The Ultimate FBAR Filing Guide

How and When to File Your FBAR

Written by John Woodfield, Portfolio Manager, CIM® CFP®

The foreign bank account report (FBAR) exists to combat tax evasion. US citizens need to report money and assets held in non-U.S. banks. This form needs to be submitted to FinCen, the US Treasury—not the IRS. An FBAR is also known as FinCen form 114. It is submitted annually.

If you are wondering whether you need to file an FBAR and how filing works, then keep reading. This article covers the most important information you need to know about FBARs, including who needs to file an FBAR.

TABLE OF CONTENTS

1. Who Is Required to File an FBAR?
2. Why Is FBAR Required?
3. FBAR Filing Deadline and When You Should Submit
4. Can I File FBAR Myself?
5. What Is the FBAR?
6. What Does Filing an FBAR do?
7. How to File FBAR Online
8. Keep Records of Your FBAR Filing
9. Cost to File FBAR
10. FinCEN Form 114 vs. Form 8938
11. Penalty If You File FBAR Late
12. File Delinquent FBAR
13. How to Seek Representation If You Have FBAR Issues
14. FBAR Statute of Limitations
15. Who Can Help You File FBAR
16. Common FBAR Questions and Answers

Who Is Required to File an FBAR?

Any US person with foreign financial accounts of over $10,000 US at any time during the calendar year must file an FBAR. US persons with signature authority on a foreign financial account with over $10,000 also need to file an FBAR.

It's common for US citizens living in Canada or other countries long-term to file an FBAR yearly.

Most filers will report the balance in their foreign bank accounts.

Others will also report:

• Foreign assets, such as company shares held in non-US financial institutions
• Non-US accounts for retirement
• Assets held in a foreign branch of a US financial institution
• Non-US life insurance, annuity contracts and mutual funds
• Accounts that are under their control, even if not owned directly

Why Is FBAR Required?

The FBAR is a way for the US to find funds in offshore accounts. Recently, the FBAR has been strictly enforced by the IRS. The FBAR makes those with money in overseas bank accounts report balances over the threshold.

Those that file an FBAR are not taxed on the balance. Filing the FBAR is simply done, so the IRS is aware of the accounts.

Non-residents who do not meet the FBAR requirements may have penalties and other expensive legal consequences. The US has increased its efforts to uncover those who have not reported their worldwide assets.

If you need to file the FBAR, you can use the FBAR Line Item Instructions provided by FinCen.

FBAR Filing Deadline and When You Should Submit

The FBAR is completed annually and is due April 15 of the following calendar year. Filers can have an automatic extension to October 15 if they do not meet the FBAR filing date of April 15.

You can find the complete information about filing dates on FinCEN's website.

Can I File FBAR Myself?

Yes, you can file the FBAR yourself. You must file the FBAR electronically through FinCEN's online BSA E-Filing system. Note that you do not file the FBAR with your tax return.

If you prefer to have someone file the FBAR for you, refer to FinCEN's Record of Authorization to Electronically File FBARs.

What Is the FBAR?

FBAR, or Foreign Bank Account Report, refers to FinCen Form 114, Report of Foreign Bank and Financial Accounts. Its purpose is to alert FinCen (Financial Crimes Enforcement) of non-US-based accounts owned by a non-resident of the US to help prevent tax evasion.

What Does Filing an FBAR Do?

The FBAR is a way to limit tax evasion, and it does this by forcing US persons to report assets in non-U.S. banks. An FBAR is submitted to FinCEN, part of the US Treasury Department's Financial Crimes and Enforcement Network.

How to File FBAR Online

The FBAR is a simple form to file. Go to the BSA E-Filing website and find the FBAR filing page. Select the File Online option.

Then enter all personal and contact information and details for non-US accounts using the online forms provided. You don't need Adobe Acrobat to fill out the FBAR forms online.

Filers will enter their account names, numbers, type of account and the name/address of the institution. The maximum account balance during the tax year also needs to be entered.

Spaces, hyphens etc. must not be used when filling out the forms. And all balances should be rounded up to the nearest dollar.

Balances must be converted into US dollars using the Treasury's Financial Service Management rate of exchange for the last day of the tax year.

Keep Records of Your FBAR Filing

If you have to file an FBAR, you should keep records for a minimum of 5 years after filing. Your records should contain the following information:

• Account name
• Account number
• Bank name and address
• Account type
• Annual maximum value

The law is vague on which documents need to be kept, so it is recommended that you keep everything you can concerning this filing.

Cost to File FBAR

The FBAR filing fee is US$100 for up to five accounts, and it costs $50 to file up to an additional five accounts. The fee charged by service providers filing your FBAR for you is over and above this basic charge.

