What are the FBAR filing deadline and requirements for 2022?

06/23/2022

If you’re a US expat, you likely have a bank account located outside the US to help manage your income and other expenses. What you may not know is that you need to report these amounts to the US government each year. And this reporting process is very different from filing your taxes.

US expats have different reporting requirements than citizens stateside. So especially if you’re a new digital nomad, you may have some questions. Your tax returns, for example, are due on June 15th, but you can request an extension if you need more time to file. Your FBAR for 2021, however, was technically due on April 15th, but luckily expats get an automatic six-month extension to October 17th.

If you’re a new expat filing the FBAR for the first time, we understand the process can feel overwhelming. We’ll walk you through everything you need to know about filing the FBAR and explain how to catch up on past FBARs.

What is the FBAR?

The Internal Revenue Service (IRS) requires anyone with foreign financial accounts over a certain balance to file an FBAR each year. The FBAR, which stands for foreign bank account report, shows the US government your bank balances. The US government uses your FBAR to make sure you’re paying the right amount of US taxes each year. It’s a measure primarily taken to prevent tax fraud.

You’ll fill out your FBAR via FinCEN Form 114. Once completed, you’ll send this form to the US Treasury Department’s Financial Crimes and Enforcement Network, or FinCEN. It’s due every year (depending on your bank account balance). It’s not part of your tax return, but there is a big penalty threat if you were supposed to file it and the authorities discover that you didn’t. The FBAR doesn’t drive a tax liability (it’s not a wealth tax), but it is an important piece to staying compliant.

Who’s required to file the Foreign Bank Account Report?

Who’s required to file an FBAR? The US requires this report if you are:

– A citizen, expat, Green Card holder, or resident alien AND
– You have a foreign bank account or any other foreign financial account, AND
– The total combined balance of one or more of your foreign financial accounts exceeds $10,000 at any point during the prior tax year

So, for example, let’s say you’re a US expat living in South Korea with a non-US bank account. Last November, your account had a balance of $11,000. Even if you have less in it right now, you need to file an FBAR, since you exceed the $10,000 balance rule.

If you’re a US expat with more than one foreign bank account, you’ll need to look at their total balances. So, for example, let’s say you have a bank account in Seoul, South Korea that had a $6,000 balance last December. You also have a bank account in Canada that had a $4,500 balance that same month. Since the total of both accounts equals $10,500, you’re also on the hook for filing the FBAR.

It also doesn’t matter whether these accounts held taxable income or not — if they meet the balance requirements, you should file the FBAR.

Here are a few exceptions where you’re not required to report your foreign bank accounts:

– 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 an IRA (Individual Retirement Account) or other retirement account, and you are the owner or beneficiary
– Your foreign bank account is part of a trust of which you are a beneficiary

If you’re married, you only have to report your foreign bank account information once, but you still have to report the full maximum balance (100%, not just your 50% share). Consolidated FBARs contain information for both partners’ individual foreign bank accounts. Only one partner needs to file a consolidated FBAR, but both partners need to sign this form.

Note: You can file a consolidated FBAR despite your tax filing status. So, even if you’re married and filing your taxes separately, you can file your FBAR together.

If you’re not sure if you meet the above criteria, you can reach out to a Bright!Tax CPA to find out.

What is the FBAR deadline for 2022?

The FBAR deadlines are slightly different from tax return deadlines for expats. While expat tax returns for 2021 were technically due on June 15, 2022, your FBAR filing was due on April 18, 2022.

Don’t panic if you’ve realized you’ve missed this year’s deadline. US expats receive an automatic six-month extension for filing the FBAR. This means you have until October 17, 2022 to file your foreign financial bank account report. You didn’t have to submit an extension request, the FBAR extension is automatic, which means you have the extension as long as you file by the October 17th deadline in time.

Here’s what to include when filing the FBAR

Before filing the FBAR, it’s a good idea to compile all the paperwork you might need beforehand. This could include bank statements, end of year earnings, or tax documents. And while you may receive these forms via the mail, you can usually access them online, too. Keeping records of all of your foreign financial accounts can make this step even easier.

Most US expats only need to report foreign bank account balances each year. But here are some other, less common accounts you may need to report:

– Foreign stocks or securities held in a foreign account. In this case, you must report the account, but not the specific details on the FBAR (keep in mind that the income earned within these accounts might need to be reported separately on your tax return)
– Foreign mutual funds
– Financial accounts held at foreign branches of US financial institutions
– Foreign life insurance policies or annuity contracts with cash values
– Foreign pensions

When filing the FBAR, you’ll generally will not need to submit statement or tax forms from your bank account. However, you will need to provide the following details on the FBAR itself:

– The account holder name(s) listed on the account
– The account number
– The name and address of the foreign bank or financial institution
– The type of account
– The maximum value during the year (converted to USD)

In some cases, you may need to reach out to the financial institution to get this information.

You can gather this information when you’re ready to file. Keeping track of your account balance throughout the year will help. This can help you stay more aware of your account balances, so you understand if you’re required to file or not.

Have questions about what to include when filing your FBAR? Chat with a Bright!Tax CPA to get the clarity you need to file confidently.

How to file your FBAR

You don’t file your FBAR with your federal US tax return. Instead, you file it separately and submit it to the US Department of Treasury, not the IRS. You can file your FBAR online using FinCEN form 114. It cannot be submitted via mail except for special circumstances (FinCEN does not allow paper filing of FBARs).

It’s fairly easy to file your FBAR on your own online. You can do this online through the BSA electronic filing system. Your online tax software may also allow you to file the FBAR. If you have questions or need advice, we recommend working with a CPA to help you file.

