What is the FBAR?
A US citizen is required to file an FBAR if they have financial accounts located outside the US and the total on deposit in all such financial accounts at any time during a calendar year exceeds $10,000. The FBAR is not an income tax filing, but an informational report that is filed separately from a US citizen’s income tax return. The FBAR is a calendar year report, which must be filed on or before June 30 of the year following the calendar year reported.
Who must file an FBAR?
A US citizen is required to file an FBAR if they had a financial interest in or signature authority over at least one financial account located outside the US and the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.
What is a financial account?
A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution. A financial account also includes a commodity futures or options account, an insurance policy with a cash value, an annuity with a cash value, and shares in a mutual fund or similar pooled fund.
What is a foreign financial account?
A foreign financial account is a financial account located outside of the US. For example, an account maintained with a branch of a US bank that is physically located outside of the US is a foreign financial account. An account maintained with a branch of a foreign bank that is physically located in the US is not a foreign financial account.
Are there extensions to file the FBAR?
No. There is no extension for filing the FBAR.
What are the penalties for failing to file the FBAR?
The penalty for non-willful failure to file the FBAR is an amount not to exceed $10,000 per account per year. A person who willfully fails to file the FBAR is subject to a penalty equal to the greater of $100,000 or 50 percent of the balance in the account at the time of the violation. Willful violations may also be subject to criminal penalties.
Can penalties for failure to file the FBAR be avoided?
If an individual can show reasonable cause for non-willful failure to file the FBAR and the balance in an account(s) are later properly reported, then the penalties can be waived. Voluntarily disclosing late FBAR filings will likely provide a US taxpayer with a better opportunity to have the penalties waived or reduced.