FinCEN Form 114 vs. Form 8938

Individuals file form 114. Corporations, partnerships, and trusts file Form 8938. Form 8938 does not need to be filed if an income tax return is not needed, even if the value of the foreign assets is more than the threshold.

Penalty If You File FBAR Late

A filer may be subject to a penalty of $10,000 per violation if the form is not properly reported or the requirements are ignored.

File Delinquent FBAR

Those that have not filed but may have no material changes in their return may qualify for the Delinquent FBAR Submission Procedures.

Those who have not filed an FBAR for several years must report the foreign accounts for the missed years to avoid non-compliance costs. Situation-dependent, filers could use the Streamlined Filing Program or the Delinquent FBAR Submission Procedures to avoid penalties.

How to Seek Representation If You Have FBAR Issues

If you need help with any issues that have come up with filing an FBAR, a good cross-border accountant is there to assist. Major accounting firms all have cross-border capabilities.

FBAR Statute of Limitations

There is a six-year statute of limitations for assessing civil FBAR penalties. This six-year window commences on the FBAR due date.

Who Can Help You File FBAR

You can reach the FBAR hotline at 866-270-0733 if you're in the USA. If you're outside the United States, you can reach the hotline at 313-234-6146. FinCEN has a help desk and a resource center. These can be found at https://www.fincen.gov/.

Common FBAR Questions and Answers

What is the purpose of FBAR?

The FBAR's purpose is to uncover money held in offshore accounts. The FBAR forces those with money in overseas accounts to disclose amounts that exceed the threshold.

Is FinCEN Form 114 the same as FBAR?

The FBAR's formal name is the Report of Foreign Bank and Financial Accounts, and the FBAR is the same as FinCEN Form 114.

Is it easy to file FBAR?

Using FinCEN form 114 electronically through the e-filing site is straightforward. It requires filers to enter the necessary information into their online system.

What if I've never filed an FBAR, but I should have?

You will need to report the accounts for the years missed to avoid non-compliance charges. Generally, you can use the Streamlined Filing Program or the Delinquent FBAR Submission Procedures to catch up without being penalized.

Who is exempt from FBAR?

US citizens, Green Card holders and resident aliens must file FinCEN Form 114 (an FBAR). But filing is only necessary if the combined balance of all the foreign accounts you own or have signing authority for exceeds $10,000 during the calendar year. If you do not have foreign bank accounts or signing authority over foreign accounts, you don't need to file an FBAR. And if you're accounts are under a combined value of $10,000, you are exempt.

Do non-residents need to file FBAR?

US citizens, Green Card holders and resident aliens must file FinCEN Form 114 (an FBAR) if their foreign accounts' combined value is more than $10,000 US. Filing is also necessary if you have signing authority for foreign accounts that exceed $10,000 at any point during the calendar year.

Do I need to file FBAR every year?

FBARs need to be filed every year. The FBAR is an annual report due April 15, following the calendar year. If you fail to meet the FBAR due date of April 15, you have an automatic extension to October 15.

What is the FBAR filing deadline for 2022 and 2023?

The FBAR filing deadline is April 15 of the following calendar year. An automatic extension to October 15 is allowed if you fail to meet the FBAR due date of April 15.

 

Summary of Key Points:

• FBARs must be filed by all US persons with foreign holdings exceeding a minimum of $10,000 US.
• It is an easy process that can be completed on your own with minimal cost.
• FBAR is filed with FinCen, not the IRS, and you must keep records for at least five years.
• Filling your FBAR isn't something to worry about, as it's easy to do.
• If you need help filing your FBAR, then see a cross-border accountant.

Next Steps

If you’re a US citizen or Green Card holder living in Canada or are planning on moving to Canada, please get in touch. At SWAN Wealth, we specialize in cross-border financial planning and cross-border wealth management as well as regular Canadian financial planning. If you need assistance with moving and optimizing your investments across the border or estate planning, wealth management and portfolio management, we are here to help.

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Schedule a 15-minute introductory call with SWAN Wealth Management. Click here to schedule a call.

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About the Author

John Woodfield is a Financial Management Advisor (FMA), a Chartered Investment Manager (CIM), and a Certified Financial Planner (CFP), and in 2007 was inducted as a fellow of the Canadian Securities Institute (FCSI). As a portfolio manager and CFP®, he works with clients across Canada. John Woodfield’s clients are families, individuals and business owners who understand the importance of comprehensive wealth and investment plans driven by the lifestyle they want to lead.

Schedule a Call

Schedule a 15-minute introductory call with SWAN Wealth Management. Click here to schedule a call.