FBAR Reporting

If you have, or are thinking about opening, an offshore bank account or other financial account, understand these reporting rules.

Report of Foreign Bank and Financial Accounts (FBAR)

The Bank Secrecy Act requires U.S. citizens and resident aliens to report certain foreign accounts to the U.S. Treasury. Although such reporting was legally required as far back as 1970, few people knew about it or took it seriously, including the Treasury Department.

All this changed in 2008 when Senate hearings resulted in revelations that Americans were hiding millions of dollars in Swiss and other foreign banks. The IRS declared war on Americans who try to hide assets offshore and began to strictly enforce existing foreign account reporting laws.

To comply with the Bank Secrecy Act, you may be required to file a Report of Foreign Bank and Financial Accounts (FinCen Form 114), called an FBAR for short (pronounced “F Bar”). When required, the FBAR must contain the name and address of each financial institution in which you held an account during the year, the account number(s), and the maximum amount in the account during the year.

If you’re a United States citizen or resident alien, you must file an FBAR if

• you have a financial interest in, or signature authority over, one or more financial accountslocated outside the United States; and
• the aggregate value of such accounts exceeds $10,000 at any time during the calendar year.

Stay Out of Trouble

Penalties can be significant! For example, the maximum penalty for a non-willful violation is $12,921.
Rule 1 in staying out of trouble is to not have any illegal offshore or foreign accounts.
Rule 2 is to complete the FBAR and income tax forms properly to avoid big penalties and jail time.

Get Peace of Mind with Tax Pro One- contact us today!.