The US government is increasingly interested in knowing about the foreign assets held by its citizens and residents. The FBAR (Foreign Financial Account Report) is one of the key reporting requirements that Uncle Sam utilizes in its monitoring efforts.

FBAR (Foreign Financial Account Report)

US citizens, permanent residents and legal entities (e.g., US corporations, partnerships, LLCs) with an interest in or signature authority over foreign financial accounts that have an aggregate balance exceeding $10,000 are required to file the FBAR.

• Foreign financial accounts or assets include: banks accounts, brokerage accounts, mutual funds, annuities, life insurance policies with cash value, and indirect interests in foreign financial assets through an entity (if >50% ownership);
• The threshold is met if the aggregate balance (combining all the accounts) exceeds $10,000 at any point during the year;
• The FBAR is a separate from your income tax filing;
• The due date is tied to your income tax return

To complete the FBAR, it is advisable to maintain records of your monthly account balances. Otherwise, the paperwork may become a difficult exercise. Account balances need to be converted to USD, using the FX rate as of the last day of the year.

Failure to report (non-willful) carries a penalty up to $10,000. Willful non-compliance potentially raises the penalty up to $100,000 or 50% of the taxpayer’s foreign assets (whichever is greater).

New Electronic FBAR (FinCEN 114)

As of July 1, 2013, the FBAR has gone electronic, and is now called FinCEN 114. Because it is now an electronic filing, it has become easier for the US government to flag delinquents.

The acronym FinCen stands for Financial Crime Enforcement Network. To visit FinCEN homepage, click here.

FBAR (FinCEN 114) vs. FATCA (Form 8938)

American expats often get the FBAR and FATCA confused with one another. They are two distinct requirements. To learn about FATCA, click here.

For general information on US expat taxation, please read: US Taxes for Americans Living Abroad – Ultimate Guide.