Foreign Bank Account Reporting (FBAR) Filing

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Foreign Bank Account Reporting (FBAR) Requirements

If you are a resident alien working in the U.S., it is likely that you have at least one bank account in another country. Unfortunately, your foreign bank account could result in disastrous legal consequences for you, including criminal charges, if you fail to fulfill the reporting requirements for your foreign assets.

If your foreign bank account has a balance that exceeds $10,000, you are required to report your account to the IRS. Failure to report your worldwide income can have a devastating effect on your life and your finances: You could face both criminal prosecution and a penalty of 27.5% of the balances in the accounts.

A foreign bank account report filing, or FBAR, is a filing separate from your federal tax return. It requires you to disclose all information regarding your foreign bank account, including balances, adjusted reported interest, and U.S. conversion metrics. FBAR filings are not only extremely time-sensitive, as criminal prosecutions happen quickly, but also extremely complicated. If done incorrectly, or not at all, you could lose much more than money: Your freedom and your ability to continue working in the U.S. could be seriously compromised.

Protect Your Assets at Home and Abroad

At Key Tax Group, we understand the urgency and importance of correctly filing your FBAR with the IRS. We specialize in FBAR cases and have the knowledge you need to protect your assets at home and abroad, we will get your FBAR filed fast to protect you and your assets. Our dedicated team of tax relief specialists, enrolled agents, and support staff have the experience and expertise to quickly get your accounts in compliance with IRS regulations before your financial future is jeopardized.

With your freedom, finances, and ability to work in the U.S. on the line, don’t let unreported assets ruin your chance of pursuing the American Dream.

Key Tax Group Can Help With FBAR Filings

We specialize in helping our clients to protect their assets abroad. Whether you live here in the U.S. or live abroad as an expat, the U.S. tax code can be quite complex and a bit overwhelming to tackle on your own. We have extensive tax law knowledge and experience which we can use to help you avoid some nasty pitfalls and penalties. That way, you can focus more on what matters to you.

If you’ve fallen behind on your FBAR filings, you need to file your first one, or you have some other questions about how to file an FBAR that weren’t covered here, Key Tax Group can help! We have FBAR attorneys who know how to help you handle your tax obligations.

Schedule a free, no-obligation consultation today to learn more about our firm and how we can help. We look forward to hearing from you.

FBAR FAQs

Do you have questions about filing a Report of Foreign Bank and Financial Accounts (FBAR)? Below are some commonly asked questions about this type of report.

What is an FBAR?

Who is required to file an FBAR?

During a calendar year, a U.S. person who has a financial interest in or a signature authority over at least one foreign financial account with an aggregate total amount of at least $10,000 must file a foreign bank account report.

For filing an FBAR, a “U.S. person” means one of the following:

A U.S. citizen;
A U.S. resident;
A trust or an estate created under U.S. laws;
An entity, such as an LLC, a corporation, or a partnership, created or organized in the U.S. or under U.S. laws, or
A non-resident alien who passes either the green card test or the substantial presence test.

What does having a “financial interest” mean?

When you have a financial interest in a financial account, it means that you’re the owner of record or holder of legal title of the account. This is true whether or not you’re maintaining the financial account for your benefit or for the benefit of someone else.

You’re considered to have a financial interest when the financial account is owned directly or indirectly by an entity in which you have more than 50 percent interest in the entity’s profits or where you are a trust grantor or the beneficiary of more than 50 percent of the trust.

What does “signature authority” mean?

What is a “financial account”?

For the purpose of an FBAR filing, a financial account can include the following:

Bank accounts - e.g., savings, checking, and time deposits.
Securities accounts - e.g., securities derivatives and brokerage accounts
Commodities futures or options accounts
Insurance policies with cash values - e.g., whole life insurance policy
Annuity policies with cash values
Mutual funds or similarly pooled funds
Any other accounts which are maintained in a foreign financial institution or a person who performs the services of a financial institution

What types of instruments or accounts are considered a “foreign financial account”?

Are there any exceptions to the FBAR filing requirement?

There are some exceptions to the filing requirements for an FBAR. For example, if you have an account in a U.S. military banking institution which is operated by a U.S. financial institution and created to serve the U.S. in another country, then this is not considered a foreign financial account, and thus there is no FBAR filing requirement for such an account.

Other accounts that require no FBAR filing include certain joint accounts owned by spouses, correspondent or nostro accounts, accounts owned by government entities, and accounts owned by international financial institutions such as the World Bank and the International Monetary Fund (IMF).

Other exceptions include the following:

A consolidated FBAR of which a U.S. person is a part but is not a greater than 50 percent owner.
An IRA owner or beneficiary
401(k), 403(a) or 403(b) participants or beneficiaries
A U.S. person who solely has a signature authority but no financial interest in a foreign financial account, such as a bank officer or employee.
Trust beneficiaries who have greater than a 50 percent financial interest in the trust’s assets of income if the trust, trustee, or agent of the trust is a U.S. person and files and FBAR

Can I submit my FBAR with my regular federal tax return?

When is my FBAR due?

What can happen if I don’t file an FBAR but have foreign accounts?

Failing to file an FBAR while having foreign financial accounts can result in some significant penalties. These penalties can either be civil penalties, criminal penalties, or both. The statute of limitations for imposing civil penalties for FBAR filing violations is up to six years after the violation date.

If you find that you have a delinquent FBAR, you must file it with the BSA E-Filing system as soon as possible. When you file, you’ll be given a change to explain your late filing. The IRS will then determine if your reason was justifiable (e.g., a natural disaster). After reviewing your reasons for a late filing, the IRS will then choose whether to impose a penalty or not.

For failing to file an FBAR, the IRS has a list of violations, which range from whether the non-filing was negligently to willfully done. There are also penalties for filing a false FBAR. Penalties increase in severity based on the type of violation. Note that civil penalties can be assessed for an amount which is larger than the account balance.

For negligent violations, civil penalties can be up to $1,078.
For non-willful violations, the civil penalties can be up to $12,459 for each negligent violation.
For willfully failing to file and FBAR, the civil penalties can be up to either $124,588 or 50 percent of the amount — whichever is greater. Criminal penalties can be up to $250,000, five years in federal prison, or both.
For willfully failing to file an FBAR along with other law violations, civil penalties can be either up to $100,000 or 50 percent of the amount — whichever is greater. Criminal penalties can be up to $500,000, 10 years in federal prison, or both.
For knowingly and willfully filing a false FBAR, the civil penalties are the greater of $100,000 or 50 percent of the financial account — whichever is greater. Criminal penalties can be up to $10,000, five years in federal prison, or both.

What kinds of recordkeeping should I be doing regarding the FBAR?

Account records for FBAR filings should be kept for five years from the due date, which is typically April 15th after the calendar year being reported.

Records should include account name, account number, account type, name and address of the foreign bank or person maintaining the account, and the maximum value of every account being reported on during the reported year. Also, keeping a copy of your FBAR filing should be enough for recordkeeping. Failure to keep proper FBAR records may result in civil penalties, criminal penalties, or both.