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How to Report Money in Foreign Bank Accounts, FBAR?

FBAR stands for Foreign Bank Account Report, which is a form that U.S. citizens, residents, and entities must file with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury if they have a financial interest in or signature authority over foreign financial accounts that exceed certain thresholds at any point during the year.

The FBAR filling requirement applies to bank accounts, brokerage accounts, mutual funds, and other types of financial accounts held outside of the United States. The threshold for filing an FBAR is $10,000 or more in aggregate value of all foreign financial accounts held by a U.S. person or entity.

The purpose of the FBAR is to help the U.S. government detect and prevent tax evasion, money laundering, and other financial crimes that involve the use of foreign accounts. Failure to file an FBAR can result in significant penalties and legal consequences.

 

Is the FBAR Filing Requirement Mandatory?

US citizens and residents who have a financial interest in or signature authority over one or more foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year are required to file a Report of Foreign Bank and Financial Accounts (FBAR) with the Financial Crimes Enforcement Network (FinCEN).

The FBAR is required to be filed annually, separate from your tax return, and is due on April 15th of the following year. However, there is an automatic extension to October 15th of the same year to file the FBAR.

The FBAR should include information about the account holder, the account number, the name and address of the foreign financial institution, and the maximum value of the account during the year. It is important to note that the FBAR reporting requirement is separate from the requirement to report foreign financial assets on the taxpayer’s US tax return.

Failure to file the FBAR or filing an incomplete or inaccurate FBAR can result in significant civil and criminal penalties, including fines, imprisonment, and forfeiture of assets. Therefore, it is important to comply with the FBAR filling requirement and seek professional advice if you have any questions or concerns about your filing obligations.

 

FBAR Filing Instructions

FBAR stands for Foreign Bank Account Report, which is a form that certain U.S. persons must file with the U.S. Treasury Department to report their financial interest in or signature authority over foreign financial accounts. Here are the instructions for filing an FBAR:

  1. Determine if you need to file: If you are a U.S. person and you have a financial interest in or signature authority over one or more foreign financial accounts with an aggregate value of over $10,000 at any point during the calendar year, you are required to file an FBAR.
  2. Gather information: You will need to gather information about each foreign financial account you have, including the name on the account, the account number, the name and address of the foreign financial institution where the account is held, and the maximum value of the account during the year.
  3. Complete Form FinCEN 114: The FBAR form is known as Form FinCEN 114. You can access the form online at the Financial Crimes Enforcement Network (FinCEN) website. You can either complete the form online or print it out and fill it in by hand.
  4. File the form: You must file the FBAR electronically through the BSA E-Filing System. You can access the system at the FinCEN website. You can also use a tax professional or third-party filer to file the FBAR on your behalf.
  5. Keep records: You should keep a copy of the FBAR and any related records for at least five years from the due date of the FBAR.

It’s important to note that the FBAR filing deadline is April 15th of the following year. However, the deadline can be extended to October 15th upon request. Failure to file an FBAR when required can result in significant penalties.

 

Non-Filing of FBAR Penalties

The penalties for not filing an FBAR can be severe, and they can include both civil and criminal penalties.

Civil Penalties: The civil penalties for not filing an FBAR can be significant. If the failure to file is deemed non-willful, the penalty can be up to $10,000 per violation. However, if the failure to file is deemed willful, the penalty can be the greater of $100,000 or 50% of the balance in the foreign account at the time of the violation for each violation.

Criminal Penalties: In addition to civil penalties, failure to file an FBAR can also result in criminal penalties. If the failure to file is deemed willful, it can result in criminal fines of up to $250,000, imprisonment for up to five years, or both.

It’s important to note that penalties for not filing an FBAR can apply even if there was no intent to evade taxes or conceal assets. The penalties can be enforced even if the account holder did not know they were required to file an FBAR. Therefore, it’s important to be aware of the FBAR filing requirements and to file the form if it is necessary to avoid these penalties.

 

 

IEMA IEMLabs
IEMA IEMLabshttps://iemlabs.com
IEMLabs is an ISO 27001:2013 and ISO 9001:2015 certified company, we are also a proud member of EC Council, NASSCOM, Data Security Council of India (DSCI), Indian Chamber of Commerce (ICC), U.S. Chamber of Commerce, and Confederation of Indian Industry (CII). The company was established in 2016 with a vision in mind to provide Cyber Security to the digital world and make them Hack Proof. The question is why are we suddenly talking about Cyber Security and all this stuff? With the development of technology, more and more companies are shifting their business to Digital World which is resulting in the increase in Cyber Crimes.
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