Do I Need to File FBAR for Foreign Accounts?

Do you have a financial interest in or authority over any financial accounts located outside the United States? If the total value of these foreign accounts exceeded $10,000 at any point during the tax year, you are likely required to file a Report of Foreign Bank and Financial Accounts (FBAR). This isn’t just for personal bank accounts; it includes investments, insurance policies with cash value, and other financial interests. For example, if you’re a U.S. resident with a savings account in Canada worth $6,000 and a stock investment in Germany valued at $5,000, the aggregate value is $11,000, which means an FBAR filing is necessary.  You could be an Australian citizen moving to the US for a job with a superannuation account with $10,000 or more. 

Don’t let the process of filing an FBAR overwhelm you. Silver Tax Group is ready to assist you in ensuring that your foreign accounts are reported correctly and on time. Our team is well-equipped to handle your specific situation with precision and care. Take the first step towards peace of mind by calling us at (855) 900-1040for personalized service tailored to your financial needs.

Determining Your FBAR Filing Requirements

Understanding FBAR filing requirements is key to staying within the bounds of the law. Any U.S. person with financial interest or signature authority over foreign financial accounts must file an FBAR if the aggregate value exceeds $10,000 at any time during the calendar year.

The term ‘U.S. person’ for FBAR purposes is more inclusive than one might initially think. U.S. persons include:

• U.S. citizens and residents
• US person who resides outside of the US
• Corporations, partnerships, or limited liability companies established in the U.S. or under U.S. laws
• Trusts or estates formed under U.S. law, provided they meet the relevant criteria

Therefore, whether you are a U.S. citizen working overseas, a resident alien, or a participant in a U.S.-based corporation, partnership, or trust with foreign financial interests, it’s imperative to comply with FBAR reporting requirements for your reportable foreign financial account. Remember, it’s not just about having a financial interest in foreign accounts. Even individuals with signature authority over foreign financial accounts, such as those held at a foreign bank, might be required to file an FBAR.

If you belong to these categories and your foreign financial accounts exceed the $10,000 mark at any point in the tax year, you need to prepare for an FBAR filing.

Signature Authority and Other Considerations

The requirement to file an FBAR also applies to individuals who have the authority to sign for transactions in foreign financial accounts, even if they don’t own the funds within those accounts. This includes employees who are authorized to handle their company’s foreign accounts.  Beneficiaries of account holders usually have signatory authority over their parent or relative’s foreign accounts.  A foreign account set up by a parent for a child or jointly held by parent and child are considered to have signatory authority and must be reported.

While individuals with the authority to sign for transactions in foreign accounts, but not owning the funds, are not required to maintain records of these accounts, employers can file an FBAR on behalf of an employee who has this authority, with the employee’s consent on Form 114a. Our team at Silver Tax Group can help with this process, ensuring that your foreign accounts are reported accurately and promptly. We understand the importance of this responsibility and are ready to provide you with personalized service that addresses your specific financial situation.

Comparison of Form 8938 and FBAR Requirements

Understanding the differences between Form 8938, Statement of Specified Foreign Financial Assets, and the FBAR (Foreign Bank and Financial Accounts Report) is crucial for U.S. taxpayers with foreign assets. Both forms are used to report assets held outside the United States, but they serve different purposes and are governed by different laws.

Form 8938 is filed as part of an individual’s tax return under the Foreign Account Tax Compliance Act (FATCA), while FBAR is filed separately and is required under the Bank Secrecy Act (BSA). Form 8938 requires the disclosure of a wider range of assets, including foreign stocks and securities not held in financial accounts, foreign partnership interests, foreign mutual funds, and foreign-issued life insurance or annuity contracts with cash value.

The filing thresholds also differ. For single taxpayers living in the U.S., Form 8938 must be filed if the total value of specified foreign assets exceeds $50,000 on the last day of the tax year, or more than $75,000 at any time during the tax year. Different thresholds apply to married taxpayers and those living abroad. In contrast, the FBAR must be filed if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

The penalties for non-compliance can be severe for both forms, but the FBAR penalties tend to be more substantial, particularly for willful violations. It’s also worth noting that even if a taxpayer files Form 8938, they must still file an FBAR if the requirements are met, as one does not replace the other.

While both Form 8938 and FBAR require the reporting of foreign financial assets, they are distinct in terms of reporting requirements, thresholds, and penalties. It is essential for taxpayers to understand these differences to ensure compliance with U.S. tax law and avoid potential penalties. Our team at Silver Tax Group can assist you in discerning the nuances between these forms and aid you in fulfilling your reporting obligations with precision and care.

Navigating the FBAR Filing Process

Understanding the FBAR filing requirements is only half the battle won. The other half is ensuring that your filing is precise and timely, which is where Silver Tax Group comes into play. Our team is dedicated to assisting you in every aspect of the FBAR filing process, providing peace of mind that your foreign accounts are reported correctly.

