Non-U.S. Citizen FBAR Filing – IRS & FinCEN Non-U.S. Citizen FBAR Tips
In fact, all U.S. persons can be subject to FBAR filing requirements – whether or not they reside in United States or outside of United States, and whether or not they are a U.S. citizen or not.
Any U.S. person who has foreign accounts that exceed $10,000 in an annual aggregate total (on any given day of the year) may be required to file an FBAR (exceptions and exclusions may apply).
This is inclusive of non-US citizens who may have U.S. status for tax purposes, either because they are a Legal Permanent Resident (Green Card Holder), or they met the Substantial Presence Test.
Non-U.S. Citizen FBAR Filing
Non-U.S. Citizens with foreign accounts may have to file an FBAR. Presuming you are (unfortunately) one of the Non-U.S. Citizens who meets this threshold requirement, we wanted to provide you with some guidance — and some free tips for filing.
5 Tips for Non-U.S. Citizen FBAR Filing
Here are five tips to assist non- US citizens who have an FBAR filing requirement:
Accounts that Pre-Date U.S. Status
First, it is important to note that the filing is not limited to account you may have opened, inherited, or otherwise gained signature authority over after receiving U.S. status. Rather, you are required to disclose all of your accounts at the time you file (whether or not they pre-dated U.S. status).
For example, if you had seven foreign bank accounts prior to receiving your US status, but you currently have 12 foreign accounts because you opened up five more accounts overseas since becoming a U.S. person – your total accounts will be 12, not five (5).
Non-Income Earning Accounts
Just because an account may not be generating any income such as interest, dividends, or capital gain does not mean the account is excluded from reporting. You have to report all of your qualified accounts, regardless of whether the account generated any income or not
If you have a joint account with either a U.S. person or non-US person, you are required to include this account on your FBAR. And, you’re required to report the full amount of the account — not just your respective share.
Therefore, if you have a joint account ownership with a relative on an account valued at a half of million dollars, but only $40,000 of it is your money — you would still report the $500,000 as a total account value.
Practice Pointer: when this type of situation happens, individuals get concerned and rightfully so. This does not mean the IRS presumes that even half of the money in the account is yours. The FBAR is merely a reporting form and therefore, the purpose of the form is to report foreign accounts of which you may have ownership interest or signature authority – but it does not presume all of the money into joint account is necessarily split 50-50.
If you have signature authority over a foreign account(s), you include these accounts as well.
This is very common and situations in which an elderly parent or relative may have placed you on the account as a signatory in case of incapacitation or emergency. Alternatively, your employer may have placed you on some of the business accounts because you are tasked with writing checks and/or issuing payments from an account for your employer.
Practice Pointer: if you have to submit to one of the amnesty programs or reasonable cause, the accounts in which you do not have ownership of the money, but merely signature authority is not included in your penalty base.
Non-FATCA Country Accounts
Just because the United States may not have entered into a FATCA agreement with a particular country in which you maintain accounts does not mean the account is excluded from the FBAR.
FBAR and FATCA are two entirely different beasts, each with their own unique reporting requirements, exceptions, limitations and exclusions.
Practice Pointer: It is important to note that some Banks in non-FATCA countries also report to the IRS, so if you’re going to file the FBAR, you should include all the accounts and not try to “cherry pick” certain accounts to include, or exclude thinking you would not get caught, since this can lead to a willful penalty.
Getting Into IRS Offshore Compliance
It is human nature to want to avoid making a proactive submission to a government agency such as the IRS before the IRS ever discovers the non-compliance. But, typically that is best path forward.
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Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.