However, unless you fall into one of the above categories, then you will need to file FBAR if you have foreign financial accounts worth more than $10,000 at any time during the year. Foreign financial accounts maintained in a United States military banking facility.Trust beneficiaries (if a US person reports the account on an FBAR filed on behalf of the trust) and.Certain individuals (such as a bank officer or employee) with signature authority over, but no financial interest in, a foreign financial account.Participants in and beneficiaries of tax-qualified retirement plans.Therefore, if you have a single foreign bank account with $9,900 in it, you will not need to file FBAR, but if you have two foreign bank accounts with $5,001 each, then you will need to report.Īdditionally, while FBAR applies to the majority of US persons with foreign financial accounts, there are some notable exceptions, including: Keep in mind that the $10,000 threshold is aggregate – meaning that it applies to the total value of all of your foreign financial accounts. This category is purposefully broad to include just about any US person – including business and financial entities – who has any type of involvement with foreign financial accounts that are valued above $10,000. If you are a US person for tax reasons – meaning a citizen, green card holder, or resident alien under the Substantial Presence Test as well as US partnerships, corporations, trusts, or estates – who owns, has a financial interest in, or has signature authority over a foreign financial account or accounts whose combined value is $10,000 or more in any calendar year, then you are required to file FBAR. Therefore, while FBAR is yet another way that the US Treasury Department keeps tabs on US persons’ finances, it also exists to root out potential illicit activities, which is why penalties for even small mistakes are so high.Īdditionally, you shouldn’t confuse FBAR with IRS Form 8938, the “Statement of Specified Foreign Assets.” You may still need to file this form in addition to your FBAR, but the official requirements for this form are much different than FBAR’s. Today, FinCEN primarily focuses on combating large-scale drug trafficking operations and the financing of terrorist activities. However, a common misconception about FBAR is that it’s purely a tax form.Īlthough the FBAR is technically administered by the IRS, FBAR is a separate report that you must file with the Financial Crime Enforcement Network (FinCEN), which is another division of the US Department of the Treasury.įinCEN was created in 1990 to enforce the provisions of the “Bank Secrecy Act” (BSA), which was passed in 1970 to aid the US government in tracking large, illicit deposits of cash and negotiable instruments used in money laundering schemes. ![]() What is FBAR?įBAR is an acronym commonly used to refer to FinCEN Form 114, “Report of Foreign Bank and Financial Accounts.”Īt its most basic, FBAR is how US persons report their foreign bank accounts to the US government. This ultimate guide will therefore provide you with an overview of:īefore you dive in too deep, however, keep in mind that while this ultimate guide may be informative, it’s not professional tax advice that’s tailored to your situation.Īs with all tax issues, I highly recommend that you seek out an expat-focused tax professional to make sure that all of your FBAR filings (and other expat tax forms) are properly completed. All too often, I encounter people who want to renounce their US citizenship or revamp their offshore strategy, but they’re not FBAR compliant, which means that we have to go through and clean up that mess first before we do anything else. And, yes, I had to report every single one individually.īecause the process for filing an FBAR can be complex and confusing, it’s easy to make costly mistakes. Georgia, for instance, is incredibly easy to bank in for the most part, but because Georgian banks assign unique account numbers to every sub-account, you have to report each account individually to ensure that you’re fully compliant.Īt one point, I had 11 different sub-accounts in Georgia – all with different numbers. Reporting foreign bank accounts can be especially frustrating in certain parts of the world. Therefore, when filing FBAR, you need to make sure that you get everything correct since one wrong move can land you in seriously hot water – even though reporting can be mind-numbingly tedious at times. ![]() It’s a frustrating process – especially since the penalties can be incredibly extreme. Going forward, I’m pretty relieved that I’ll never need to report my foreign bank accounts to the IRS again. Last year, after renouncing my US citizenship, I prepared my final FBAR form.
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