FBAR stands for “Foreign Bank Account Report”. Originally numbered as TDF 90-22.1, up to 2013 and was filed on paper, since then it is required to be filed online and its name changed to FinCEN Form 114.
FinCEN Form 114 is required to be filed by all US citizen, Green Card Holders and tax residents of the USA that meet the FBAR filing threshold requirement. This compliance form reports all foreign financial accounts (defined below) held by US taxpayers. The filing threshold is calculated by taking the total aggregate highest balance in all “foreign financial accounts”, and if the total calculated exceeds $10,000, the taxpayer is required to file FBAR forms.
What Is A “Foreign Financial Account”?
A foreign financial account is defined as a “financial account” held outside of the USA, as follows:
Financial Account: A financial account includes, but is not limited to, securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).
What Are the Penalties for Late Filing FinCEN Form 114 (FBAR)?
Penalties for late filing of FBAR forms can be significant. In cases where the taxpayer is not considered “willful” in their non-disclosure the penalty should not exceed $10,000. In cases where the government can prove “willful non-filing” the penalty can be the greater of $100,000 and 50% of the unreported financial accounts.
What Are the Options If I Have Not Filed Form 114 (FBAR)?
Your options for late filing FBARs are different depending on your particular situation. For the purposes of this article we will assume that the non-disclosure is “not willful”.
In cases where the taxpayer is currently compliant in filing US tax returns and all the income related to the non-disclosed financial accounts have been reported and properly taxes on the US income tax returns, the late FBARs may be able to be late filed without penalty.
In cases where the income from the foreign financial accounts have not been reported, the taxpayer has the option of the Streamlined Procedure, which allows delinquent FBAR filers to late file FBARs without threat of penalty. Under the program taxpayers will file 3 years of late (or adjusted) 1040 US Individual Tax Return and 6 years of late FBAR filings.
If you need more information, please do not hesitate to contact US Tax Consultants 91 519 4392 or info@nmlconsultores.com
Question: Does financial account or interest include land?
No, you do not need to include Real Estate nor land in your FinCEN 114.
What is in the new tax law that is going to require entities to file a fincen 114?
Entities have always been required to file FinCEN 114
I normally file an 8938 form with my annual tax return. Do I need to file an FBAR 114 also? My foreign account is an IRA.
thanks
Brian,
Yes, you must also file the FinCEN annually. There are two different requirements from two different entities; one is the IRS and the other is the FinCEN (Financial Crimes Enforcement Network), as you might know the FinCEN was signed by Nixon back in 1990. Both reports are refered to U.S, Foreign financial accounts. It seems to me that the IRA must be in a U.S. financial institution, so it should not be listed neither in the 8938 nor the FinCEN.
I am a UK citizen filing taxes in UK but also filing a US non resident form 1040NR for some US income. Do I need to file FinCEN form to report foreign bank accounts?
The finCEN is a fisacal obligation only for U.S. Persons: U.S. Citizens, Green Card holders and Resident Aliens. So, it is not for you.