Ways to file an FBAR and its importance to the government
We must report certain foreign financial accounts, such as bank accounts, brokerage accounts, and mutual funds, to the Treasury Department every year and retain certain records of those accounts under the Bank Secrecy Act. On FinCEN Form 114, users report the accounts by filing a Report of Foreign Bank and Financial Accounts (FBAR).
Who needs to do this?
An FBAR must be filed in a certain way. One can easily find fbar instructions on the internet. Anybody in the United States, including citizens, residents, corporations, partnerships, limited liability companies, trusts, and estates needs to file an Fbar.
- Have a financial interest in, or signature or other authority over, at least one financial account outside the United States.
- At any point during the calendar year reported, the total value of those international financial accounts exceeded $10,000.
A foreign financial account is one held at a financial institution outside the United States. Whether or not the account generated taxable revenue has no bearing on whether or not it is considered a “foreign financial account” for FBAR purposes.
How to file a Fbar:
It must be filed electronically through the BSA E-Filing System of the Financial Crimes Enforcement Network. It is not to be filed with the federal tax return. If you want to file your FBAR on paper, you must contact FinCEN’s Regulatory Helpline to obtain an exemption from e-filing. FinCEN will provide the paper FBAR form to complete and mail to the IRS at the address specified in the form’s instructions if FinCEN approves the request. Paper filings on TD F 90-22.1 (obsolete) or printed FinCEN Form 114 will not be accepted by the IRS (for e-filing only).
Things to keep in mind while filing an FBAR:
Keep records of-
- Name on the account,
- Account number,
- Name and address of the foreign bank,
- Type of account, and
- The maximum value during the year.
Filing an FBAR is of significant importance because it deals with government work and when someone does not comply with the laws stated by the government, they may face certain punishment. Violations that are not purposeful can result in a civil penalty of up to $10,000 per infraction. Willful infractions can result in fines of up to $100,000 or 50% of the account’s balance at the time of the violation. Criminal charges may be brought against you, and you may be sentenced to prison.