Spoiler alert: If you don’t have ownership of or signing authority for foreign financial accounts, you may feel this doesn’t apply to you. But just because it doesn’t apply now, doesn’t mean it won’t sometime in the future, right?
An FBAR is a Foreign Bank Account Report that must be filed by US individuals
- whose foreign bank account assets have exceeded $10,000 at any time during the previous year; in other words, 2015 tax year,
- or who have signature authority without financial interest in a foreign financial account.
For the 2015 tax year, the FBAR deadline for filing is June 30th with no option for extension.
(FYI: next year the deadline is moving to April 15th with the usual six-month extension.)
If you are an individual who is required to file, you must submit Form 114 electronically at bsaefiling.fincen.treas.gov/or have your CPA or attorney submit the report on your behalf. The Treasury Department has made filing secure and convenient through its BSA E-Filing System. Pain only comes from failing to file. Penalties can put a large dent in your finances. *
As with everything, there are exceptions to the requirement. According to the IRS, these are filing exceptions for the following United States persons or foreign financial accounts:
- Certain foreign financial accounts jointly owned by spouses
- United States persons included in a consolidated FBAR
- Correspondent/Nostro accounts
- Foreign financial accounts owned by a governmental entity
- Foreign financial accounts owned by an international financial institution
- Owners and beneficiaries of U.S. IRAs
- Participants in and beneficiaries of tax-qualified retirement plans
- Certain individuals with signature authority over, but no financial interest in, a foreign financial account
- Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf of the trust)
- Foreign financial accounts maintained on a United States military banking facility.
Don’t lose sleep over this. Talk to a professional. Get answers to your questions. But don’t wait too long. The end of the month is fast approaching.
*Civil penalties for failing to properly file an FBAR range from up to US$10,000 per unreported account for non-willful violations, to the greater of US$100,000 or 50 percent of the account balance per year for a “willful” failure to properly report a foreign account