About FBAR Requirements: What is the FBAR (also known as FinCen Form 114), and why is it so important? An FBAR is a report filed with the Financial Crimes Enforcement Network which is part of the Department of Treasury to disclose your foreign financial accounts. The Department of Treasury is not the same as the IRS, but this information does link closely with your income tax return. It is a separate filing from your tax return, but the due date for the FBAR mirrors your individual return. The standard due date is April 15th, but if you are outside of the country in April then the automatic two-month extension to June 15th applies to both your income tax return and your FBAR filing. If you file for an additional extension to October 15th it will apply to both your tax return and FBAR filings.
If you have signing authority (or actual ownership) over foreign bank accounts that combined totaled $10,000 on any day of the year, you are required to file the FBAR. Sometimes that means a checking and savings account in a foreign country, sometimes that could be signing authority on accounts for your parents who might not even be US citizens and live in a foreign country.
So what types of information need to be reported on an FBAR? The name and address of the financial institution, the account number, type of account, and the highest balance during the year need to be reported for each and every account. You also need to disclose who the other owners of the account are, like if you have a joint account with your spouse or you just have signing authority over a child’s account or perhaps a relative’s account.
One of the key aspects to the FBAR are the penalties for not filing. If the Department of Treasury feels you have willfully failed to file the FBAR, the penalty is the greater of $100,000 per year or 50% of the account balance a year. That is an incredible penalty for willful failure to file. Even the penalty for non-willful is $10,000 per year. It’s better to not get behind in the first place, but if you do there is a Streamline disclosure program available to get caught up on your old FBAR filings, but that’s for another post.