If you like old-school methods for filing forms, you can request to complete your FBAR via the mail, but the authorities only allow this exception in special circumstances. To do so, you must reach out to FinCEN’s resource center to request an e-filing exemption. If approved, FinCEN will mail you the correct form to fill out. You cannot download the online form and mail it in.

Do you have questions about the FBAR and whether you need to file one? Bright!Tax can get you the answers you need and partner with you to file your FBAR ahead of the deadline.

Are there penalties for not filing the FBAR?

Yes, the US government can issue penalties if you do not file an FBAR when required. Not filing your FBAR on time or at all could result in penalties.

In some cases, the US government could fine you $10,000 per violation for ignoring this filing request. Penalties can go higher depending on your specific bank account balances. But, it’s easy to prevent this risk. Get ahead of the October filing deadline and team up with a trustworthy CPA.

Bright!Tax can offer you peace of mind and help you avoid FBAR penalties. We’ll help you understand if you’re required to file and help you navigate through the process.

Is the FBAR part of my tax return?

No, the FBAR is different from your federal tax return. Most US expats are on the hook for filing taxes, but fewer will need to file an FBAR.

Your FBAR details the money you’ve held in foreign bank accounts for a given tax year. The information reported in an FBAR could be transmitted to the authorities to allow them to cross-check that your income reported on your federal tax return “makes sense” with the amounts you’ve listed on the FBAR.

Your federal tax return, on the other hand, reports any taxable income that you made throughout the year in order to determine how much you owe in US taxes.

Each form goes to different departments in the US government. An FBAR goes to the Department of the US Treasury Financial Crimes Enforcement Network and your tax return goes to the Internal Revenue Service.

Who is exempt from filing the FBAR?

In general, if you have a foreign bank account with more than $10,000 in it at any given time, you need to file an FBAR. But, there are a few exceptions.

You may be exempt from filing if your foreign accounts are retirement accounts or trust beneficiary accounts. Likewise, if your spouse filed a consolidated FBAR, you do not need to file an additional one.

Not all foreign retirement accounts are exempt though. If you’re unsure if your retirement accounts require an FBAR filing, reach out to a Bright!Tax CPA to find out.

How does the IRS know if you have a foreign bank account?

In today’s digital world, it’s increasingly more difficult to hide bank accounts from the US. If you have a foreign bank account, the US government is bound to find out about it. In fact, banks directly share this information with the Department of Treasury.

The US passed the Foreign Account Tax Compliance Act, FATCA, in 2010 as part of the 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 do not file the FBAR and you’re required to, the US government will know. It’s best to voluntarily file if you meet the requirements.

How much does it cost to file a FBAR?

There’s no cost incurred when filing the FBAR. It’s free to file online by yourself. If you use a tax preparer 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. The US may charge penalties for missing or incorrect FBARs. To ensure your FBAR is error-free, we recommend working with an experienced CPA. A tax professional with a background in expat taxes can verify your FBAR and help you file.

How difficult is it to file a 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 keep any corresponding bank statements for your own records, and submit.

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.

Bright!Tax can work with you to make sure filing your FBAR is as quick and painless as possible.

What if I haven’t filed my FBAR in previous years?

If you’ve been a US expat for more than a year and suspect you may owe the US a previous FBAR, don’t panic. A Bright!Tax CPA can help you determine the best next steps to take.

The good news is if you do owe previous FBARs, the IRS has made it easier for expats to catch up. If you’re eligible, there are two amnesty programs to consider – IRS streamlined filing compliance procedure and the delinquent FBAR submissions procedure.

The streamlined procedure is best for US expats who owe tax returns and FBARs. There are some requirements. Your missed filings must be due to non-willful conduct on your part. So, if you weren’t aware you had to file an FBAR, you may be eligible for this process. You’ll also be able to file your past six years of FBARs as part of this process.

The delinquent FBAR submissions procedure is suited for US expats who are up to date on their tax returns, but behind on FBARs. Like the streamlined procedure, you must not have filed due to non-willful conduct to qualify.

We recommend filing previous FBARs voluntarily to avoid penalties. Remember, FATCA has made it easier for the US government to identify foreign accounts, so it’s better to be proactive here.

Bright!Tax has experience helping US expats through both of these amnesty procedures. We can help you catch up and gain peace of mind.

What other financial reports do US expats have to file?

The FBAR is just one of the forms you’ll need to file as a US expat. Some US citizens living abroad may need to file other forms, such as IRS form 8938. This form is a Statement of Specified Foreign Financial Assets. As part of FATCA, this form is also required from eligible US expats each year.

You may be required to file Form 8938 if you’re a US individual or business that holds foreign assets over $50,000. So, in this case, if your foreign bank account contains $55,000, you’d have to file the FBAR and IRS Form 8938. There are varying thresholds to consider with Form 8938 depending on your filing status and whether you’re physically located within or outside the US during the tax year. 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, 2022 (unless you request a tax return extension). If you receive an extension, it is due by October 17, 2022.

If you already filed your tax return, but think you may need to file form 8938, Bright!Tax can help.

Bright!Tax can make filing your FBAR simple

Navigating through the reporting requirements as a US expat can feel overwhelming. If you’re filing for the first time, you will have a lot of questions about the process. Bright!Tax can help you file your FBAR, tax returns, and any other tax form with ease. We can help you avoid penalties and catch up on past FBAR filings.

Bright!Tax can help clarify the tax reporting and filing process for you, so you know exactly what to file and when. We’ll also help you apply for extensions if needed. Connect with a Bright!Tax CPA today to get started.