FBAR filing can be a complex and time-consuming process, but when you entrust Silver Tax Group with the task, you can relax knowing that the online filing will be handled by professionals. Our team at Silver Tax Group will manage the submission of your Report of Foreign Bank to the IRS, disclosing your financial interest in or signature authority over foreign financial accounts, including those in foreign financial institutions. We take care of this process using FinCEN Form 114, filed through the BSA E-Filing System on your behalf.

Registering for the BSA E-Filing System

The FBAR filing process can seem daunting, but with Silver Tax Group, you don’t have to navigate it alone. Here’s how we take the reins:

• For banks, insurance companies, and other entities: Silver Tax Group will handle the enrollment for filing BSA data on your behalf, ensuring all supervisory users are properly registered.
• For law firms, CPAs, and enrolled agents: Our team will secure a User ID and password, managing the FBAR filings for your clients with utmost confidentiality and diligence.
• For individuals: You have the option to let us take care of the filing without the need for you to register personally.

We’ll gather your personal details, such as name, address, and social security number, and complete the registration for you, including the setup of a user ID and security questions for account recovery. If you prefer, Silver Tax Group can also file an FBAR directly using the ‘File FBAR’ method on your behalf, sparing you the registration process. With Silver Tax Group, you can choose the level of assistance that best fits your needs, and we’re here to support you every step of the way.

Completing FinCEN Form 114

Once you engage Silver Tax Group, the next step is for us to complete FinCEN Form 114 on your behalf. This form necessitates personal identification information, such as your taxpayer identification number. We will also meticulously gather details of your foreign financial accounts, including the names of the institutions and the respective account numbers.

It’s imperative to report the highest value of your foreign accounts, including foreign bank accounts, accurately over the tax year. This detail is critical and often overlooked, but with Silver Tax Group handling this responsibility, you can rest assured that all aspects will be thoroughly reviewed and addressed, demonstrating our commitment to maintaining the integrity of your financial records.

Record-Keeping Post-Filing

After Silver Tax Group completes your FBAR filing, rest easy knowing that all records are meticulously maintained for a minimum of five years from the due date. These records include account numbers, financial institution names and addresses, and the highest account values during the year.

If you grant Silver Tax Group authorization to e-file an FBAR on your behalf using FinCEN Report 114a, we keep this form securely within our records. Our commitment to safeguarding your financial security and ensuring compliance with the law is reflected in the conscientious record-keeping and management of your financial documents.

FBAR Deadlines and Extensions

Much like your tax returns, awareness of FBAR filing deadlines is significant. However, with Silver Tax Group, you don’t have to mark your calendar or stress about remembering these dates — we handle everything for you. The standard deadline for filing an FBAR is April 15, following the calendar year reported. But don’t worry about the dates. Our team ensures your FBAR is filed accurately and on time, every time.

If you’re concerned about meeting the standard deadline, Silver Tax Group has you covered. We take advantage of the automatic six-month extension until October 15, so you can have peace of mind without having to file a separate extension request. Even in the face of natural disasters or other unforeseen circumstances, we stay up to date on any further government-granted extensions to ensure your FBAR filing is seamless and penalty-free.

Consequences of Non-Compliance

The significance of FBAR compliance is profound. Failing to comply with FBAR reporting and recordkeeping requirements can result in the imposition of both civil and criminal penalties. These penalties can be severe and have significant financial implications.

The severity of the penalties depends on the nature of the violation. Civil penalties for willful failure to file an FBAR can amount to up to $129,210 or up to half of the assets in the account in violation. For non-willful violations, up to $12,921 per tax year can be imposed. However, consequences can extend beyond financial penalties.

Criminal penalties can be pursued if the IRS determines that the taxpayer’s behavior was willful, which includes being knowingly or recklessly ignorant of filing requirements or engaging in tax evasion.

Civil Penalties for Unintentional Violations

Even unintentional breaches of FBAR regulations can lead to civil penalties. Even if you weren’t aware of your FBAR filing obligations or made a mistake in your filing, you could face penalties of up to $10,000 per violation. However, the actual penalty amount is subject to managerial approval and cannot exceed 50% of the account’s highest balance during the year.

The good news is that penalties for non-willful FBAR violations may be waived if there was reasonable cause for the violation and the account balance was reported correctly. However, determining what constitutes a ‘reasonable cause’ can be subjective and complex, making it crucial to seek professional guidance if you find yourself in this situation.

Criminal Penalties and Willful Violations

Conversely, intentional violations pose the risk of criminal penalties. If you knowingly fail to file an FBAR or are found to be recklessly ignorant of the filing requirements, you could be looking at fines of up to $250,000 and/or imprisonment for up to 5 years.

If the willful failure to file an FBAR is in conjunction with another law violation or involves a pattern of illegal activity over $100,000 in 12 months, these fines may increase to up to $500,000 and/or imprisonment for up to 10 years. The specter of criminal penalties underscores the importance of taking FBAR filing obligations seriously and seeking professional guidance to ensure compliance.

