No Tax Return Requirement & FBAR
No Tax Return Requirement & FBAR: While the actual preparation and filing of the annual FBAR (FinCEN Form 114)in accordance with FinCEN and IRS requirements is less complicated than many other international information returns such as form 3520-A or 5471 — the rules surrounding who has to file the FinCEN Form 114 and when is what can make filing the FBAR confusing. One major source of confusion (understandably so) is whether a person has to file an FBAR in any year that they meet the foreign account reporting filing requirements — but do not have to actually file a tax return. For example, a person may have money in overseas accounts, but the accounts are not generating foreign income, and the person is living off their savings instead of earned income.
Let’s review if there is an FBAR filing requirement when the tax return is not required to be filed:
FBAR if No Tax Return Required
The FBAR is required to be filed by any US person, including individuals, minor children, entities, trusts and estates that meet the threshold requirements for filing. Even if a US person does not have to file a tax return, they still have to file the annual FBAR in any year they meet the FBAR threshold filing requirements.
The main reason is because the FinCEN Form 114 is not a tax form but rather a reporting form — and therefore the mere fact that a person does not have to file a tax return would negate the requirement for filing .
Form 8938 vs FBAR
One international reporting form that is similar to the FBAR is Form 8938, which is used by individuals and others filing a US tax return who are required to report their specified foreign financial assets in accordance with FATCA. The form 8938 is only required in a year in which a person is filing a tax return.
Because unlike the FBAR, the form 8938 is part of the taxpayer’s tax return and submitted alongside the 1040 (FBAR is submitted separately from the tax return and filed directly on the FinCEN website.) In other words, even if a person meets the threshold requirements for filing a form 8938, if they do not otherwise meet the requirements for having to file, then they are not required to file the form 8938 in that year – although the FBAR would still be required.
*A person is not required to file a tax return solely because they otherwise met the form 8938 requirements. Stated another way, do not file a tax return solely to file a Form 8938 because you otherwise met the 8938 filing requirements.
In conclusion, if a person meets the threshold requirements for filing, they have to file with FinCEN even if they do not have to file A tax return. but, some international reporting forms such as Form 8938 are not required unless a tax return is required to be filed.
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