What is an FBAR
As Per the Bank Secrecy Act, every year you must report certain foreign financial accounts to the Treasury Department and keep records of those accounts. You report the accounts by filing a Report of Foreign Bank and Financial Accounts (FBAR) on Financial Crimes Enforcement Network (FinCEN) Form 114.
Those who must file an FBAR and fail to timely file a complete and correct FBAR may be subject to civil monetary penalties, criminal penalties, or both.
A financial account maintained with a financial institution located outside of the U.S. is a foreign financial account. It is the location of the account, not the nationality of the financial institution, that determines whether an account is “foreign” for FBAR purposes.
You need to report:
• Bank Accounts, FDs, Joint accounts with anybody, Signatories in any bank accounts.
• Foreign Financial assets like stock / securities
• Assets in a foreign branch of a U.S. financial institution
• Foreign mutual funds, life insurance or annuity contract
• Foreign retirement accounts
• Accounts that you don’t own but are able to control
Who Files an FBAR
Whether you live in the U.S. or abroad, if you are a U.S. person (U.S. citizens, Green Card holders, resident aliens) you are required to file FinCEN Form 114 (an FBAR) if the combined balance of all the foreign accounts you own or have a financial interest or signature authority is more than $10,000 at any point during the calendar year.
• Financial interest is determined based upon who is the owner of record or legal title.
• Signature authority means that you have some level of control over the disposition of assets through direct communication with the institution. For example, if you’re a signatory on an employer’s foreign bank account, you have signature authority and should report the account on your FBAR.
When to file FBAR
The FBAR is an annual report, due April 15 following the calendar year reported. To avoid penalties, file your FINCEN report by the Due Date (You’re allowed an automatic extension to October 15.
For Further questions reach out to your Tax Expert.
Monika Agrawal