As a US citizen or green card holder living abroad, you have an obligation to report your foreign financial accounts to the U.S. government. The Foreign Bank and Financial Accounts Report (FBAR) is a way for the government to track these foreign accounts and ensure that U.S. taxpayers are reporting their foreign income and paying the appropriate taxes. Failing to file an FBAR can result in severe penalties, so it’s important to understand your FBAR obligation if you’re a U.S. expat.
What is an FBAR?
The FBAR is an annual report that is required for any U.S. person who has a financial interest in, or signature authority over, foreign financial accounts with an aggregate value of $10,000 or more at any time during the calendar year. The FBAR is filed with the Financial Crimes Enforcement Network (FinCEN) and must be filed by June 30 of the year following the calendar year for which the report is required. For example, if you had foreign financial accounts with a total value of $10,000 or more during the calendar year 2022, your FBAR for that year must be filed by June 30, 2023.
What types of accounts must be reported on the FBAR?
The FBAR must include any foreign financial accounts that you have a financial interest in or signature authority over. This includes, but is not limited to, foreign bank accounts, investment accounts, mutual funds, and life insurance policies with cash value. It’s important to note that the FBAR is not a tax form, but rather a report of your foreign financial accounts to the U.S. government.
Who must file an FBAR?
U.S. citizens, U.S. residents, and entities (such as corporations and partnerships) that are formed in the U.S. or under U.S. law must file an FBAR if they have a financial interest in or signature authority over foreign financial accounts with an aggregate value of $10,000 or more at any time during the calendar year. This includes U.S. expats living abroad and U.S. residents with foreign financial accounts.
What happens if I don’t file an FBAR?
Failing to file an FBAR can result in severe penalties. If the failure to file is considered non-willful, you could face a fine of up to $10,000 per year. If the failure to file is considered willful, you could face a fine of up to $100,000 or 50% of the account balance, whichever is greater, per year. In some cases, you could also face criminal penalties, including imprisonment.
How do I file an FBAR?
The FBAR can be filed electronically through the BSA E-Filing System website. The process is straightforward and simple, and the website provides step-by-step instructions to help you complete the form. In addition, you may need to file additional forms, such as Form 8938, if you have a foreign financial asset with a value that exceeds the threshold established by the U.S. government.
In conclusion, understanding your FBAR obligation is crucial if you’re a U.S. expat. Failing to file an FBAR can result in severe penalties, so it’s important to ensure that you’re reporting your foreign financial accounts accurately and on time. If you require any further assistance about the FBAR or your tax obligations as a U.S. expat, it’s a good idea to speak with a tax professional.
★ Useful links
BSA E-Filing System website:
https://bsaefiling.fincen.treas.gov/main.html
