Are Trusts Subject to FBAR Reporting
Are Trusts Subject to FBAR Reporting Rules & Obligations: A common misconception is that only individuals are required to file the FBAR, but this is inaccurate. When you see the term U.S. person, it means more than just “individuals.” In fact, trusts, estates, and entities such as corporations, partnerships and limited companies will also have an FBAR reporting requirement. Generally, whether an individual, entity trust or estate is filing the FBAR, the due date is the same. The FBAR is due on April 15th (or when the filers U.S. tax return is due), but is currently on automatic extension until October to coincide with the 1040 tax return extension rules.
As provided by the IRS:
- “A United States person must file an FBAR if that person has a financial interest in or signature authority over any financial account(s) outside of the United States and the aggregate maximum value of the account(s) exceeds $10,000 at any time during the calendar year.
Let’s review when trusts are subject to FBAR reporting rules & obligations.
Who is a United States Person?
A “United States person” means:
• A citizen or resident of the United States;
• An entity created or organized in the United States or under the laws of the United States. The term “entity” • includes but is not limited to, a corporation, partnership, and limited liability company;
• A trust formed under the laws of the United States; or
• An estate formed under the laws of the United States.
Entities that are United States persons and are disregarded for tax purposes may be required to file an FBAR. The federal tax treatment of an entity does not affect the entity’s requirement to file an FBAR. FBARs are required under a Bank Secrecy Act provision of Title 31 and not under any provisions of the Internal Revenue Code.
United States Resident:
A United States resident is an alien residing in the United States. To determine if the filer is a resident of the United States, apply the residency tests in 26 U.S.C. § 7701(b).
When applying the § 7701(b) residency tests use the following definition of United States:
United States includes the States, the District of Columbia, all United States territories and possessions (e.g., American Samoa, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico, Guam, and the United States Virgin Islands), and the Indian lands as defined in the Indian Gaming Regulatory Act.”
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