FBAR filing is one of the IRS tax laws for US citizens who have funds landed in offshore accounts. To avoid making your tax returns for 2020 more complicated, let’s have a basic understanding of FBAR reporting. We can explain everything about FBAR reporting.
What are FBAR filings?
FBAR is an abbreviation for Foreign Bank Account Report, also referred to as FinCEN Form 114. It requires you to submit it annually if you meet the criteria for reporting thresholds. The reporting of FBAR (Foreign Bank Account Report) is a special requirement by the IRS to avoid tax evasion by US persons for the money and assets in foreign banks.
Instead, to file with the IRS, you have to file the FBAR with FinCEN, the US Treasury Department Finance Crime and Enforcement Network. Any default in filings can land you in trouble, so it’s better to stay time-bound.
Who files an FBAR?
A US person living in the US or abroad (US citizen, resident alien, or green card holder) having ownership or control of foreign accounts files a FinCEN form. Special reporting of FBAR is required if the combined balances of foreign accounts at any point of the calendar are more than $10,000. Even if your account balance is $10,000 for one day, you need to report FBAR.
What do you need to report?
Many expats think that for FBAR filing, they only need to report their foreign account balances. But they also have to report:
⦁ Foreign mutual funds, annuity contracts, and life insurance.
⦁ Online gaming accounts in foreign countries.
⦁ Stocks or securities held in the financial account of the foreign financial institution. Only accounts are reported. No details of the account are required.
⦁ Accounts in the foreign branch of a US bank.
How do you file?
The FBAR filing process for the year 2020 is the same as in 2019. You e-file through FinCEN’s BSA e-filing system or via a professional tax preparer like Meru Accounting.
The married taxpayer can jointly file an FBAR if they don’t own separate accounts individually and have joint accounts only. Otherwise, each spouse has to file an individual FBAR.
While doing your FBAR filings with Meru Accounting, our expert tax consultants will walk you through the filing process.
When do I file?
The deadline to file FBAR is April 15, following the calendar year in which you are reporting. However, for FBAR reporting in 2020, the deadline for FinCEN Form 114 is extended to December 31.
If you need to file, then make sure to file within the deadline to avoid penalties.
Confused about whether to file for 2019 or 2020? We can help you once we have all your tax documents. To begin the US expat tax service with Meru Accounting Tax Service, upload your document today itself.
Why should you file? Penalties for non-filing.
If you still think about why I should file FBAR or are unaware that you need to file, then be ready to face penalties for non-filings. The penalty for non-reporting of FBAR is $10,000 per violation. And, if you have not filed purposefully, the fine can be $100,000 or 50% of the account balance at the time of the violation.
Seek help for your FBAR filings from expat tax experts at Meru Accounting.
Still have queries about filings? Is the deadline approaching to file FinCEN Form 114? No matter how complex your US tax return is, there is always an expat tax expert to help you out.
Start today with Meru Accounting Expat Tax Service.
