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Whether you’re a United States expat frantically searching “2023 FBAR deadline” or a seasoned filer staying ahead of the latest FBAR filing requirements, we’re here to answer your FBAR questions.
US expats typically have one or more foreign bank accounts to receive their income and facilitate payment of living expenses. For newcomers to the FBAR filing requirement, here’s what you need to know: With a foreign bank account often comes an administrative US reporting obligation: the Foreign Bank Account Report (FBAR). Those subject to the FBAR must file this form annually to report their foreign bank and financial accounts.
To our veteran filers: Welcome back! It’s our pleasure to provide you with the most updated information on the FBAR and its 2023 filing deadline.
Let’s dive in.
Who’s required to file the Foreign Bank Account Report?
The Internal Revenue Service (IRS) requires you to file an FBAR as an individual taxpayer if you are:
- A citizen, Green Card holder, or resident alien AND
- You have a foreign bank account or any other foreign financial account, AND
- The total combined balance in one or more of your foreign financial accounts exceeds $10,000 at any point during the prior tax year.
Note: Any account that you have signature authority over will be subject to FBAR reporting as well.
Common examples of triggering the FBAR filing requirement
The situation: Jason is a US expat living in South Korea with just one non-US bank account: a checking account with a South Korean bank. Last November, his account had a balance of $11,000 when he was paid his annual bonus. He then immediately used the bonus to pay for a family vacation.
The result: Even though he has just $8,500 in it right now, he still must file an FBAR, as his account briefly exceeded the $10,000 threshold during the tax year.
The situation: Victoria is a US expat. She currently lives and works in South Korea, but she has previously lived and worked in Canada. She has one brokerage account in Canada and one checking account in South Korea.
In this scenario, she needs to look carefully at their combined total balances. Let’s say that her Canadian brokerage account had a $6,000 balance last December. Also, in December, the balance in her Korean checking account hit $4,500.
The result: Since the maximum value of both accounts totaled $10,500, Victoria must also file the FBAR, even though no one foreign account individually held over $10,000.
Pro tip:
To calculate whether you hit the threshold, identify the highest balance in each of your foreign accounts throughout the entire tax year for which you are filing. Add them together. If the total is more than $10,000, you meet FBAR reporting requirements. Of course, you will likely be dealing in foreign currencies, in which case you’ll calculate the US equivalent using the US Treasury Exchange Rate. (1)
Exceptions to FBAR filing
There are some exceptions that prevent taxpayers from having to file an FBAR, even if they fit the criteria described above. You do not need to complete the FBAR filing if:
- A US military financial institution manages your foreign bank account
- You have a correspondent or Nostro foreign bank account
- A government entity owns your foreign bank account
- Your foreign bank account is a US-based IRA (Individual Retirement Account) or another qualified retirement account containing foreign accounts as part of a pooled fund, and you are the owner or beneficiary
- Your foreign bank account is part of a trust of which you are a beneficiary
- Among married couples, only one spouse may need to file an FBAR (more details on that below)
Jointly-filed FBARs & FinCen Form 114a?
As mentioned above, some married couples may only need to file one FBAR, provided that a) the couple holds jointly-owned foreign accounts and b) only one or none of the spouses own a separate account.
Let’s look at an example
Ted and Sasha are a married couple living in Vietnam. The couple jointly owns two accounts in Vietnam: a checking account and a savings account.
Ted also has a UK-based retirement account from when he lived and worked in Scotland, but has not added Sasha as a co-owner. Sasha owns no other foreign accounts besides the one she jointly holds with her husband. In this case, Ted must file an FBAR, but Sasha does not need to, as her jointly held account will already have been disclosed on Ted’s FBAR.
In order to jointly file this FBAR, you must include along with it FinCEN Form 114a: Record of Authorization to Electronically File FBARs, which allows one spouse to authorize the other to file on their behalf. Note that the filing spouse must report both their individually-owned accounts as well as the full balance of their joint accounts (i.e. 100% of the balance, not just their 50% share).
Pro tip:
Your ability to jointly file an FBAR is independent of your tax filing status, so even if you’re married and filing your taxes separately, you can still file your FBAR together.
