- 1 What is an FBAR?
- 2 When is the FBAR due
- 3 Can you extend the FBAR filing date?
- 4 Who should file an FBAR?
- 5 Children with foreign accounts
- 6 Spouses filing jointly
- 7 What types of accounts are required to be reported?
- 8 How do you covert the foreign currency to USD?
- 9 What if you do not have the maximum value of the account?
- 10 What happens if you forget to file an FBAR?
- 11 How to file an FBAR
What is an FBAR?
All United States tax residents are required to file FinCEN Form 114 if they have a a financial interest in, or signature or other authority over, foreign bank, securities, or other financial accounts, and whose total value, in the aggregate, at any time during the calendar year exceeds $10,000.
When is the FBAR due
The current year’s FBAR is due April 15th of the following year.
For example, if you have foreign financial accounts exceeding $10,000 in 2019, you are required to file an FBAR in 2020.
The FBAR must be filed every year that you exceed the reporting threshold.
Can you extend the FBAR filing date?
If you fail to file by April 15th, you are automatically given an extension to October 15th to file your FBAR. You do not have to request an extension. Treas. Reg. § 301.7701(b)-4(d).
Who should file an FBAR?
In the applicable Internal Revenue Code section, the FBAR filing requirement applies to all “United States Persons”. This includes:
- United States Citizens
- United States resident individuals*
- A person other than an individual (such as a corporation, partnership or trust), that is established or organized under the laws of a State or the United States
*Note that a United States resident is different than a ‘resident’ for immigration purposes. If you meet the substantial presence test, or if you elected to file married filing jointly, you’re considered a United States resident.
Children with foreign accounts
Generally,a child is responsible for filing his or her own FBAR report. If a child cannot file his or own FBAR for any reason, such as age, the child’s parent, guardian, or other legally responsible person must file it for the child.
If the child cannot sign his or her FBAR, a parent or guardian must electronically sign the child’s FBAR. In item 45 Filer Title, you would enter “Parent/Guardian filing for child.”.
Spouses filing jointly
In some cases, spouses with joint accounts may file jointly.
This is only possible where all accounts are jointly owned, or only one spouse has separate accounts (in addition to their joint accounts).
If both spouses have separate accounts (in addition to their joint accounts), then both must file an FBAR.
What types of accounts are required to be reported?
The FBAR requirements applies to foreign bank accounts, securities accounts, and other financial accounts.
A “foreign bank” is a bank organized under foreign law, or a bank agency, branch or office located outside the United States.
A “securities account,” meaning an account with a person engaged in the business of buying, selling, holding or trading stock or other securities.
An “other financial account” includes:
(i) An account with a person that is in the business of accepting deposits as a financial agency;
(ii) An account that is an insurance or annuity policy with a cash value;
(iii) An account with a person that acts as a broker or dealer for futures or options transactions in any commodity on or subject to the rules of a commodity exchange or association; or
(iv) An account with a mutual fund or similar pooled fund which issues shares available to the general public that have a regular net asset value determination and regular redemptions
How do you covert the foreign currency to USD?
When recording the maximum value of accounts, record all amounts as U.S. Dollar amounts rounded up to the next whole dollar.
Determine the maximum value of each account (in the currency of that account) during the calendar year being reported.
In the case of non-United States currency, convert the maximum account value for each account into United States dollars.
Convert foreign currency by using the Treasury’s Financial Management Service rate (select Exchange Rates under Reference & Guidance at (www.fms.treas.gov) for the last day of the calendar year.
What if you do not have the maximum value of the account?
You are allowed to estimate the maximum value.
The maximum value of an account is a reasonable approximation of the greatest value of currency or nonmonetary assets in the account during the calendar year.
Periodic account statements may be relied on to determine the maximum value of the account, provided that the statements fairly reflect the maximum account value during the calendar year. See FBAR- Electronic Filing Instructions at BSA.gov.
What happens if you forget to file an FBAR?
Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to civil monetary penalties.
A non-willful violation carries a maximum penalty of $10,000 per account, per year.
A willful failure to file an FBAR carries a maximum civil penalty that is the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Criminal penalties for a willful failure to file is $250,000 and/or 5 years imprisonment. Both civil and criminal penalties may be assessed for willful violations.
The Statute of Limitations (i.e., how far back the IRS can assess penalties) is 6 years from the due date of the FBAR.
There are a number of ways you can file delinquent FBARs. If you do not have any unreported foreign income and simply missed an FBAR filing, you can file it under the IRS’ Delinquent FBAR Procedures.
You can choose any one of the drop down options for your reason for filing late.
If you also have unreported income, you should speak with legal counsel. You may need to to file under the streamlined filing compliance procedures or make a voluntary disclosure.
How to file an FBAR
All FBARs must be filed electronically via the BSA E-filing System.
Visit the BSA E-filing System and click on ‘File FBAR’, then ‘File PDF FBAR’ or ‘File Online FBAR’.
Step 2: Fill out the FBAR
If you choose to file a PDF FBAR, then you’ll be prompted to download the FBAR. Otherwise, if you file an online FBAR, you’ll input the FBAR information directly on the BSA website.
PDF FBAR filing:
- Complete the FBAR
- Click ‘Sign the Form’ at the top of the PDF
- Save the PDF to your computer
- Return to the BSA screen as shown in Step 1. Click on Submit
- Fill in the requested information and upload the PDF.
- Click Submit.
Online FBAR filing:
- Complete the FBAR
- Click ‘Sign the Form’
- Click on ‘Submit’