U.S. citizens with more than a total of $10,000 in foreign accounts, at any time during the prior year, are required to file a Report of Foreign Bank and Financial Accounts (FBAR) each year. Failure to report may result in a $10,000 fine and imprisonment. The deadline for filing is June 30. The FBAR is NOT filed with your tax return and is not filed with the IRS. It is a separate requirement. Just about every American with a SRRV is required to file an FBAR.
The good news is that it’s now possible to file the FBAR online. Sending the FBAR via PhilPost is not a great idea and paying $35 to send it by FedEx adds an unwelcome expense to the expat budget. In the future e-filing of FBARs will be mandatory. This is the link to sign up for FBAR e-filing: http://bsaefiling.fincen.treas.gov/main.html The bad news is that the FBAR electronic filing process is very finicky. You must use the Adobe Acrobat Reader and you must use the Microsoft Internet Explorer browser. We normally use Google Chrome (which now has more users than Internet Explorer but it did not work and I had to fire up I.E. to submit my form.
We wish they would make the process easier for those with limited assets. We ended up reporting on accounts with a value of $20!
Here are some highlights from the FBAR regulations which can be found at: http://www.irs.gov/businesses/small/article/0,,id=148849,00.html
“If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
Who Must File an FBAR
United States persons are required to file an FBAR if:
- The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
- The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.
United States person means United States citizens; United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.”