How does the IRS know if you have a foreign bank account?
The US passed the Foreign Account Tax Compliance Act (FATCA) in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. As of 2014, this law compels all foreign financial institutions (FFIs) to report accounts held by US citizens and expats to the US government. In other words, your foreign bank will report your account to the US. FFIs that do not comply with FATCA could receive fines.
This means if you must file the FBAR but do not, you open yourself up to issues with the US Treasury — including a potential $10,000 penalty for every year of noncompliance.
Given that the FBAR is a reporting obligation vs. a tax obligation — i.e. it doesn’t in itself carry an associated tax liability — it’s in your best financial interest to voluntarily file if you meet the requirements.
What is the FBAR filing deadline for 2023?
The FBAR deadlines are slightly different from tax return deadlines for expats. Due to an automatic two-month filing extension for Americans abroad, expat tax returns for the 2022 tax year weren’t due until June 15, 2023 — a date that you can extend further upon request to October 16, 2023. However, FBAR filings technically have the same due date as the standard tax return deadline: April 18, 2023.
Don’t panic if you realize you’ve missed this year’s deadline, though. US expats receive an automatic six-month extension for filing the FBAR. This means you still have until October 16, 2023, to file your foreign financial bank account report. The FBAR automatic extension does not require you to proactively submit a request — as long as you file by the October 16th deadline, you will be considered a timely filer.
Online filing for FBAR
FinCEN form 114 is one of the more straightforward US tax forms to file. It requires that expats enter their personal and contact information, as well as the details for all their foreign accounts.
For each account, expats should enter the:
- Account name
- Account number
- Type of account
- Name and address of the bank or other financial institution where the account is held
- Maximum account balance during the tax year
You should keep records of this information for at least five years after filing.
When entering phone or account numbers, expats should omit all formatting such as spaces, hyphens, or parentheses, and when entering maximum account balances, expats should round them up to the nearest dollar.
Expats should convert non-dollar account balances into USD before entering them on FinCEN form 114 using the Treasury Reporting Rates of Exchange for the last day of the relevant tax year.
Cost to file an FBAR
There’s no cost incurred when filing the FBAR. It’s free to file online by yourself. If you use a tax preparation service or CPA, however, they might request a fee to file your FBAR on your behalf.
Filing your FBAR incorrectly or skipping a required FBAR filing could cost you, however, as the US may charge penalties for missing or inaccurate FBARs. To ensure your FBAR is error-free, we recommend working with an experienced CPA with a background in expat taxes who can verify your FBAR and help you file.
How difficult is it to file an FBAR on my own?
The FBAR online filing process is quick and straightforward for most US expats. You’ll simply fill out the form and submit it, making sure to keep any corresponding bank statements for your own records.
If you have a more complicated financial or tax situation, filing the FBAR may take more time. You may need to wait to receive forms from all of your foreign accounts. In this case, you may also prefer to seek professional filing help.
No matter how complex your situation, Bright!Tax can work with you to make sure filing your FBAR is as quick and painless as possible.
Other related filing requirements for US expats
The FBAR is just one of the (oftentimes, many) forms you’ll need to file as a US expat. Another common filing requirement in the same vein as the FBAR is IRS Form 8938, or the Statement of Specified Foreign Financial Assets.
A brief overview of the Statement of Specified Foreign Financial Assets
Expats filing individually who live outside the US and hold foreign assets worth over $200,000 on the last day of the tax year — or over $300,000 at any time during the tax year — typically must file Form 8938. However, the thresholds that trigger mandatory Form 8938 filing do depend on your filing status and your residency location (i.e. whether you lived within or outside of the US during the tax year).
So if you’re a US expat living abroad with a foreign bank account containing $250,000 on the last day of the tax year, you’d have to file both an FBAR and IRS Form 8938. And, since foreign financial institutions are reporting your accounts to the US government, it’s best to file on time to prevent penalties.
Unlike the FBAR, you’ll file IRS Form 8938 along with your tax return itself. This means it was due by June 15, 2023 (unless you requested a tax return extension). If you did receive an extension, it is due by October 16, 2023.
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