Foreign Bank and Financial Accounts Report (FBAR) in Cary
Do you know if you have any foreign accounts with an aggregate value higher than $10,000 at any time during the calendar year? U.S. taxpayers (including individuals and business entities) are required to report on foreign assets or investments they hold in offshore accounts. Under the Bank Secrecy Act, you may be required to e-file what is known as Foreign Bank and Financial Accounts Report (FBAR) directly with the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department.
FinCEN Form-114 Filing Deadline
The FBAR (FinCEN Form-114 formerly TD F 90-22.1) is an annual report and must be received by the Department of the Treasury on or before April 15 of the year following the calendar year being reported. However, for the first time, a six-month extension to Oct. 15 will be available.
Misconceptions About FBAR Filing
We have mentioned below common misconceptions among taxpayers regarding FBAR filing requirements.
1. Misunderstanding Regarding the Threshold
We come across taxpayers quiet often who think they are not required to file because they don’t have more than $10,000 in any one bank account. In fact, the rule pertains to anyone who has had over $10,000 in the last calendar year cumulatively across all foreign financial accounts. On top of that, it’s not what the account value was at the end of the year, it’s the maximum account value during the year.
2. What should be disclosed?
If you meet the filing requirement, you’re required to report ALL of your foreign financial accounts. This brings the next question, of course: what constitutes a ‘foreign financial account’? As of now, on top of bank accounts, this also means mutual funds, brokerage accounts, commodities options or future contracts, and insurance policies that have a cash value. Other hard assets such as real estate, coins, jewels, collectibles, and precious metals like gold or silver should not be considered for the FBAR.
3. Don't Consider Online Financial Accounts for FBAR
Bitcoin is considered property rather than currency by the IRS and should not be counted for FBAR. However, other accounts like an international Paypal account or online poker accounts should be counted for FBAR.
4. What is considered foreign?
The government definition in this case is the physical location of the account, not the nationality of the institution itself. For example, opening an account in the Hong Kong branch of Citibank, does count as a foreign account for FBAR purposes; whereas the New York branch of Bank of China does not.
5. Forget to Include Children's Accounts
There is no minimum age limit for the FBAR, meaning that even those under the age of 18 are subject to this compliance requirement. This includes accounts held by a parent on behalf of their children, given that the child is a signatory of the account. Yes, that’s right, the government even goes after your children.
Contact Akram for FBAR Filing Help
For more information, call Akram toll-free or use the form on this page to schedule a free consultation.
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