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How to File an FBAR

Posted on 3rd Sep 2016

As we all know, April 15th is the critical filing deadline for your income taxes. There is another important deadline which many of our clients must be aware of as well: June 30th, which is the date by which all United States citizens are required to file a Foreign Bank Account Report (FBAR). It is important not to miss this deadline, especially in recent years, as the IRS has begun to more aggressively pursue taxpayers involved in hidden offshore transactions. This issue relates closely to real estate law, as your non-monetary assets are implicated in an FBAR as well.

Who Has to File an FBAR?

To be in compliance, you must file an FBAR annually with the Treasury Department if you have signature authority over a foreign financial account valued at more than $10,000 at any time during the preceding calendar year, or if you have an interest in such an account. It isn’t just foreign bank accounts holding cash that trigger the FBAR requirement. You also have to file one if you have a foreign account holding non-monetary assets worth more than $10,000, such as real estate investments.

How Do You File Properly?

To be in compliance with the FBAR rules, you are required to complete and electronically file the FBAR FinCEN Report 114 through FinCEN’s BSA E-Filing System. There are instructions provided on the same website that walk you through the filing. In short, your FBAR must contain the name and address of any financial institution in which you hold an account that has been valued at over $10,000 in the past 12 months, as well as the account number and the maximum amount the account held in the prior year. There are no filing extensions available for filing an FBAR, meaning even if all you have is incomplete information on June 30th, you need to file something. It can always be amended upon receipt of additional information. Not filing, on the other hand, opens you up to penalties.

These rules and regulations can be confusing. A real estate lawyer can help you understand exactly how to stay on track with the various forms, deadlines, and processes.