- 1 Simple FBAR Guide to (Almost) Everything You Need to Know
- 2 FBAR is Electronically Filed
- 3 It is Due to Be Filed Each Year
- 4 The FBAR Deadline is on Automatic Extension
- 5 FBAR Filing includes More than Just Banks Accounts
- 6 May Include Trust & Business Accounts
- 7 Includes Accounts You Co-Own
- 8 Young Kids May Have to File Too!
- 9 Foreign Account Reporting Includes Signature Authority Accounts
- 10 Which FBAR Exchange Rate to Use
- 11 If You Missed Filing, do Not File a Quiet Disclosure
- 12 FBAR Amnesty Program Summary
- 13 Can I Just Start Filing FBAR This Year Instead?
- 14 Our FBAR Lawyers Represent Clients Worldwide
Simple FBAR Guide to (Almost) Everything You Need to Know
Simple FBAR Guide to (Almost) Everything You Need to Know: Considering that the FBAR (Foreign Bank and Financial Account Form aka FinCEN Form 114) is one of the less complicated international information reporting forms required by the IRS — there sure is a lot to know about Filing the Form, such as:
- Reporting the Maximum Account Value
- Which FBAR Exchange Rate to Use — and of course,
- Foreign Account Penalties and how to avoid them.
Our International Tax Lawyer Specialist Team has authored hundreds of articles of FBAR and given countless presentations on offshore disclosure & asset reporting– there is just that much to know. But, the purpose of this simple FBAR Guide is to provide you with the basics of what you need to know:
FBAR is Electronically Filed
Many years ago, the FBAR (it has been around since the early 1970s) was filed by Paper. Since around 2013, the FBAR is electronically filed only. Taxpayers submit the FBAR directly on the FinCEN (Financial Crimes Enforcement Network) website.
It is Due to Be Filed Each Year
Each year that a US Person (more than just individuals) has an annual aggregate total value of their foreign and overseas accounts that exceeds the threshold requirement for filing — they have to file. This is true, even if it was file in the prior year(s) and/or whether or not the Taxpayer is also required to file a tax return.
The FBAR Deadline is on Automatic Extension
At the current time (this rule is always subject to change), the Form is due to be filed on April 15, BUT is on automatic extension until October — and no additional extension form is required to be filed in order to obtain the extension.
FBAR Filing includes More than Just Banks Accounts
Despite the fact that the form refers to “Foreign Bank Accounts,” it required the reporting of more than just bank accounts. It may include investment accounts, funds, pension accounts and even foreign life insurance policies.
May Include Trust & Business Accounts
Trusts and Businesses can also be considered US persons, and if they have foreign accounts that meet the reporting requirements — they will have to file as well to report the accounts.
Includes Accounts You Co-Own
When a person co-owns or jointly owns a foreign account, that account has to be reported as well. For reference, the total value is reported, not just the portion attributed to the US person.
Young Kids May Have to File Too!
There is no exception for children and FBAR. Therefore, your 3-year-old may also have to file a FinCEN Form 114 as well — if they meet the threshold for filing.
Foreign Account Reporting Includes Signature Authority Accounts
When a person has signature authority over a foreign account, they are required to include these types of accounts as well — such as when a child had signature authority for a parent — or an employee/employer situation.
Which FBAR Exchange Rate to Use
If You Missed Filing, do Not File a Quiet Disclosure
A quiet or silent FBAR disclosure is when a person submits prior year FBARs — or begins filing forward — without following the proper FBAR amnesty protocols. The IRS has stated that if they catch a Taxpayer committing an intentional quiet disclosure — it can lead to severe penalties and even a criminal investigation.
FBAR Amnesty Program Summary
Foreign Account Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Delinquency Procedures
- Reasonable Cause
Can I Just Start Filing FBAR This Year Instead?
No, unless the current year is the first-year you had a Reporting requirement.
If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as a Quiet Disclosure. The IRS has warned taxpayers that if they get caught in a Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.
Our FBAR Lawyers Represent Clients Worldwide
Our International Tax Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm today for assistance.