What Is The FBAR

Effective July 1, 2013, electronic filing of FinCEN’s BSA e-filing system is mandatory for all FBARs. In addition, the FBAR form previously known as the TD F 90-22.1 was superceded by the FinCEN Form 114.

When is the FBAR due? FBAR filing is due on June 30 for the prior calendar year. No filing extension is available.

Elements of FBAR Filing

There are four elements of FBAR Filing

1. “US Persons” must file if,
2. They have a financial interest in or signature authority over an account,
3. That account is a Foreign Financial Account, and
4. The aggregate value of the account(s) exceeds $10,000 at any time during the calendar year.

So what does a US person mean. It means:
• US citizens no matter where they reside
• US residents
• And US entities, which is any entity created or organized in the US or under US law

US resident generally means a person that meets the green card and/or substantial presence test and those who have elected to be treated as residents.

“Financial interest” generally means a US person who is the record owner or holds title directly, whereas “signature authority” means that you are not an owner but you can control the disposition of the account assets.

“Foreign” means outside the United States. It is the physical location of the account that governs whether the location is outside of the U.S. The U.S. means all 50 states, D.C. and US territories and possessions.

“Financial” means both monetary and non-monetary assets such as bank, brokerage and investment accounts, insurance and annuity policies with a cash value and mutual fund holdings. In general, it does not include real and personal property. There are exceptions to reportable accounts that are defined in the FBAR instructions or that your qualified tax professional could advise you about what exceptions may apply to you.

“Account” means a relationship with a financial institution or a person acting as a financial institution.

Lastly, aggregate value exceeds $10,000. To do this, you aggregate accounts with financial interest and those with signature authority. If the aggregate value exceeded $10,000 at any point during the calendar year, an FBAR is required.

Valuing Foreign Financial Accounts For The FBAR

• Each account must be valued separately at its highest value for the calendar year
• You can rely on periodic statements such as monthly statements, however it may be easier just to ask your bank for the highest account value for the year
• The value in your local currency must be converted to US dollars based on the December 31 Treasury Reporting Rate of Exchange
• You must aggregate all accounts, however you do not double count accounts for determining the threshold.
• So let’s take a look at how that works

The FBAR reporting requirements are deceptively complex with severe penalties for failure to comply with the requirements. Please don’t hesitate to contact us here at Tax Samaritan for assistance with your FBAR reporting needs – whether timely filing or late filing we can help.

It is important to note that there are severe civil and criminal penalties that can be applicable for failing to comply with the FBAR filing requirements.

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