Getting a job abroad can be extremely exciting. And it’s easy to get sucked into a vortex of euphoria as we embark on our big adventure. After we arrive at our destination, it’s natural to settle into our new lives and forget about things back home. But however awesome this unique experience is, it entails some very unexciting responsibilities as well, like reporting foreign bank accounts.
One of the most important things that gets little attention among expats is the Report of Foreign Bank and Financial Accounts, or FBAR. It’s just as important as filing a US tax return, so it’s something that Americans living abroad should be aware of. It only popped on my radar because I regularly read the financial news.
FBAR (FinCen Form 114, Report of Foreign Bank and Financial Accounts)
What is the FBAR?
The FBAR (FinCen Form 114) is a form that must be filed by Americans who have foreign financial accounts in excess of the equivalent of $10,000USD, according to the IRS.
The information on the FBAR must be reported to the Financial Crimes Enforcement Network (FinCen) of the United States Department of the Treasury.
Who must file the FBAR?
- US Persons
- Accounts over $10,000USD
For example
Michael, who is a US citizen, worked as a kindergarten teacher in Korea in 2018 and accumulated ￦15,000,000 ($13,483USD) in his Korean bank account. Michael must file the FBAR.
So If you have been working outside the US and saving/depositing money in financial account(s), make sure to monitor the exchange rate and calculate the total value of the accounts. If the total ever exceeds $10,000USD, you will need to file the FBAR.
What is the deadline to file the FBAR?
The deadline to file the FBAR is April 15, but there are some exemptions and exceptions. The timeline for the FBAR is similar to that of income tax returns.
For example
An FBAR regarding accounts for 2018 should be submitted on or before April 15, 2019.
How do I file a Report of Foreign Bank and Financial Accounts (FBAR)?
Visit the IRS website.
What if I do not file the FBAR?
Those who fail to file an FBAR may be subject to severe financial penalties.
What happens if I want to file the FBAR after the due date(s)?
The IRS calls this a delinquent FBAR. Depending on the situation, it may be possible to submit an FBAR after the deadline. The IRS gives submission details on its website.
Have questions?
If after visiting the IRS’s website you still have questions, call or email them. The sooner the better.
In sum
- Americans who have got accounts with a value in excess of the equivalent of $10,000USD must file the FinCen Form 114 (FBAR).
- The deadline to file the FBAR is April 15, but it’s possible to get an extension.
- It is possible to file a late FBAR under certain conditions.
- Failure to file the FBAR can lead to serious penalties.
- Contact the IRS if you need assistance or have questions about the FBAR.
This is not financial or legal advice. It has been provided for informational purposes only. You should contact the IRS or a CPA for more detailed information.