FBAR 2020: The FBAR is the Foreign Bank and Financial Account Reporting Form (aka FinCEN 114). The IRS requirements for submitting the FBAR in 2020 are not much different than what was required to be filed in prior years, but there are some recent clarifications to be aware of. The reason FBAR filing is so important, is that in recent years, the IRS has made foreign accounts compliance a key enforcement priority. The failure to timely report the FBAR may result in fines and penalties. This post will serve as a (brief) refresher as to why Foreign Bank Account Reporting should remain on your radar.
10 Common FBAR Questions & Answers (FAQ)
Questions about the FBAR can go on indefinitely — there is just that much to know.
Here are 10 of the more common questions we receive:
What is FBAR (FinCEN Form 114)?
The FBAR is an electronic form used in accordance with Title 31 (AML: Anti-Money Laundering).
The form was first introduced 50-years ago to help the U.S. Government track foreign accounts.
As provided by the IRS:
“FBAR refers to Form 114, Report of Foreign Bank and Financial Accounts, that must be filed with the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the Treasury Department.
The form must be filed electronically and is only available online through the BSA E-FilingSystem website...The FBAR filing requirement is not part of filing a tax return.
The FBAR Form 114 is filed separately and directly with FinCEN….FBAR filings have surged in recent years, according to data from FinCEN…”
Who Has to File the FBAR?
Any person who meets the threshold for filing an FBAR may have to file.
The threshold is “if the annual aggregate total of foreign accounts exceeds more than $10,000 on any day of the year.”
Also, it is more than just individuals who have to file the FBAR; it also includes:
- Other entities.
A few key takeaways:
- It is not $10,000 per account, but rather an annual aggregate total
- It includes joint and signature authority accounts.
- It is required even if the person does not have a tax return filing requirement.
- It doesn’t matter if the account pre-dates becoming a U.S. person
Do Individuals File FBAR?
Yes, Individuals file an annual FBAR.
Do Entities File FBAR?
Yep, entities file the FBAR too.
What About Minors, do they File FBAR?
Yes. There is no minor’s exception to filing the FBAR.
How about Trust and Estates, Do they File FBAR Too?
Yes, there is no exception for Trusts and Estates either.
What is the FBAR Filing Due Date?
The FBAR is due in April, but is on automatic extension through October. (this may change in the future).
What’s the FBAR Filing Threshold?
If a Person has an annual aggregate total across all accounts (not per account total) that exceeds more than $10,000 on any given day of the year, the FBAR reporting rules kick-in and the form must be filed.
The +$10,000 is not a per account requirement, but rather +$10,000 in total for all accounts combined.
Which Foreign Accounts are Reported on FBAR?
All different types of accounts are FBAR reportable.
The FBAR requires you report the majority of foreign bank and financial accounts.
It is important to note it is not limited to just bank accounts.
It may also include:
- Investment Accounts
- Pension Accounts
- Stock Accounts
- Life Insurance
How do I File the FBAR?
Individuals can go to the FinCEN.org website, download the PDF, save it to their computer, and submit directly from the form itself.
Need Help with FBAR Instructions?
We don’t know why they make it so hard, but we have prepared our own set of FBAR Instructions as 10-step guide to try to help you understand the requirements for filing.
Are there Late FBAR Penalties?
Yes, but there are FBAR Amnesty programs to assist you.
Beware of attorneys trying to scare you.
Always be careful of self-purported “FBAR Experts.”
What are the FBAR Penalties?
The FBAR Penalties range extensively.
Some people get away with a warning letter in lieu of penalties.
Others can get hit with willfulness penalties, BUT most people are non-willful, and those penalties are more limited.
It is extremely rare for an FBAR violation to turn criminal.
Can I Avoid FBAR Penalties?
You may be able to avoid or limit penalties.
FBAR Amnesty is an approved method for safely getting into compliance.
Many taxpayers can reduce or even avoid penalties altogether.
Please beware of any tax professional that recommends a quiet disclosure — those are illegal and may result in an IRS Special Agent Investigation (read: not good)
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.