The FBAR (Foreign Bank Account Report) deadline is approaching—do you need to file? It’s important for US expats to first determine if they need to file, then engage in the new process of filing took effect this year. Let’s take a closer look at FBAR, who needs to file and how!
FBAR is a major component of the US effort to thwart tax cheats who are hiding money in overseas accounts. It is pursuant to Title 31 of the Bank Secrecy Act, which is not actually part of the IRS (which is why FBAR forms are filed with the Department of the Treasury). If you have a financial interest in or signing authority over foreign financial accounts with a cumulative balance of $10,000 or more at any point during the year, you are required to file FBAR. It is critical to note that if your account balance hits $10,000 for only one day (or one hour!) you must file FBAR.
The FBAR is filed each year by June 30th. Unlike your US Federal Tax Return, you cannot request an extension. FBAR is filed to the US Department of the Treasury, not the IRS, which is why it is separate from your expat tax return.
In prior years, FBAR was filed via Form TD 90-22.1 and was mailed to the Department of the Treasury. But now, you are required to file electronically via FinCEN 114. This process is entirely online and more efficient than the old process.
The BSA E-Filing System is the new way to file. Click on the link to the left and you will be brought to the FBAR application. Let’s walk through the steps:
Before you file, you’ll want to gather a few important pieces of information:
Throughout the form there are required fields you must complete before submitting. It’s also important to enter all information in the proper format to avoid getting your form ‘kicked back.’ Enter all phone and identifying numbers without any dashes or extra characters. For example, enter your phone number as 3313456464.
Since all balances must be reported in US dollars, you’ll need to convert your balance prior to completing the FBAR. If you are looking for a good place to get an accurate exchange rate, try the Treasury's Financial Management Service rate (select Exchange Rates under Reference & Guidance at www.fms.treas.gov). There you can convert based on the exchange rate on the last day of the calendar year.
There are often questions throughout the process and the Frequently Asked Questions on the BSA E-Filing site are a relatively comprehensive list of answers that can help you. Since the system has proven to be solid and there are no reports of widespread issues, chances are you can fix any errors you encounter. If the Frequently Asked Questions don’t answer your question fully, we highly suggest you contact an experienced tax attorney to discuss. The penalties for failing to file FBAR can be steep, so you will want to be 100% confident that you have filed correctly and accurately to avoid future issues.
This post was written by David McKeegan, co-founder of Greenback Expat Tax Services. Greenback specializes in the preparation of US expat taxes for Americans living abroad. Greenback offers straightforward pricing, a simple, hassle-free process, and CPAs and IRS Enrolled Agents who have extensive experience in the field of expat tax preparation. If you’d like Greenback to file your FBAR or your US expat tax return, simply click here to get started.
Do you have a comment about this article, a further question or even a correction? If so please do let us know.
We may edit your comments and cannot guarantee that all comments will be published, please be nice!