As a US citizen, you must know how important it is to keep track of your financial records along with your bank accounts and tax payments. However, many people forget FBAR filing for their taxes, which could land them in trouble. If you are an American living abroad, you must read all the details mentioned below to avoid harsh penalties from the IRS.
What is FBAR?
Also known as Foreign Bank Account Report, FBAR was created in the US to keep track of the tax cheating and frauds by hiding money in offshore accounts. This initiative also goes by FinCEN Form 114 and is to be paid if you are eligible for the filing. It applies to all people living in the US, whether resident aliens, domestic entities, trusts, or estates. Moreover, this new policy allows the authorities to keep a check on money that lies in offshore accounts and know the balances of the charges.
Who Needs to File For FBAR?
Any person who is a US citizen and holds a foreign account is required to file for FBAR. It also includes people who live abroad and are green cardholders. If the offshore bank contains a balance of 10,000 dollars or more on any day during the tax year, then the FBAR filing applies to the person. If someone has more than one account, the FBAR filing will be based on all statements’ total. For example, if a person has $4000 in one account and $6000 in another, they will still be eligible for the FBAR filing.
Learn more about the Streamlined Offshore filing Procedure here.
How To File For FBAR?
Filing the FBAR requires you to fill a form with all the necessary details, along with electronic submission to the official filing website.It is a straightforward process requiring you to gather all the essential and latest information before filling the form for submission. The form is supposed to be served by individuals and US companies who own a foreign bank account. Not only limited to savings or deposits, but the financial report also includes insurance policies or shares in a mutual fund. If you require assistance when filing for FBAR, you can approach a professional tax preparer who can complete the form and file it for you.
Further Guidelines for FBAR Filing
Regardless of age or gender, all US citizens are supposed to file for FBAR if they fall within the guidelines provided by the FBAR authorities. If minor children are account holders, their guardians or parents must file FBAR for them within the due date. If someone owns a joint account with a spouse, both individuals can file a joint FBAR without any other separate bank accounts. If you have a joint bank account with someone else, then each person will file their FBAR form, including the complete details of the bank account balance.
What Information Goes on The Form?
The following information is required from all individuals to complete the FBAR form.
- Full name, social security number, and address
- Foreign bank account names and addresses
- Type of bank accounts
- Each year’s filing copy of FBAR
- Foreign bank account numbers for all accounts
- Maximum balance in foreign reserves to be mentioned in US dollars
If you need further assistance or have questions in mind when filing FBAR form, then you can email BSAEFilingHelp@fincen.gov. or call 1-866-346-9478 for on-call service.
Important Notice to readers: Note that this article was written and provided by Expatustax.com – Please consult a tax or legal advisor for more details on any tax or legal matters at your own risk.