Should I File an FBAR Report?

On: September 3, 2023

Tax season rolls around every year and tax laws continue to evolve and change to adapt and keep up with the times. As an American, if you live abroad throughout the year, make money in another country, or receive assets or an estate in another country, you may be subject to special taxes and reporting requirements.

Taxes can be difficult to navigate, even for those with the simplest of returns, so once you start adding in additional requirements and rules to follow, it can quickly get out of control and become a mess. Working closely with an IRS tax expert can ensure that your taxes are not only filed on time but that you are remaining in compliance with the IRS and their reporting guidelines when it comes to foreign bank accounts and assets.

What is an FBAR?

FBAR is an acronym that refers to the IRS FinCEN Form 114. This form is used by taxpayers to report any type of foreign accounts that they have abroad. Financial accounts that hold a combined amount of $10,000 or more at any time throughout the year must be reported on this form. The keyword to pay attention to is “combined”. This means that the total of ALL accounts and not just a singular account.

The form does not go directly to the IRS but instead is sent to the U.S. Treasury Department’s Financial Crimes and Enforcement Network.

What Must Be Reported on an FBAR?

In general, bank accounts are reported on the FBAR, but some additional items that may need to be claimed include:

• Accounts that you are not the owner of but are in control of
• Foreign life insurance policies, mutual funds, and annuities
• Foreign stocks
• Foreign retirement accounts
• Assets within a foreign branch of the US

Is There a Due Date for Filing an FBAR?

Yes. The due date is the same as the federal tax deadline.

Does Everyone Need to File an FBAR?

No, not always. The rules and reporting regulations surrounding whether an FBAR needs to be filled out can be very confusing. It is best to consult with a tax attorney if you are unsure as to whether you need to fill one out, especially if you do have any income or assets in a foreign country.

What Will Happen if I Do Not File an FBAR and Should?

If you do not file an FBAR and you were supposed to, you will face penalties. These penalties are quite harsh too with penalties of up to $10,000 per violation. These penalties can be imposed even if you are unaware that you needed to file one.

Should you knowingly not file an FBAR, you can receive a penalty of up to $100,000 per violation.

Who Is Required to File an FBAR?

All U.S. individuals who are U.S. citizens, resident aliens, Green Card holders, and dual citizens are required to file an FBAR if they have foreign bank accounts with a combined total of $10,000 or more at any point in time throughout the year.

Leading Tax Group Can Help You with an FBAR Filing 

Whether you need to file an FBAR or simply need to know whether you should, the experts at Leading Tax Group can assist you. We have many years of experience helping taxpayers claim income and assets in foreign bank accounts. We know the ins and outs and exactly what you need to do to remain in compliance with all tax requirements.

Having an experienced tax team on your side such as Leading Tax Group will ensure that you get your taxes and FBAR filed on time and minimize your chances of an audit or penalties.

Don’t try to wait it out and see if you need to file an FBAR and contact Leading Tax Group today to discuss your present foreign income and assets.