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4.8  of 1000+ reviews by Trustpilot   ✔ Tax returns for both US and abroad
4.8  of 1000+ reviews by Trustpilot   ✔ Tax returns for both US and abroad
4.8  of 1000+ reviews by Trustpilot   ✔ Tax returns for both US and abroad
4.8  of 1000+ reviews by Trustpilot   ✔ Tax returns for both US and abroad
4.8  of 1000+ reviews by Trustpilot   ✔ Tax returns for both US and abroad
4.8  of 1000+ reviews by Trustpilot   ✔ Tax returns for both US and abroad
4.8  of 1000+ reviews by Trustpilot   ✔ Tax returns for both US and abroad
4.8  of 1000+ reviews by Trustpilot   ✔ Tax returns for both US and abroad
US tax return

Understanding FBAR: A Guide for Expats

By January 8th, 2024No Comments4 min read
Foreign Bank Account Report (FBAR) is a crucial filing requirement for US citizens living abroad. Read our FBAR expat guide

The Foreign Bank Account Report (FBAR) is a crucial filing  requirement for US citizens living abroad. In this comprehensive guide, we will delve into the key aspects of FBAR, its purpose, who needs to file, and the potential consequences of non-compliance. Whether you’re an expat or considering living overseas, understanding FBAR is essential to ensure compliance with US tax laws.

What is FBAR?

FBAR refers to the Foreign Bank Account Report, also known as FinCEN Form 114. It is an informational report that must be filed by US citizens, residents, and certain entities who have financial interests in or signature authority over foreign financial accounts. The Financial Crimes Enforcement Network (FinCEN) mandates FBAR filing to combat tax evasion and money laundering. Essentially, FBAR is a tool to track and monitor offshore accounts held by US persons.

Who needs to file FBAR?

If you are a US citizen, resident alien, or entity and have an aggregate value exceeding $10,000 in one or more foreign (non- US) financial accounts at any time during the calendar year, you are required to file FBAR. Foreign financial accounts can include bank accounts, mutual funds, brokerage accounts, and even certain insurance policies. Expats, dual citizens, and green card holders must also file FBAR, regardless of their residence outside the United States.

 

Expats Overseas expert Romy Lindner “We understand the unique challenges faced by expats when it comes to financial matters, especially the complex requirements like FBAR. Most expats are not familiar with FBAR because as an expat, it is the first time you have a bank account overseas. At Expats Overseas, our team of experts is dedicated to providing comprehensive guidance and support to ensure expats remain compliant with US tax laws. With our in-depth knowledge and experience, we empower expats to navigate the intricacies of FBAR filing, protecting their financial well-being and giving them peace of mind while living abroad.”

 

Consequences of non-compliance

Failing to file FBAR or providing incorrect information can result in severe consequences. The penalties for non-compliance can be substantial, ranging from civil penalties to criminal charges in extreme cases. The IRS has stepped up its enforcement efforts and is actively working with foreign tax authorities to identify non-compliant individuals. It is essential to ensure FBAR compliance to avoid penalties, legal issues, and potential damage to your financial reputation.

FBAR expat filing process

To fulfill FBAR requirements yearly, you need to electronically file FinCEN Form 114 through the Financial Crimes Enforcement Network’s BSA E-Filing System. The filing deadline is April 15th, with an automatic extension until October 15th. Accurate reporting of all foreign accounts and their maximum balances during the year is crucial. Retaining records and supporting documentation is recommended in case of future inquiries or audits.

Tax due on the FBAR

The good news here, no tax is due on the FBAR filed. However, the reported data is checked against the reports that financial institutions worldwide submit to the IRS under FATCA law. This should ensure that tax evasion and money laundering are prevented. The IRS is very strict on correct reporting of the FBAR, with fines if the reporting is incorrect or incomplete.

Expats Overseas, one-stop-shop filing for expats

Filing expat taxes overseas can be a complex process. However, with the help of Expats Overseas, you can navigate the nuances of the U.S. tax code and overseas tax system. We have a network of expert tax advisors for both your US tax and your local tax who can file your tax return(s)accurately and efficiently.

Prevent double taxation and receive the tax credits you are eligible for. Contact Expats Overseas today to get started.

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