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Americans Living Abroad
What is an FBAR?
An FBAR is a Report of Foreign Financial Accounts.
Do I need to file an FBAR?
An FBAR must be filed by any United States person who has a financial interest, signature authority or “other” authority over financial accounts in a foreign country (all geographic areas outside of the United States, Puerto Rico, the Northern Mariano Islands, and any territories or possessions of the United States), as long as the total value of all accounts exceeds the amount of $10,000 during the calendar year.
Who qualifies as a “United States” person”?
The term refers to a citizen or resident of the United States, a domestic partnership, a domestic corporation, and a domestic estate or trust.
What happens if you are required to file an FBAR but fail to do so?
If you fail to file a required FBAR, you could be subject to serious penalties—civil, criminal or both. Those who have failed to file FBAR returns in previous years should file the delinquent returns, along with an explanation as to why they are late.
Do my wife and I need to file more than one form if we own a joint account?
No, the IRS only requires that both names and Social Security numbers of the joint owners are clearly indicated on the FBAR. Spouses with joint financial interests should be included as a joint account number in the third section of the FBAR filing. If the only reportable accounts for the spouse are the accounts in which the spouse is listed as a joint owner, no additional filings will be necessary.
What does it mean to have authority or signature over an account?
In order to determine whether an individual has a signature authority over an account, the IRS examines whether the person controls how the funds or property are disposed. Authority also exists in a person who can exercise a similar authority to the signature authority over an account that is maintained at a bank. This authority can be oral or by other means.
What happens if I am an account holder who is required to file an FBAR, but I do not?
If you fail to file an FBAR, you may face civil and/or criminal penalties. If you learn that you were previously required to file FBARs and you have not previously done so, the IRS suggests that you file the delinquent returns. It would be beneficial to include a statement explaining why the returns were not filed in the past. If the IRS agrees that there was a reasonable cause behind your failure to file, it will not assert penalties.
Am I required to file an FBAR if my foreign bank account does not generate interest or dividend income?
Yes, filing an FBAR is required, regardless of whether interest or dividends are generated.
Is an FBAR required, even if the assets held in the financial institution are noncash?
Yes, the IRS requires an FBAR for any account, whether it holds cash or other assets that are noncash, such as gold.
When is the FBAR due?
The filing date for an FBAR is June 30 each year that you have an account with an aggregate balance over $10,000 at any point during the year.
Where can I find the FBAR forms I am required to file?
The FBAR forms can be found on the IRS website. Consulting with an experienced tax professional when dealing with FBAR issues is also important, as knowledge about proper disclosure is essential.
How long should I keep my foreign account records?
Foreign account holders are required to maintain records for a period of five years. If records are not maintained, the account holder could face penalties—civil, criminal, or both.
If I have authority regarding how an account is invested, but I do not have disbursement authority over the account, do I still need to file an FBAR?
No. Disbursement authority over an account is essential in assessing the need to file an FBAR.
If I am a UBS account holder, am I still eligible for the Voluntary Disclosure Program? I have not disclosed the income on my 1040, nor have I previously filed any FBARs.
The Voluntary Disclosure Program, part of the IRS Criminal Investigation unit, is a continuous program of timely and accurate disclosure of accounts that the IRS will then use to determine whether or not criminal prosecution is required. It allows taxpayers who have been previously noncompliant to resolve their liabilities and minimize the chances of criminal prosecution. If the taxpayer is compliant with all provisions of the Voluntary Disclosure Practice, the taxpayer will not be recommended for prosecution to the Department of Justice. Consult with your tax professional when considering this program.
What are the exceptions to the FBAR filing requirements?
According to the IRS, “accounts in U.S. military banking facilities, operated by a United States financial institution to serve U.S. government installations abroad, are not considered as accounts in a foreign country;” therefore, holders of such accounts are not required to file FBARs.
See What the IRS Has to Say About Americans Living Abroad:
https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad
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