The Foreign Bank Account Reporting Deadline is in June - What You Need to Know!
As a US expat, there are many US tax intricacies you must be aware of, and fortunately, many benefits, too. One such benefit is a delayed tax deadline. If you're living overseas on tax day, you receive an automatic two-month extension from the April 15th deadline - making your tax deadline June 15th. However, June is also a big month for expats, because Foreign Bank Account Reporting (FBAR) filing is due on June 30th this year as well. Here's what you should know about FBAR filing, so you'll be prepared when the deadline approaches!
What Is the FBAR?
FBAR, more recently known as FinCEN Form 114, reports your foreign bank account information to the US Treasury. It's not technically a tax form, as it doesn't generate taxes or amounts due - instead, it's used as an informational source that many people must fill out for the Treasury. The FBAR must be filed by individuals and companies who own, or have an interest in, foreign bank or financial accounts that exceed the reporting threshold for the given year. The purpose of the FBAR is to prevent anyone from hiding offshore assets and income in order to avoid US taxation.
Who Needs to File the FBAR?
Individual Foreign Bank Account Holders
US citizens or Resident Aliens (Greencard holders) will need to file an FBAR if they have at least one foreign financial account with a total balance exceeding $10,000 at any point during the calendar year. All US persons must file an FBAR if they meet these requirements, regardless of age or circumstance. Guardians of minors and those unable to file for themselves must file the FBAR on behalf of their charges.
Joint Foreign Bank Account Holders
Joint account holders will actually need to file separate FBAR forms if they have other separate accounts to report as well, but both persons will report the full balance of the joint account(s) on their respective forms. If a couple has only a jointly held account (no separate accounts), they may file a single FBAR form to report the account.
US Companies with Foreign Accounts
US companies must also follow the FBAR reporting requirements. A US company is considered to be any corporation, partnership, LLC, estate or trust that is formed or organized under the laws of the US.
If you own, or have an interest in, any foreign financial accounts, it's important to stay on top of the financial information. If at any point during the calendar year, the account balance exceeds $10,000, you must file an FBAR form - so it's very important to keep a close eye on these accounts in order to stay compliant.
Foreign financial accounts include things like:
- Mutual funds
- Whole-life insurance policies
- Any other accounts held with a financial institution
How and When to File
The FBAR must be filed electronically through the FinCEN website. In order to complete the form, you'll need the following information:
- Your name, Social Security Number (SSN) or ITIN and address
- The names, addresses and SNN/ITIN of all joint owners of the account
- The names and addresses of your foreign bank(s)
- The type of account - bank, securities or other
- Your foreign bank account number for each account
- The maximum balance of your foreign financial account during the year, converted to US dollars
For calendar year 2015 filings, your FBAR form is due June 30, 2016 and there are no extensions.
For calendar year 2016 and beyond, the due date will be April 15th. You'll have an automatic extension of two months if you're living abroad on the due date. You can also request an extension until October 17th.
Filing your FBAR in a timely manner is important, because there is a penalty of $10,000 involved if you fail to file. If you willfully fail to report an account, you may even be subject to a penalty equal to $100,000 or 50% of the balance of the account, whichever is greater. Note that if you have reasonable cause for failing to file, a penalty may not be assessed.
How Should I Proceed with FBAR Filing?
Consulting with a tax professional is always recommended when it comes to US expat taxes and FBAR filings, as both can be quite complicated! In any instance, you should first carefully review your foreign bank account information to see if any warrant an FBAR filing. If so, gather all the necessary information and head to the FinCEN website, where your FBARs must be electronically submitted. Head over to our blog for more details about filing your FBARs.
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. For more information about FBAR, expat taxes or Greenback, please visit http://www.greenbacktaxservices.com.