What is the FBAR?
FBAR is the acronym of Report of Foreign Bank and Financial Accounts, otherwise know as ‘FBAR’.
The Bank Secrecy Act (BSA) gave the Department of the Treasury authority to collect information from U. S. persons who have financial interests in or signature or other authority over financial accounts maintained with financial institutions located outside the United States. This provision of the BSA requires that U.S. persons file a FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), if the aggregate maximum values of the foreign financial accounts exceed $10,000 at any time during the calendar year.
Purpose of the FBAR
The FBAR is used by the U.S. government to identify persons who may be using foreign financial accounts to circumvent U.S. law. FBAR information can help identify or trace funds used for illicit purposes or identify unreported income maintained or generated abroad.
Who Must File the FBAR?
A U.S. person must file an FBAR if they have a financial interest in or signature or other authority over any financial account(s) outside the U.S. and the aggregate amount(s) in the account(s) exceeds $10,000 at any time during the calendar year.
Who is a U.S. Person?
A “U.S. person” means:
• A citizen or resident of the United States;
(U.S. Resident: To determine if a person is a resident of the United States, apply 183 days during a three-year period)
• An entity created, organized, or formed in the United States or under the laws of the United States, any State, the District of Columbia, the Territories and Insular Possessions of the United States, or the Indian Tribes. An “entity” includes but is not limited to, a corporation, partnership, trust, and limited liability company; or
• An estate formed under the laws of the United States.
- Disregarded Entities: U.S. persons that are disregarded entities for tax purposes
What are Financial Accounts
• Bank accounts such as savings and checking accounts, and time deposits, • Securities accounts, such as brokerage accounts, securities derivatives accounts, or other financial instruments accounts;
• Commodity futures or options accounts;
• Insurance or annuity policies with a cash value (such as a whole life insurance policy);
• Mutual funds or similar pooled funds (i.e., a fund available to the public with a regular net asset value determination and regular redemptions), and;
• Any other accounts maintained in a foreign financial institution or with a person performing the services of a financial institution.
How and where to report FBAR
he FBAR can be electronically filed through FinCEN’s BSA E-Filing System. The FBAR does not have to be filing with your individual federal income tax return. The FBAR must be reporting during the calendar year in which accounts are subject to be reporting.