FBAR Reporting And Its Impliacations

Simply put, the FBAR is a report that needs to be filed in addition your individual tax return. Every individual is required to file the FBAR if they have been a U.S resident or citizen and have experienced an aggregate balance exceeding $10,000 in all their financial and overseas bank accounts. The final date for filing FBAR is June 30th.


Crucial Aspects of FBAR


FBAR though seems to be a simple foreign bank account filing procedure, has its own critical aspects that need to be kept in mind. They are discussed below.


* FBAR is not the same as your individual tax return


FBAR is filed in addition to an individual’s income tax return and needs to be filed in TD F 90-22.1 even of an individual has filed Form 8938, 'Statement of Specified Foreign Financial Assets' with the tax return.


* The FBAR due date is on June 30th


June 30th is the final date of FBAR submission. As opposed to a tax return that needs to be completed on April 15th, the FBAR needs to be received by the Treasury by the 30th of June and there is no extension to it. Hence, if you have completed your FBAR by June 29th it is important for you to send it through an overnight mail for it to reach by June 30th. In case, you complete the same by June 30th, then it becomes late.


* FBAR reporting is a must, even if there is zero income


In case you are holding a foreign financial account, you will have a reporting obligation even if the account has no taxable income


* A single day’s high balance is taken into consideration


The FBAR needs to be filed by the U.S residents, citizens and green card holders even if the aggregate of their financial and bank accounts surpassed $10,000 at any time during a year. This indicates that of the aggregate income of the account holder surpassed $10,000 even on a single day in a given year, then the person needs to file FBAR and disclose individual accounts.


Finally, individual who fail to report FBAR are faced with penalties. For the ones who fail to file FBAR they can be subject to harsh penalties that might go up to an amount of USD 100,000, 50 percent of the account balance, or a criminal penalty that may go up to USD 250,000. This apart, there is also a chance of 5 years imprisonment. At the same time, the IRS can even track down 6 years and review an individual’s tax return to trade the balances indicating FBAR. In  order to avoid these penalties, it is best to seek guidance from an expert tax planning agency and file your FBAR accordingly.


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