If you are a U.S. citizen or resident and you have a foreign bank or financial account, you may be subject to certain reporting requirements in the U.S. According to the IRS, you would be subject to the reporting requirements if you have a financial interest in, or signature or other authority over accounts in a foreign country, and the total value of all your foreign financial accounts exceeds $10,000 at any time during the year.
If you are required to report, you must file a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). The IRS points out that this form supersedes Form TD F 90-22.1, and after June 30, 2013, the FBAR must be filed electronically with FinCEN. The deadline for filing this report is June 30 of the year following the calendar year that is being reported.
In addition to individual U.S. citizens and residents, the reporting requirement also applies to entities such as corporations, partnerships, and limited liability companies that are created or organized in the U.S. or under U.S. law, and trusts or estates formed under U.S. law.
The accounts that are subject to this reporting requirement include bank accounts such as checking and savings accounts or time deposits, brokerage accounts, mutual funds, trusts, insurance or annuity policies with a cash value, and other types of foreign financial accounts.
The penalty for not meeting the reporting requirement can be severe. Non-willful failure to file an FBAR if required can result in a civil penalty of up to $10,000.
The FBAR report is a U.S. Treasury report. But if you have foreign financial accounts with a total of over $10,000 you also need to complete Part III, Foreign Accounts and Trusts, of Schedule B, Interest and Ordinary Dividends, that you file with your annual income tax return.
The IRS points out that Form 8938, Statement of Specified Foreign Financial Assets, must be filed with your tax return if you have foreign financial accounts that are over the threshold for filing. If you are living in the U.S. you would be required to file this form if you have foreign financial accounts for a total of more than $50,000 on the last day of the tax year or $75,000 at any time during the tax year. If you are married filing jointly, the thresholds are $100,000 on the last day of the year and $150,000 at any time during the year.
If you are living outside the U.S. and are not married, the threshold amounts are $200,000 on the last day of the year and $400,000 at any time during the year. If you live outside the U.S. and are married, the corresponding thresholds are $400,000 and $600,000.
The requirement to file Form 8938 is in addition to the requirement to file FinCEN Form 114 with the U.S. Treasury.
Comparison of Form 8938 and FBAR Requirements, IRS
File the Report of Foreign Bank and Financial Accounts (FBAR) as an Individual, BSA E-Filing System
Foreign Financial Accounts Reporting Requirements, IRS
Form 8938, Statement of Specified Foreign Financial Assets
Report of Foreign Bank and Financial Accounts (FBAR), IRS
Schedule B, Interest and Ordinary Dividends, IRS