What You Need To Know About The FBAR

We all know that our U.S. taxes must be filed by April 15th, but not many know that there is another tax reporting deadline. By June 30th, any U.S. citizen who has offshore bank accounts must file a Foreign Bank Account Report (Form TD F 90-22.1) with the Department of the Treasury.

The Report of Foreign Bank and Financial Accounts (FBAR) was designed to stop taxpayers who have aggressively abused offshore transactions. These individuals have tried to avoid or evade claiming such U.S. income tax by hiding income in offshore banks, brokerage accounts or evaded taxes by using offshore debit cards, credit cards, wire transfers, foreign trusts, private annuities or insurance plans. If any of your accounts held $10,000 at any time during the year, the FBAR must be filed. It does not matter if the account did not average $10,000 the entire year or if the money was withdrawn, the FBAR still has to be filed.

Penalties For Failure To File FBAR

Failure to file the FBAR will lead to penalties. If the reason of failure to file was inadvertent, the minimum penalty given is $10,000. If the individual was found guilty of willfully not filing, then the minimum penalty is $100,000 or half the value of what is in the account(s), whichever is greater.

Please keep in mind that the FBAR is not filed with your tax return, it must be filed separately with the Department of Treasury every year by June 30th. An extension cannot be requested, that means that it has to be in the hands of the Department by that date not placed in the mail. You can find the FBAR form on the IRS website. To properly complete it, the form needs to contain the name and addresses of each financial institution in which you hold an account over $10,000, the account number and the maximum amount that the account held during the year.