FOREIGN BANK ACCOUNTS REPORT AND SPECIFIED FOREIGN FINANCIAL ASSETS

A United States person must file an FBAR if that person has a financial interest in or signature authority over any financial account(s) outside of the United States and the aggregate maximum value of the account(s) exceeds $10,000 at any time during the calendar year. The due date for filing FBAR is April 15.

Financial account includes the following types of accounts:

  • Bank accounts such as savings accounts, checking accounts, and time deposits,
  • Securities accounts such as brokerage accounts and securities derivatives or other financial instruments accounts,
  • Commodity futures or options accounts,
  • Insurance policies with a cash value (such as a whole life insurance policy),
  • Mutual funds or similar pooled funds (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).
  • A financial account is foreign when it is located outside of the United States, which includes the following places:

    1. United States, including the District of Columbia;
    2. United States territories and possessions, such as:
      • Commonwealth Northern Mariana Islands
      • District of Columbia
      • American Samoa
      • Guam
      • Commonwealth of Puerto Rico
      • United States Virgin Islands
      • Trust Territories of the Pacific Islands
    3. Indian lands as defined in the Indian Gaming Regulatory Act.

    A United States person has a financial interest in the following situations:

    1. The United States person is the owner of record or holder of legal title, regardless of whether the account is maintained for benefit of the United States person or for the benefit of another person, including non-United States persons.
    2. The owner of record or holder of legal title is a person acting as an agent, nominee, attorney, or a person acting on behalf of the United States person with respect to the account.
    3. The owner of record or holder of legal title is a corporation in which a United States person owns directly or indirectly: (i) more than 50 percent of the total value of shares of stock; or (ii) more than 50 percent of the voting power of all shares of stock.
    4. The owner of record or holder of legal title is a partnership in which the United States person owns directly or indirectly: (i) an interest in more than 50 percent of the partnership's profits (distributive share of partnership income taking into account any special allocation agreement); or (ii) an interest in more than 50 percent of the partnership capital.
    5. The owner of record or holder of legal title is a trust of which the United States person: (i) is the trust grantor; and (ii) has an ownership interest in the trust for United States federal tax purposes.
    6. The owner of record or holder of legal title is a trust in which the United States person has a greater than 50 percent present beneficial interest in the assets or income of the trust for the calendar year.
    7. The owner of record or holder of legal title is any other entity in which the United States person owns directly or indirectly more than 50 percent of the voting power, total value of equity interest or assets, or interest in profits.

    Signature authority is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (whether in writing or otherwise) to the bank or other financial institution that maintains the financial account.

    Typically, a financial account that is maintained with a financial institution located outside of the United States is a foreign financial account.

    You may be subject to civil monetary penalties and/or criminal penalties for FBAR reporting and/or recordkeeping violations. Assertion of penalties depends on facts and circumstances. Civil FBAR penalty maximums in Title 31 of the United States Code are adjusted annually for inflation. Please refer to Publication 5569, Report of Foreign Bank & Financial Accounts (FBAR) Reference Guide for information about criminal penalties.

    FBAR is NOT part of the income tax return preparation service. If you engage us for FBAR service to Department of Treasury, there will be a separate charge for the service. There will usually be a separate line item on our tax preparation service invoice if we provide the service to you for the first time.

    Specified Foreign Financial Assets

    For an unmarried individual or married individual filing separately living in the US who has an interest in one or more specified foreign financial assets having an aggregate value exceeding either $50,000 on the last day of the tax year or $75,000 at any time during the year ($100,000 and $150,000, respectively, for married individuals filing a joint return), a statement of specified foreign financial assets is required to be attached to his/her US income tax return.

    For an unmarried individual or married individual filing separately living outside the US who has an interest in one or more specified foreign financial assets having an aggregate value exceeding either $200,000 on the last day of the tax year or $300,000 at any time during the year ($400,00 and $600,000, respectively, for married individuals filing a joint return), a statement of specified foreign financial assets is required to be attached to his/her US income tax return.

    Specified foreign financial assets include financial accounts maintained by foreign financial institutions and other assets not held in accounts maintained by financial institutions, such as stock or securities issued by non-US persons (including stock or securities issued by a person organized under the laws of a US possession), financial institutions or contracts with issuers or counterparts hat are non-US persons (including financial instruments issued by a person organized under the laws of a US possession), and interests in certain foreign entities. A specified foreign financial interest does not include foreign real estate, the direct ownership of foreign currency, shares in a US mutual funds tha owns foreign stock and securities, or brokerage accounts maintained by US financial institutions.