Ines Zemelman, EA 05-Aug-13
With new FATCA guidelines constantly being implemented, it can become difficult for US Expats to keep the most current information in mind. The FBAR (Foreign Bank Accounts Report) has been a common area for mistakes among American Expats, and we at Taxes for Expats thought it would be beneficial to look at the most up to date information on FBAR requirements. Here are answers to some of the most frequently asked questions and some tips for simplifying the process (at least somewhat) and making it easier to process your FBAR in a timely manner.
One of the most socially intrusive issues facing Americans today is that of identity theft. There are numerous phishing emails being sent out to unsuspecting taxpayers claiming to be from the IRS or a department therein. If you receive an email from a sender claiming to represent the IRS or Department of Treasury, it is most likely a case of fraud – especially if personal details are being sought – and certain steps should be taken to help minimize the damage of these emails.
When is FBAR due?
Form Fincen 114 is due by April 15th with foreign financial account information for the previous year.. As of 2016, there is an extension available until Oct 15.
What if I am only an approved signor on the foreign financial account?
You still have to include this foreign financial account on your FBAR, but the manner in which you report it will vary depending on other details of each account. If you are listed on the account with signature authority but you do not personally benefit from any of the funds in the account, you must report this foreign bank account in Part IV. Otherwise (for example if you are receiving a portion of income from the account), you must report the foreign financial account on Part III.
What currency must I use on FBAR?
You may only complete an FBAR using USD with exchange rates as determined by the IRS for the given year.
If 2 spouses each have their own pension funds or other financial accounts can the elect to file a joint FBAR?
No. If both spouses’ foreign financial account balances exceed $10K then 1 separate FBARs need filed in each of their names. If this is the case and there are also joint foreign financial accounts, these accounts can either be reported on one form or the other.
Am I required to include my insurance policy in my FBAR?
Maybe…The answer is, “Yes,” in the event your insurance policy has a cash surrender option attached to it. If your insurance policy does have a value that can be redeemed for cash on or before December 31 of the taxable year, you will be required to include it on your FBAR in Part II. On this part of the form, you will be asked for the type of account you’re reporting on line 16; here you should mark it as “other” and write or type “insurance” as the description of the account.
If I am the owner of a foreign company that has a foreign financial account in its name, how do I report this account on my FBAR?
Again, the answer to this question depends on more details. In this case, the additional details to consider are that of your involvement with the foreign company. If you have at least 50% ownership of the company, you will report the account in Part II as an individual account. Select account type as "Other" and provide description: "[company name] - Corporate account.
If you own 49% or less of the foreign company but you are still listed as a holder or signor of the foreign financial account, you will use section IV to report this information.
So I own more than 50% of the foreign company. Should I report the foreign financial account in my name or my company’s name?
You want to put your name as the primary and then in parenthesis add your company name.
Do non-financial assets such as rental or property real estate value need to be included on FBAR?
No; only foreign financial accounts need to be reported on FBAR. You may be required to file Form 8938 if your foreign assets exceed certain levels, but you are currently not required to include them on Form TD F 90-22.1.
How is FBAR submitted?
As of July 1, 2013 the only option for submitting your FBAR became online. You are required to submit Form Fincen 114 electronically through the Financial Center of the US Treasury Department’s website.
How do I know that my FBAR was accepted and processed?
You will receive a confirmation in the BSA filing portal once you have completed the electronic filing process
What value must I use to report my accounts or determine my requirement to file FBAR?
You must use each account’s highest balance during the year.
When asking how many joint account holders, am I supposed to include myself in the answer?
No; the filer is considered the account holder and the term ‘joint account holders’ refers to everybody else. If you split the account equally, you will have an opportunity to include that person’s name and information in Part III.
What if the account joint holder is my spouse?
Simply add his/her name and add “Spouse” next to it.