What is FBAR?
FBAR is a short term used for the Foreign Bank Account Reporting declaration to be done. This is also commonly known as Fincen114a. As part of the FATCA compliance, the FINCEN114 reporting is mandatory for certain individuals with connections with the United States.
Generally, If an account at the financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes
Who must file FBAR/Fincen114 Form?
A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust, and estate, must file an FBAR to report:
a financial interest in or signature or other authority over at least one financial account located outside the United States if
the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
What you do not report on FBAR Form?
You do not need to report foreign financial accounts that are:
You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly-owned accounts on a timely-filed, signed FBAR. Income tax filing status, such as married-filing-jointly and married-filing-separately has no effect on your qualification for this exception.
All your foreign financial accounts are reported on a consolidated FBAR.
All your foreign financial accounts are jointly-owned with your spouse and:
Owned by a governmental entity,
Owned by an international financial institution,
Maintained on a United States military banking facility,
Held in an individual retirement account (IRA) you own or are beneficiary of,
Held in a retirement plan of which you’re a participant or beneficiary, or
Part of a trust of which you’re a beneficiary if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.
What are the information required to prepare an FBAR?
Name on the account,
Name and address of the foreign bank,
Type of account, and
The maximum value during the year.
Do you need my records of the FBAR, if so for how long?
The law doesn’t specify the type of document to keep with this information; it can be bank statements or a copy of a filed FBAR, for example, if they have all the information.
You must keep these records for five years from the due date of the FBAR.
Exception: An officer or employee who files an FBAR to report signature authority over an employer's foreign financial account doesn’t need to personally keep records on these accounts. The employer must keep the records for these accounts.
When is the FBAR filing deadline date?
The FBAR is an annual report, due April 15 following the calendar year reported.
You’re allowed an automatic extension to October 15 if you fail to meet the FBAR annual due date of April 15. You don’t need to request an extension to file the FBAR.
When are penalties for not filing FBAR?
You may be subject to civil monetary penalties and/or criminal penalties for FBAR reporting and/or recordkeeping violations. Assertion of penalties depends on facts and circumstances. Civil penalty maximums must be adjusted annually for inflation. Current maximums are as follows:
We are one of the IRS Enrolled Agents with many years of experience in US 1040/1040NR personal tax compliance reporting and Fatca Compliance FBAR Reporting, We are happy to assist our clients in a timely, efficient, and cost-effective way.