FBAR – Foreign Bank Account Reporting.
FBAR Filing 2021: Most of the United States tax payers are not aware of FBAR Filing, which is very much mandatory to report. Since April 2013 FinCEN(Financial Crimes Enforcement Network) which is a bureau of Department of Treasury entitled to keenly analyse the foreign bank account transitions in order to contain international money laundering, terrorist financing or any financial crimes.
Due to lack of FBAR awareness the tax payers are not filing FBAR which is causing them to face criminal and civil penalties by the FinCEN. As we are a renowned tax consulting firm we feel it as our responsibility to create awareness about FBAR filing among the tax payers, to avoid any penalties and criminal proceedings by IRS or FinCEN.
Below is the required information on FBAR instructions for the tax payers to check/determine their eligibility to file/report FBAR with FinCEN.
What is FBAR?
FBAR stands for Foreign Bank Account Reporting, United States persons who have the obligation to file FBAR need to report on FinCEN form 114 with the Financial Crimes Enforcement Network each year.
Note: Tax returns should be filed with IRS (Internal Revenue Service) and FBAR (Foreign Bank Account Report) with FinCEN on form 114 electronically.
By the way of The Bank Secrecy Act (BSA) the Department of Treasury has a legal right to get the financial information of U.S. persons, who have Financial Interest or Signature Authority on Financial Accounts managed by the Financial Institutions located outside the United States.
FinCEN (Financial Crimes Enforcement Network) has authorised IRS (Internal Revenue Service) for:
- Assessing and collecting the civil and criminal penalties
- Investigating criminal and civil violations under FBAR guidelines
Why FBAR is Required?
The compulsion to report FBAR is to trace or identify the funds used for illegitimate purposes, or to find unreported income earned or maintained abroad.
Who Must File FBAR?
A United States person (Citizen, Legal resident, Green card holder, H1b, L1 visa holder etc) who has a Signature authority or Financial Interest on any single or multiple foreign financial accounts, value over $10,000 any time during the U.S. financial year (calendar year) must file/report FBAR on FinCEN form 114 each year.
Who is United States Person?
- Legal Resident
- Green Card Holder
- H1b Visa Holder
- L1 Visa Holder
- A trust formed under the laws of United States
- An estate formed under the laws of United States
- An entity created or organized in the United States under the laws of the U.S. government
Types of FBAR Related Foreign Financial Accounts?
A foreign financial account with a financial institution located outside the United States.
If all the foreign financial accounts aggregate value exceeds $10,000 a tax payer is subjected to file FBAR on FinCEN form 114 with the Financial Crimes Enforcement Network.
- Mutual Funds
- Commodity futures or options accounts
- Insurance policies of whole life insurance policy with a cash value
- Bank Accounts: Savings, checking, and time deposits
- Security Accounts: Brokerage accounts, securities, derivatives, or any other financial accounts.
- Any financial account maintained with the foreign financial institution abroad.
How to Convert the Foreign Currency to USD for FBAR Purposes?
After determining the maximum accounts value in the currency of financial account, convert the amount into USD according to Treasury Reporting Rates of Exchange of the last day of a calendar year.
What is Signature Authority for FBAR?
A signing authority of an individual who has a right of disposition of assets held in a foreign financial account.
Jointly held financial accounts
If there is more than one person maintain financial account, each United States person has a financial interest over the financial account, so each United States person should report the complete value of account on FBAR.
Jointly held financial accounts by spouses
The spouse of an individual need not file FBAR if the financial accounts are held by both the spouses, the financial accounts maintained separately then each spouse need to file separate FBAR.
FBAR Filing Deadline or FBAR Due Date 2021:
The filing due date to file/report FBAR 2021 is April 15th 2022 and automatic extension is till October 15th 2022 request for an extension is not required.
The taxpayers who missed FBAR 2017, 2018, 2019, 2020 filing can still file.
Who is Exempted From Filing FBAR?
An individual who has signature authority but no financial interest of a foreign financial account is exempted to file FBAR 2021 if below conditions are met.
- An officer of a trust, bank or financial institution who is holding signature authority for official requirement.
- Non-resident aliens examples: foreign students and resident aliens who are not qualified to file resident tax returns according to SPT (substantial present test)
FBAR Record Keeping Requirements
Required financial account records need to be kept safe for 5 years.
- Name and address of a foreign financial account
- Maximum value of a financial account of a calendar year
- Name maintained on each financial account
- Types of accounts
FBAR Penalties, Civil and Criminal proceedings
Non filing of FBAR can attract both civil and criminal penalties or may be both. A person who was eligible to file FBAR for previous years can still file any time, below are the details of wilful and non-wilful penalties.
- Negligent Violation: $1,078
- Each Non-WilfulViolation: $12,459
- Wilful Failure to file: $124,588 up to $250,000 or 50 per cent of the amount of an account at the time of violation, 5 year imprisonment of both.
- Knowing and wilfully filing false FBAR: Up to $100,000 or 50 per cent of the amount in the account at the time of violation, 5 years imprisonment or both.
How to file FBAR?
Crescent Tax Filing would be glad to help you in assessing your eligibility and file your accurate FBAR for Free with FinCEN.
On request we will email you FBAR questionnaire form, you can fill the form and email us in turn we will assess the details and file your FBAR 2021 online and share the acknowledgement with you.
Since crescent tax filing works 365 days providing various value added tax services for free which can cost you $1200 in the market, it means you are entitled to have our tax experts support all the time without paying cost, so please call us today for any assistance.
FBAR filing assistance…..Call 916-241-4499 or Email: email@example.com