Foreign Bank and Financial Accounts (FBAR)
FBAR is the IRS reporting requirement of U.S Citizens and residents who own or have signature authority over financial accounts outside the United States. There is a reporting threshold in aggregate of foreign accounts during any day in the calendar year. Failure to report carries significant penalties and interest
Threshold
- The threshold is cumulative across all foreign financial accounts
- Not what the account value was at the end of the year but the maximum value during the year
- The amounts are converted based on the IRS official exchange rates
What to disclose?
- Bank accounts
- Mutual funds
- Brokerage accounts
- Cash value of insurance policies
- Commodities, options, futures contract
What is foreign?
- The physical location is considered foreign by the Government. Not the nationality
- Eg: Citibank in India is a foreign account, State Bank of India in the US is not
Children Matter
- Children under 18 are subject to FBAR compliance
- Includes accounts held by parent on behalf of the children
| Type of Filing | Form |
|---|---|
| Expat Taxes | 1040, 2555, 1116 and/or State Income Taxes |
| FBAR | 114 |
| FATCA | 8938 |
| CFC | 5471 |
| PFIC | 8621 |