If you (a US taxpayer) has a financial interest in or authority over foreign investments or accounts that totaled over $10,000 at any point in the year, you are required to file an FBAR (aka FinCen 114) form.
That sentence was a mouthful, so let’s break it down.
- You are a US person, (citizen, green card holder, resident alien)
- You have a financial interest in (own part of it, are a beneficiary of it, etc.) or authority over (sign on the account), and
- Your financial accounts total over $10,000 at any point in the year.
You do not need to include real estate property or bullion in the investment total.
The form must be filed each year in which you meet the above qualifications. It is filed online through FinCEN’s BSA e-filing system. You do not file this form with your federal income tax return. You can only file this form online.
The filing is due by April 15th, but you can get a 6-month extension to October 15th.
You don’t have to pay taxes with this filing, but you do need to file. If you don’t file the form, the penalties can be steep. The IRS has the right to assess penalties up to $12,459 per violation for non-willful violations. For willful violations, penalty may be the greater of $124,588 or 50 percent of the balance in the accounts at the time of the violation, for each violation.
If you have not filed past reports when due, and the IRS isn’t currently auditing you, hasn’t indicated they plan to audit you and you’re not currently under a criminal investigation by the IRS, you likely fall within their amnesty program. File your past reports with the help of an experienced CPA or tax attorney and include a statement explaining why you haven’t filed. As long as you have properly reported any foreign income that was subject to taxation and you have paid any associated tax, the IRS has said they will not assess penalties.
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