The filing deadline for the Foreign Bank Account Report (FBAR) has changed. To ensure U.S. taxpayers pay income taxes on their worldwide income, the Financial Crimes Enforcement Network (FinCEN) developed the FBAR. In the past, this form was due on June 30, but starting 2016 calendar year, the form will be due by the due date of the federal income tax return – April 15 (April 18th in this year 2017).
The threshold for the filing requirement is for a U.S. taxpayer with the aggregate value of all foreign account balances (Bank accounts, Savings accounts, Investment accounts, Securities accounts, Mutual Funds. Foreign Trusts, Foreign Retirement Plans, Foreign Business and/or Corporate Accounts, Insurance Policies including some Life Insurance, Foreign Accounts held in a Controlled Foreign Corporation, or Foreign Accounts held in a Passive Foreign Investment Company) that exceed $10,000 at any point of time during the calendar year. What this means: if you have 11 accounts with $1000 in them at any given time during the year, you are STILL required to file the FBAR and list all the foreign accounts on it, even if none of the accounts exceed $10,000.
A U.S. taxpayer includes a United States citizen, Legal Permanent Resident (Green Card holder), or a U.S. visa holder who meets the Substantial Presence Test.
The FBAR is filed every year to the US Treasury Department via FinCEN (not to the IRS). The FBAR does not generate any additional tax -it simply exists as a reporting requirement. This “Disclosure” prevents the hiding of foreign assets and income as a way to avoid US income tax. Failure to file the FBAR can result in significant civil and/or criminal penalties. If you are unsure as to whether you need to file the FBAR, the IRS Website should help you, but you can also visit www.srjtax.com if you need FBAR filing services.
Shiv Jhawar is Master in Accounting from Univ. of IL at Urbana-Champaign
Shiv R. Jhawar