FBAR – Foreign Bank Account Report
You must also report on your U.S. tax return whether you have any foreign bank or investment accounts. The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:
The FBAR is a calendar year report and must be filed on or before April 15 of the year following the calendar year being reported. Effective July 1, 2013, the FBAR must be filed electronically through FinCEN’s BSA E-Filing System. The FBAR is not filed with a federal tax return. A filing extension, granted by the IRS to file an income tax return, does not extend the time to file an FBAR. There is no provision to request an extension of time to file an FBAR.
A person required to file an FBAR who fails to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50% of the balance in the account at the time of the violation, for each violation.
Unmarried individual residing in the United States are required to file Form 8938 if the market value of their foreign financial assets is greater than $50,000 on last day of year or greater than $75,000 at any time during the year.
• Married individuals filing jointly and residing in the United States are required to file Form 8938 if the market value of their foreign financial assets is greater than $100,000 on last day of year or greater than $150,000 at any time during the year.
• Married individuals filing separately and residing in the United States are required to file Form 8938 if the market value of their foreign financial assets is greater than $50,000 on last day of the year or greater than $75,000 at any time during the year.
• Unmarried individual residing outside the United States and satisfying either the bona fide resident or physical presence tests are required to file Form 8938 if the market value of their foreign financial assets is greater than $200,000 on last day of year or greater than $300,000 at any time during the year.
• Married individuals filing jointly residing outside the United States and satisfying either the bona fide resident or physical presence tests are required to file Form 8938 if the market value of their foreign financial assets is greater than $400,000 on last day of year or greater than $600,000 at any time during the year.
• Married individuals filing separately and residing outside the United States and satisfying either the bona fide resident or physical presence tests are required to file Form 8938 if the market value of their foreign financial assets is greater than $200,000 on last day of year or greater than $300,000 at any time during the year.
Reporting of Specified Foreign Financial Assets
Penalties Relating to Form 8938
The IRS can impose a $10,000 penalty for failing to file Form 8938 by the due date of the tax return (including extensions), or for filing an incomplete or inaccurate Form 8938. If the Form 8938 has not been filed within 90 days of a formal notice by the IRS, then the IRS can assess additional penalties of $10,000 for each 30-day period (or part of a 30-day period) that the Form 8938 continues to be not-filed, up to a maximum penalty of $50,000.
If no Form 8938 is filed and the IRS determines that a taxpayer owns one or more foreign financial assets required to be reported, the IRS is allowed to presume that the foreign financial asset has sufficient value to meet the reporting thresholds. Penalties can be waived if the taxpayer can show reasonable cause for not reporting an asset on Form 8938.
You must also report on your U.S. tax return whether you have any foreign bank or investment accounts. The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:
- You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and
- The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.
- Reporting and Filing Information A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income. The reporting obligation is met by answering questions on a tax return about foreign accounts (for example, the questions about foreign accounts on Form 1040 Schedule B) and by filing an FBAR.
The FBAR is a calendar year report and must be filed on or before April 15 of the year following the calendar year being reported. Effective July 1, 2013, the FBAR must be filed electronically through FinCEN’s BSA E-Filing System. The FBAR is not filed with a federal tax return. A filing extension, granted by the IRS to file an income tax return, does not extend the time to file an FBAR. There is no provision to request an extension of time to file an FBAR.
A person required to file an FBAR who fails to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50% of the balance in the account at the time of the violation, for each violation.
Unmarried individual residing in the United States are required to file Form 8938 if the market value of their foreign financial assets is greater than $50,000 on last day of year or greater than $75,000 at any time during the year.
• Married individuals filing jointly and residing in the United States are required to file Form 8938 if the market value of their foreign financial assets is greater than $100,000 on last day of year or greater than $150,000 at any time during the year.
• Married individuals filing separately and residing in the United States are required to file Form 8938 if the market value of their foreign financial assets is greater than $50,000 on last day of the year or greater than $75,000 at any time during the year.
• Unmarried individual residing outside the United States and satisfying either the bona fide resident or physical presence tests are required to file Form 8938 if the market value of their foreign financial assets is greater than $200,000 on last day of year or greater than $300,000 at any time during the year.
• Married individuals filing jointly residing outside the United States and satisfying either the bona fide resident or physical presence tests are required to file Form 8938 if the market value of their foreign financial assets is greater than $400,000 on last day of year or greater than $600,000 at any time during the year.
• Married individuals filing separately and residing outside the United States and satisfying either the bona fide resident or physical presence tests are required to file Form 8938 if the market value of their foreign financial assets is greater than $200,000 on last day of year or greater than $300,000 at any time during the year.
Reporting of Specified Foreign Financial Assets
Penalties Relating to Form 8938
The IRS can impose a $10,000 penalty for failing to file Form 8938 by the due date of the tax return (including extensions), or for filing an incomplete or inaccurate Form 8938. If the Form 8938 has not been filed within 90 days of a formal notice by the IRS, then the IRS can assess additional penalties of $10,000 for each 30-day period (or part of a 30-day period) that the Form 8938 continues to be not-filed, up to a maximum penalty of $50,000.
If no Form 8938 is filed and the IRS determines that a taxpayer owns one or more foreign financial assets required to be reported, the IRS is allowed to presume that the foreign financial asset has sufficient value to meet the reporting thresholds. Penalties can be waived if the taxpayer can show reasonable cause for not reporting an asset on Form 8938.