How to File FBAR Online – A Guide for Expats
Many American expats are surprised to learn that they have to report their global income on a US tax return every year, often as well as having to file foreign taxes in their country of residence.
They have to file a US return because the US taxes all of its citizens (and green card holders), rather than just US residents.
To avoid double taxation, when expats file, they can file additional forms to claim IRS measures such as the Foreign Tax Credit or the Foreign Earned Income Exclusion. Unfortunately, tax treaties don’t in themselves exempt expats from having to file.
Expats also have additional US reporting requirements too, if they have a foreign registered business for example, or foreign financial assets.
One notable US reporting requirement that affects millions of US expats is reporting foreign bank and other financial accounts by filing a Foreign Bank Account Report, or FBAR.
Who has to file an FBAR?
The requirement to file an FBAR affects any American who has a total of over $10,000 in foreign registered financial accounts at any time during the year.
It doesn’t matter whether the $10,000 is distributed between multiple accounts, or all in one account, as the threshold is per person.
Qualifying accounts include all bank and most investment accounts (including many foreign pensions) that are held outside the US and its territories.
How to file an FBAR online
“The Report of Foreign Bank and Financial Accounts (114) must be filed electronically using the BSA E-Filing System. Individuals can satisfy their filing obligation by using the no registration option within the E-Filing System.” – FinCEN.
FBARs have to be filed online at the FinCEN website. The FBAR form is called FinCEN Form 114.
Because FBARs are filed to FinCEN rather than to the IRS, penalties for not filing are high, starting at $10,000 per year for an unintentional non-compliance. The US government is receiving account balance (and contact) information from foreign banks and investment firms too, so they can verify the information provided on FBARs.
FinCEN Form 114 requires expats enter the account name, account number, and the name and address of financial institution where the account is held, and the maximum balance in each account during the year, for each of their foreign registered financial accounts.
Filing FBARs late
The FBAR filing deadline is April 15th, however there’s an automatically applied extension until October 15th, so most expats file their FBAR at the same time as their US tax return.
Many expats aren’t aware that they have to file US taxes from abroad, let alone an FBAR. These folks run the risk of receiving an unexpected and unwelcome letter from the IRS. Thankfully, there’s a way for them to catch up without facing penalties and while still back-claiming the IRS provisions such as the Foreign Earned Income Exclusion that let them reduce their US tax bill.
The IRS amnesty program for expats who are behind with both their tax and FBAR filing is called the Streamlined Procedure. For expats who have been filing their US taxes but not reporting their foreign financial accounts on an FBAR, there’s a separate amnesty program called the Delinquent FBAR Procedures.
Expats with any questions or doubts about their US tax obligations should always consult an expat tax specialist, who will advise them on the best, most tax efficient route to get and stay compliant.