Do I have to file FBAR

What is an FBAR? Here are eight important things to know about FBAR reporting

Here are eight important things to think about FBAR reporting must know.

1. What is an FBAR?

This is the abbreviation for "Foreign Bank Account Report" or an indication of non-US bank accounts in which you have an interest or over which you have a power of attorney or other power of disposal.

This FBAR form must be submitted if the maximum balance over the course of the assessment period for all accounts (even if you are not the owner of the account) is more than $ 10,000 (see example). It is important to emphasize that this is the highest balance during the year, not the starting or ending balance, as is common in some countries.

In this form (FBAR declaration) not only the private accounts must be specified, but also joint accounts and accounts for which one has a signing authorization (e.g. account of a minor child, account of the parents, account of the employer, if one is allowed to make payments, account of a Sports club, if you are the treasurer, retirement and pension accounts, investment accounts and others).

2. What does FBAR mean?

A US tax law (FATCA - Foreign Account Tax Compliance Act) has existed since the beginning of 2011, which now calls for stricter reporting requirements for foreign (non-US) assets in US tax returns.

Failure to comply with US reporting requirements for these foreign investments can result in substantial fines.

3. Who does FBAR apply to?

The regulation applies not only to US citizens and US green card holders, but also to persons (such as expatriates) who are subject to unlimited tax liability in the USA.

Under FATCA, certain foreign assets must be disclosed on the Form (Form 8938) Statement for Specific Foreign Financial Assets if certain asset limits are reached.

File FBAR: These thresholds depend on the type of assessment (Single, Married Filing Jointly, Married Filing Separately) and the place of residence (residence within the USA / residence outside the USA) and are shown in the following figure.

4. Example of when to file an FBAR

FBAR rules: In one year you will receive € 6,000 in your current account and transfer it to your savings account. You are now required to fill out an FBAR. This is because the highest balance of your checking and savings accounts combined is greater than $ 10,000. Up to the assessment period 2016, this form had to be submitted before July 1st without the possibility of extending the deadline. From the 2016 assessment period, the FBAR benefits from the extension of the deadline for a regular American tax return, so you can receive an extension of the deadline.

In addition, the FBAR can and must be filed electronically through the Treasury Department's website or through professional tax filing software. For more information on FBAR filing, visit the IRS website.

5. What do you declare in the FBAR form?

US persons who have bank accounts outside the US or who have power of attorney through foreign accounts are usually required to submit an FBAR form to the US Treasury Department annually if the total of the maximum account levels of all foreign bank accounts exceeds USD 10,000.

The following account types and contracts must be declared on the FBAR form, among other things: current accounts, savings accounts, share custody accounts, building society contracts, certain insurance policies and private pension plans (e.g. Riester pension) as well as other types of accounts.

6. Information on filing FBAR

The FBAR form is not part of the US tax return. While the US tax return is filed with the US tax authorities, the FBAR form is filed with the Financial Crimes Enforcement Network (FinCEN), a division of the US Treasury Department.

The FBAR form must be submitted electronically. The deadline for submitting the FBAR form is April 15th of the following year.

7. Penalties

A penalty of up to USD 10,000 may be levied for FBAR forms that are not submitted, incomplete, or incorrectly completed if the violation was not intentional. For intentional violations, the penalty is USD 100,000 or 50% of the account balance at the time of the violation.

8. Missed the FBAR submission deadline?

A penalty payment for FBARs not submitted on time will not be levied if the entire income (e.g. interest, dividends, etc.) that can be allocated to the bank account not specified has been fully declared on the tax return and the tax liability arising from this income has been paid.

Another condition for impunity is that the US Treasury Department has not yet become aware of you and has not contacted you. Together with the FBAR form, a statement must be submitted in which you explain why you did not comply with your FBAR submission obligation on time.

If you submitted the FBAR on time, but accidentally incorrectly declared the maximum account balance, or forgot an account, you can submit a corrected FBAR later.

More questions about FBAR or the US?

We, the founders of Americans Overseas, were born in the Netherlands. We came into possession of an American passport through our (American) mothers.

When we heard about this law and tax liability for the first time around 2013, we were unbelieving (that can't be true). Also anger (how can you just decide about us), fear (will I get a fine now or other problems await me) and panic (what do I have to do now). There is no escape from American tax obligations. At that time there was no information for us from the authorities. The American consulate referred us to the IRS and the IRS was impenetrable.

That is why we started this initiative to help people who are in the same situation as us with comprehensive information. In order not to panic unnecessarily, to offer non-binding help in the form of a network of affordable experts. So we have also become interlocutors of the ‘Tweede Kamer’, the Dutch Bundestag. However, we still have a long way to go before anything really changes - if at all. It may be reassuring for those affected to learn that 90% of the cases we deal with lead to clear solutions. In most cases, you will therefore not have to pay any tax in America.

Do you have additional questions about Foreign Bank Account Reporting or US Taxes? If so, contact Americans Overseas.

Contact us now for more information