Filing of Foreign Bank Account Report (FBAR) form or FinCEN Form 114 to the U.S. Treasury Department is a requirement for all United States citizens with foreign financial accounts that holds an aggregate value of more than $10,000 in balance at any time during the calendar year.
Failure to file this form can lead to penalties that may include hefty fines and criminal prosecution.
The purpose of the form is to prevent people from evading US income tax by hiding assets and income offshore.
The Foreign Bank Account Report (FBAR) Form is an old name for the FinCEN Form 114, the Financial Crimes Enforcement Network, an agency of the U.S. Treasury Department.
FinCEN 114 is not a tax form although it is administered by the U.S. Treasury Department. It does not generate taxes to be paid. It is for informational purposes.
The form primarily reports your foreign bank information to the U.S. Treasury Department each year.
If you have a financial interest or have signature authority over foreign financial accounts, you may be required to file an FBAR if the total balance on your foreign accounts exceeds $10,000 even for a day during the year.
The foreign financial accounts can be checking or savings accounts, brokerage accounts, securities, deposits, time deposits, demand, unit trusts, or any other account held with a financial institution. It also includes a commodity futures or options account, an insurance policy with a cash value (whole-life insurance policy), an annuity policy with a cash value, and mutual funds.
You will have to use the U.S. Treasury's Financial Management Service rate and click on Exchange Rates under Reference & Guidance at the Bureau of the Fiscal Service as of December 31st of the year in question and convert your balances in your foreign accounts to USD before entering it on the FBAR form.
In case you are not able to get the Treasury Financial Management Service rate, use a verifiable exchange rate and provide the source of the rate you used for the currency conversion.
You need not actually convert the financial funds to USD. Convert the total balances to USD only on paper for filing the report.
Individual Foreign Account Holders: U.S. persons (U.S. citizens/Resident Aliens- green card holders)
Joint Foreign Account Holders
U.S. Companies with Foreign Accounts
All FBAR forms must be filed electronically through the FinCEN's website.
Individual FBAR filers can electronically file through the BSA E-Filing System without the need to register for a BSA E-Filing account. Filing is mandatory for all U.S. persons, regardless of age and circumstances. The guardians of minor children may file the FBAR form on behalf of their children.
Joint account holders are required to file separate FBAR forms, each person mentioning the full balance on the joint account. Spouses with only jointly held accounts may be able to file a joint FBAR form if neither of them has individual foreign accounts.
FBARs can also be filed on your behalf and/or owner of the foreign accounts by a professional tax preparer or a CPA (Certified Public Accountant). The filer or the owner, however, must complete and maintain a record of FinCEN Form 114a, FinCEN BSA E-Filing Signature Authorization Record, to authorize the third-party filing.
Spouses filing a joint FBAR can also use Form 114a to identify which spouse is signing the report.
The completed FinCEN Form 114a need not be included when filing. But you have to show it if the IRS asks for it.
In case you are the third party preparer filing on behalf of a client, you need to register to Become a BSA E-Filer and file as an institution and not as an individual.
If you need any assistance with the filing process, you can contact the BSA E-Filing Help Desk at 1-866-346-9478 (option 1) or send an email to BSAEFilingHelp@fincen.gov.
The FBAR Form can only be filed online and is due April 15th. An automatic extension until October 15 is available for U.S. citizens living abroad. You cannot request an extension for filing FinCEN Form 114.
The FinCEN Form 114 has nothing to do with your tax return.
Make sure the following information is entered correctly when filing your form. Follow the instructions to avoid any mistakes.
Name, Social Security Number (SSN) or ITIN,
address of the account holder (individual/joint)
Name of the Foreign banks and addresses
Account Type: Bank, securities, etc.
Account numbers of all the foreign accounts
The maximum balance (in USD) of the foreign financial accounts during the year
If a person intentionally violates the FBAR reporting rules, the penalties are greater than $128,210, or 50% of the account value at the time of the violation. Willful violations include knowing and careless violations and may be subject to criminal prosecution.
Account-holders or persons with signature authority over a bank account in U.S. military financial institutions operated by the United States to serve U.S. government operations abroad. These accounts are not considered foreign accounts, hence do not have to file the FBAR form
Employees/ officers of a bank that is under the supervision of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and if the employee or the officers have no personal interest in the bank account
Employees or officers of a domestic corporation whose equity securities are listed on a national securities exchange or which has assets exceeding $10 M and 500 or above shareholders of record and have no personal interest in these securities.
Is FCAR reporting required when transferring money from a foreign account to the United States?
If you are transferring more than $10,000 from your foreign account to the U.S., make sure your report to the IRS to avoid penalties. Any U.S. person with foreign accounts under their name needs to stay in compliance with the FBAR reporting rules.
Can I open accounts that have below $10,000 to avoid FBAR filing?
If the aggregate value of the accounts exceeds $10,000, you have to file an FBAR and mention all the accounts on the form.
Also, intentionally keeping your account balances at a certain amount to avoid detection by the U.S. government is considered a crime referred to as smurfing and/or structuring.
What is the maximum balance of the account?
The largest amount of currency and non-monetary assets in the account at any time during the calendar year is the maximum balance of the account. If the balance exceeds $10,000 even temporarily, It must be reported.
How does the U.S. Government know if certain foreign financial assets are not being reported?
The U.S. has entered into information-sharing agreements with Foreign Financial Institutions (FFIs) in 39 countries and is in the process of finalizing the same agreements with 62 more countries. The participating FFIs will report certain information on accounts held by U.S. citizens. The foreign bank account details shared by the FFIs will help in detecting the violators.