March 11, 2021 | FBAR
Things You Need to Know About FBAR ReportingFBAR stands for Foreign Bank Account Report or Report of Foreign Bank and Financial Accounts. As the name suggests, it refers to reporting certain foreign bank accounts to the Treasury Department of the United States of America. In extended terms, under the Bank Secrecy Act, FBAR is the legal procedure that needs to be complied with by every US citizen, resident, corporation, partnership, limited liability company, trust, and estate who have foreign bank accounts. They are required to report all their foreign accounts such as bank accounts, brokerage accounts, and mutual funds to the Treasury Department. To report their foreign accounts, they need to file FBAR on FinCEN form 114. Generally, when it comes to federal income tax return filing, everyone stays up during the tax season. But when it is about FBAR reporting, people often take it lightly. And this could result in heavy penalties and criminal charges. So, it is very important to understand the seriousness of the Report of Foreign Bank and Financial Accounts. In this piece of writing, we have compiled a few very important things you need to know about FBAR. Let’s take a look below.
FBAR- Things to KnowWho Needs To File An FBAR- As a US citizen, resident, corporation, partnership, limited liability company, trust, and estate, you need to file an FBAR if you have financial interest and authority over one or more offshore accounts. However, you only need to file an FBAR when the aggregate amount of your foreign account touches or exceeds $10,000 at any point in a calendar year. One thing you must keep in mind is whether or not your foreign accounts produce taxable income, you still need to file an FBAR if your foreign accounts touch or exceed the aggregate amount of $10,000 at any point of a calendar year. When to File An FBAR- Like tax filing, FBAR is also an annual report, must be filed by the annual due date or extended due date. Every year, 15 April is the annual due date for FBAR filing. It will automatically extend if you fail to report an FBAR. You don’t need to request an extension if you fail to report it by the due date as you are automatically allowed for it. If any natural disaster affected your FBAR filing, the government may further extend the due date of FBAR filing for you. However, it is very important to learn all the relevant information related to it. If you face any difficulties to understand the FBAR filing procedure, you must take professional assistance from the FBAR lawyers. They will certainly help you with this and smartly handle your FBAR reporting matter. What You Don’t Need to Report- You don’t need to file your foreign bank accounts if:
- They are Correspondent/Nostro accounts,
- The governmental entity owns them
- An international financial institution owns them
- The United States military banking facility maintain them
- They are held in an individual retirement account (IRA) you own or are beneficiary of
- They are held in a retirement plan of which you’re a participant or beneficiary
- They are a part of a trust of which you’re a beneficiary
- You reported all your offshore accounts on consolidated FBAR.
- All your offshore accounts are jointly owned by you and your spouse, and you authorized your spouse to file FBAR on your behalf by completing and signing FinCEN form 114a, and your spouse timely reported all jointly owned accounts.
- For a non-willful violation of foreign financial agency transactions, the IRS will levy a maximum of $12, 921 penalties.
- For a willful violation of foreign financial agency transactions, the IRS will levies a greater of $129,210 or 50% of the amount per 31 U.S.C.5321(a)(5)(D) penalty.
- For a negligent violation by a financial institution or nonfinancial trade or business, the IRS will levy a maximum of $ 1,118 penalty.
- For a pattern of negligent activity by a financial institution or nonfinancial trade or business, the IRS will levy a maximum of $86, 976 penalties.