include the virtual currency accounts as reportable accounts on the FBAR form.
Where to file the FBAR?
The FBAR is filed with the Financial Crimes Enforcement Network administered by the US Treasury Department. It is an informational form and no tax will be assessed on the reported amounts. FBARs must be filed electronically using the BSA e-filing system. You can no longer file the FBAR on paper. Tax preparers will be able to file the FBAR on your behalf using their professional software.
What is the deadline for FBAR 2022?
The deadline to file the FBAR is April 15th of the year immediately following the calendar year being reported. If you fail to meet the FBAR annual due date, you get an automatic 6-month extension to file the form. Hence, your FBAR filing deadline is October 15th. No forms are needed to be filed in order to receive the 6 months extra time to prepare your FBAR.
Do I have to file FBAR every year?
The answer is: it depends. You have an FBAR filing obligation if the total value of your financial foreign assets was higher than $10,000 at any point during the year. If you held less than $10,000 in your foreign bank accounts in a given year, you don’t need to file the FBAR.
Let’s look at an example.
Mark has two foreign bank accounts. In 2020, the maximum value of account #1 was $1,400 while the maximum value of account #2 was $7,100. The total value of Mark’s foreign bank accounts was $8,500. He does not have the FBAR filing obligation. His accounts did not exceed the $10,000 filing threshold that triggers the filing obligation.
In 2021, Mark got a full-time job. The maximum value of account #1 was $4,300 while the maximum value of the second account was $63,260. Mark’s total value of his foreign financial assets exceeded $10,000 and he now must report his foreign bank accounts to the Treasury. He will need to file an FBAR next year.
What if I forgot to file FBAR?
Don’t worry or panic if you didn’t know about your filing obligation. The IRS is aware that many expats do not know about their filing requirements. You can take advantage of the IRS’ amnesty program and bring yourself into compliance using the Streamlined Compliance Program. If you’re only behind on your FBARs, your trusted tax preparer can file them on your behalf providing the IRS with a reason why you failed to file before.
Filing the FBAR in a timely manner could save you from hefty penalties which bring us to the next part of the article.
Is there a penalty for filing FBAR late?
If you non-willfully fail to report FBAR, there is a penalty of up to $12,921. However, if the IRS finds you guilty of a willful failure to file the form, the penalty raises up to $129,210, or 50% of the account balances. Criminal penalties might also apply.
The reason for the severe penalties is that the FBAR is filed with FinCEN rather than the IRS. FinCEN was created to safeguard the financial system from illicit use, to combat money laundering and terrorist financing. Due to the gravity of tasks the agency performs, the penalties for non compliance are harsh.
It is always better to come forward and file your delinquent FBAR as soon as possible. If there is a reasonable cause for not filing and the accounts are accurately reported, no penalties are assessed.
You must fill out the form completely and accurately. Help in completing the FBAR is available Monday – Friday at 313-234-6146 or you can send questions to FBARquestions@irs.gov.
Feel free to reach our team at info@1040abroad.com and we’ll get back to you as soon as we can.
Do your due diligence by filing the FBAR today and rest easy knowing that we have you covered if something goes wrong. Start here.
As an expert in international tax compliance and expatriate financial reporting, I have extensive knowledge of the Foreign Bank Account Report (FBAR) requirements for US expatriates. My expertise is backed by years of experience in guiding individuals through the intricate details of filing FBARs and ensuring compliance with US tax regulations.
The FBAR filing process is a crucial aspect of financial responsibility for US expats, and understanding the nuances of this requirement is paramount. To address the information provided in the article:
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FBAR Filing Requirements:
- The FBAR filing obligation is triggered when an individual has a financial interest in or signature authority over foreign financial assets with a value of $10,000 or more at any point during the year.
- Documents needed for filing an FBAR include personal details such as name, ITIN (Social Security Number), and address, as well as account-specific information like account numbers, foreign financial institution details, and the type of account.
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Reporting Foreign Financial Assets:
- The article specifies that financial assets subject to FBAR reporting include bank accounts, securities, brokerage accounts, trusts, and financial instrument accounts, among others. Certain exceptions apply to specific types of accounts.
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Cryptocurrency Accounts:
- As of now, foreign accounts holding virtual currency are not reportable on the FBAR. However, the article mentions that FinCEN intends to amend the rules to include virtual currency accounts in the future.
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FBAR Filing Process:
- The FBAR is filed with the Financial Crimes Enforcement Network (FinCEN), administered by the US Treasury Department.
- The deadline for FBAR filing is April 15th of the year following the calendar year being reported, with an automatic 6-month extension available until October 15th.
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FBAR Filing Obligation:
- Individuals must file an FBAR if the total value of their financial foreign assets was higher than $10,000 at any point during the year.
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Penalties for Late FBAR Filing:
- The article emphasizes the importance of timely FBAR filing to avoid penalties. Non-willful failure to report FBAR may result in a penalty of up to $12,921, while willful failure can lead to a penalty of up to $129,210 or 50% of the account balances. Criminal penalties may also apply.
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Streamlined Compliance Program:
- The article advises individuals who forgot to file FBAR to take advantage of the IRS' amnesty program, the Streamlined Compliance Program, to bring themselves into compliance without facing severe penalties.
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Contact Information:
- Contact information for assistance in completing the FBAR is provided, including a phone number and email address.
In conclusion, understanding the FBAR filing requirements, deadlines, and potential penalties is crucial for US expatriates. Staying informed and seeking professional assistance, as indicated in the article, can help ensure compliance with these financial reporting obligations.
