How to Report 25 or More Accounts on FBAR (Modified Reporting)

How to Report 25 or More Accounts on FBAR (Modified Reporting)

How to Report 25 or More Accounts on FBAR 

The FBAR refers to Foreign Bank and Financial Account Reporting (aka FinCEN Form 114). US Taxpayers who have foreign accounts and meet the threshold for reporting are required to disclose the maximum account value for each account on an annual FBAR — including bank accounts, pension accounts, life insurance, etc. When a person has several accounts, the reporting can become very onerous – but once the Taxpayer hits the 25 account mark (either ownership or signature authority) they are not required to complete the full FBAR for submission purposes, but rather limited reporting while having to maintain records on their own.

As provided by the IRS:

Reporting requirements are modified for reporting:

A financial interest in 25 or more foreign financial accounts.

      • A U.S. person with a financial interest in 25 or more foreign financial accounts should check the ‘Yes’ box in Part I, Item 14a, and record the number of accounts in the space provided.

      • The U.S. person shouldn’t complete Part II or Part III of the report but keep records of the information. If the group of entities covered by a consolidated report has a financial interest in 25 or more foreign financial accounts, the reporting parent corporation need only complete Part V (for consolidated reporting), Items 34-42, to identify the account owners; it doesn’t need to complete the account information.

Signature or other authority over 25 or more foreign financial accounts.

      • A U.S. person who has signature or other authority over 25 or more foreign financial accounts should check the ‘Yes’ box in Part I, Item 14b, and record the number of accounts in the space provided. Complete Part IV, Items 34-43, for each person for which the filer has signature authority.

      • Example: Doug has a financial interest in 12 foreign financial accounts and signature authority over 17 foreign financial accounts. Doug must complete the entire FBAR because he has a financial interest in fewer than 25 foreign financial accounts and signature authority over fewer than 25 foreign financial accounts.

By U.S. persons employed and residing outside the U.S.

      • A U.S. person who resides outside the U.S., is an officer or employee of an employer who is physically located outside the U.S. and has signature authority over a foreign financial account owned or maintained by the individual’s employer only needs to complete Part I, Part IV, Items 34-43, and the signature section of the FBAR.

        1. Example: Julia is a U.S. person who lives in Ireland and is employed by an Irish company. She only needs to complete Part I, Part IV, Items 34-43, and the signature section of the FBAR to report her signature authority over the foreign financial accounts of her employer.

        2. Example: Given the above example, if Julia lived in the U.S., she would not be able to take advantage of the modified reporting requirement and must fill out the FBAR form in its entirety

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