Taxpayers with Foreign Assets May Have to File FBAR and FATCA
Who needs to file an FBAR? Do you have a foreign bank account? Was the balance in your account(s) greater than $10,000 in total ? If the answer is yes to both, a U.S. taxpayer must file an "FBAR," a Foreign Bank Account Report. The new name of "FBAR" is FinCEN Report 114. FinCEN is an acronym for Financial Crimes Enforcement Network. If you have a very high balance in your foreign account, you must also file IRS Form 8938, Statement of Specified Foreign Financial Assets.
The filing deadline for the Foreign Bank Account Report (FBAR) has changed! To ensure U.S. taxpayers pay income taxes on their worldwide income, the Financial Crimes Enforcement Network (FinCEN) developed the FBAR. In the past, this form was due on June 30, but starting 2016 calendar year, the form will be due by the due date of the federal income tax return – April 15 (April 18th in this year 2017).
The threshold for the filing requirement is for a U.S. taxpayer with the aggregate value of all foreign account balances (Bank accounts, Savings accounts, Investment accounts, Securities accounts, Mutual Funds. Foreign Trusts, Foreign Retirement Plans, Foreign Business and/or Corporate Accounts, Foreign-issued life insurance or annuity contracts with cash value, Foreign Accounts held in a Controlled Foreign Corporation, or Foreign Accounts held in a Passive Foreign Investment Company) that exceed $10,000 at any point of time during the calendar year. Once your foreign accounts exceed $10,000 in total, you must report all of the foreign accounts.
A U.S. taxpayer includes a United States citizen, Legal Permanent Resident (Green Card holder), or a U.S. visa holder who meets the Substantial Presence Test.
The FBAR is filed every year to the US Treasury Department via FinCEN (not to the IRS). The FBAR does not generate any additional tax — it simply exists as a reporting requirement. This “Disclosure” prevents the hiding of foreign assets and income as a way to avoid US income tax. Failure to file the FBAR can result in significant civil and/or criminal penalties.
If you were liable to file FBARs but you did not know you had to, you may qualify for the IRS voluntary disclosure program called the Streamlined Procedure, which is penalty free.
If you are unsure as to whether you need to file the FBAR, the IRS Web site should help you, but you can also visit www.srjtax.com if you need FBAR filing services.