Why Choose Silver Tax Group for Your FBAR Compliance

Entrusting your FBAR compliance to Silver Tax Group means you can cast aside worries about the daunting consequences of non-compliance. Our team of seasoned tax professionals provides meticulous service, ensuring that your foreign accounts are reported accurately and on time. With our seasoned guidance, you can navigate the complexities of FBAR filing with confidence, secure in the knowledge that Silver Tax Group is safeguarding your interests and keeping you within the bounds of the law. This way, you can focus on what’s important to you, leaving the intricacies of tax law in our capable hands.

Correcting Past FBAR Missteps

If you’ve made errors in your past FBAR filings, there’s no need to panic. The IRS Voluntary Disclosure Program is a lifeline that Silver Tax Group navigates on behalf of our clients. This program provides a structured opportunity for taxpayers to come forward and disclose previously unreported offshore income, assets, investments, and accounts. Our team at Silver Tax Group will manage the entire process, ensuring that your disclosures are truthful, timely, and complete and that you cooperate fully with the IRS. We’ll calculate and facilitate the payment of any due taxes, interest, and penalties, turning a complex situation into a manageable one. This proactive approach is a critical step in rectifying past FBAR oversights and realigning with your compliance obligations.

How Silver Tax Group Can Help with Your FBAR Filing

Silver Tax Group brings over 40 years of combined experience in tax law to assist clients with FBAR filing. Every client is represented by a qualified tax attorney for individualized service.

Our clear flat-fee pricing and round-the-clock availability for emergency tax relief and FBAR filing support make us a dependable ally in your compliance journey.

Guidance Through the FBAR Filing Process

At Silver Tax Group, we know that each client’s situation is unique. That’s why we offer guidance through the FBAR filing process, ensuring accurate and timely submissions. Our team is well-versed in the nuances of FBAR filing, and we use our experience to assist clients in remaining compliant with their U.S. tax obligations.

From understanding your FBAR filing requirements to completing FinCEN Form 114, we guide you every step of the way. We strive to make the FBAR filing process seamless and hassle-free, providing you with peace of mind and freeing up your time to concentrate on your priorities.

Representation in FBAR-related Issues

Our services extend beyond guidance. We also provide representation in FBAR-related issues. Our tax attorneys negotiate with the IRS on behalf of our clients, preventing excessive tax payments and penalties.

Whether you’re facing potential civil or criminal penalties or looking for ways to correct past FBAR missteps, we’re here to help. We recognize that handling FBAR issues can be taxing, and our team is dedicated to standing with you, providing experienced representation and tranquility.

Ready to File Your FBAR? Contact Silver Tax Group

Don’t let FBAR filing requirements stress you out. Silver Tax Group is here to assist you with personalized service that caters to your individual financial needs. Our knowledgeable team is equipped to ensure that your foreign accounts are reported accurately and on time. Take control of your financial obligations and call us at  (855) 900-1040. We’re committed to making the process straightforward and worry-free, so you can focus on what matters most to you.

Frequently Asked Questions

Who is considered a ‘U.S. person’ for FBAR purposes?

The definition of a ‘U.S. person’ for FBAR purposes extends beyond just U.S. citizens. It also includes entities such as U.S. corporations, partnerships, and trusts, as well as non-U.S. citizens who meet the criteria of resident aliens for tax purposes. Essentially, if you have a significant connection to the U.S. through citizenship, residency, or business incorporation, you are likely to fall under this category for FBAR reporting.

What is the $10,000 threshold for FBAR filing?

The $10,000 threshold for FBAR filing refers to the total value of all foreign financial accounts you have an interest in or authority over. At any point in the calendar year, if the cumulative balance of these accounts exceeds $10,000, even momentarily, you are required to report them to the Financial Crimes Enforcement Network (FinCEN). This rule applies to the aggregate amount, so even if no individual account exceeds the threshold, combined they might trigger the filing requirement.

When is the FBAR filing deadline?

The FBAR filing deadline is set for April 15 of the year following the reportable year. However, there is an automatic extension that extends the deadline to October 15, giving filers an additional six months to submit their reports without the need for a specific extension request. This aligns with the federal income tax deadline, making it easier to remember for compliance.

What are the civil and criminal penalties for non-compliance with FBAR requirements?

Non-compliance with FBAR requirements can lead to significant financial repercussions. Civil penalties for willful violations can reach up to $129,210 or 50% of the account balances at the time of the violation. On the criminal side, willful violators may face fines of up to $250,000 and/or up to five years in prison, highlighting the importance of adhering to FBAR regulations.

How can Silver Tax Group help with my FBAR filing?

Our team at Silver Tax Group assists clients with FBAR filing by providing thorough guidance throughout the filing process and ensuring timeliness and accuracy. We also offer representation in matters related to FBAR, advocating for clients during disputes or negotiations with the IRS. With personalized service and a commitment to your financial well-being, we can help alleviate the stress associated with FBAR compliance.