- 1 FBAR Filing Requirements
- 2 Common FBAR Questions & Answers (FAQ)
- 3 What is FBAR (FinCEN Form 114)?
- 4 Who Has to File the FBAR?
- 5 What is the Threshold for Filing FBAR?
- 6 What Types of Accounts are Reported on FBAR?
- 7 Who Must File the FBAR?
- 8 When is the FBAR Due Date?
- 9 How do I File the FBAR?
- 10 Why are the FBAR Instructions so Confusing?
- 11 What if I Missed the FBAR Deadline?
- 12 What are the FBAR Penalties?
- 13 How does IRS Know I Didn’t File FBAR?
- 14 What is FBAR Amnesty?
- 15 Golding & Golding: About Our International Tax Law Firm
- 16 Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
FBAR Filing Requirements
FBAR Filing Requirements: The FBAR is an international information reporting form that is enforced by the IRS. Technically, it is referred to as the “Foreign Bank and Financial Account Form” or “FinCEN Form 114.” The FBAR Filing Requirement is not territorial, and is required whether you live in the U.S. or abroad. It is required for any U.S. person who meets the threshold for filing. In other words, whether you are U.S. Citizen, Legal Permanent Resident or Foreign National who meets the substantial present test — you may have an FBAR reporting requirements.
In recent years, the IRS has launched an aggressive campaign in support of foreign accounts compliance. But, they have also created various FBAR Amnesty or”offshore disclosure” programs designed to reduce and minimize offshore penalties.
We will summarize the FBAR Reporting Requirements with a 10-step filing process below.
We have also a Common FBAR Questions and Answer page on the most Frequently received questions on Foreign Accounts Compliance.
You can always search our free online International Tax Law library if you have additional questions.
Common FBAR Questions & Answers (FAQ)
Questions about the FBAR can 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
What is the Threshold for Filing FBAR?
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.
What Types of 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
Who Must File the FBAR?
Anyone who meets the +$10,000 threshold must file the FBAR.
One very confusing aspect of the FBAR, is that you have to file the form even if you are not required to file a tax return in the current year.
It is an entirely separate reporting requirement.
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.
When is the FBAR Due Date?
The FBAR is due in April, but is on automatic extension through October. (this may change in the future).
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.
Why are the FBAR Instructions so Confusing?
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.
What if I Missed the FBAR Deadline?
You may be subject to penalties, but there are several 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.
How does IRS Know I Didn’t File FBAR?
The IRS has many different ways to find you.
Maybe someone else disclosed an account you own jointly with them, or already submitted to the FBAR Amnesty program.
More commonly, with the introduction of FATCA (Foreign Account Tax Compliance Act) more than 110 countries and 300,000 Foreign Financial Institutions are actively reporting U.S. persons with foreign account relationships.
What is FBAR Amnesty?
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.