Declaring bank accounts abroad with the aggregate value of over $10,000 has been required of US citizens and residents for many years and in recent years the law around foreign bank account reporting has become more complex and non-compliance with respect to this reporting can lead to civil penalties which are higher than those of tax penalties. Let’s dive deeper into the Report of Foreign Bank and Financial Accounts (FBAR).
Each year, US persons are required to report certain foreign financial accounts such as your bank accounts, brokerage accounts, and mutual funds to the Treasury Department under the law that is known as the Bank Secrecy Act. Reporting of the said accounts is done by filing a Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114.
As mentioned above, if the aggregate value of foreign financial accounts exceeds $10,000 at any given time during the year, then an FBAR is required to be filed.
A United States individual that includes a citizen, resident, partnership, corporation, trust and estate, liability company, are required to file an FBAR to report the following:
However, you don’t need to file an FBAR if:
When to file FBAR?
You must remember that the FBAR is an annual report and is due every 15th of April following the calendar year end. An automatic extension to October 15 is allowed if ever you fail to meet the FBAR yearly due date of April 15. There is no need for an extension request to file.
If you fail to file an FBAR report, this may lead to civil penalties which include a $10,000 file or up to half of the balance of all unreported accounts in case the government has fully determined that the cause of failure to report was reckless or willful.
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