Congress passed the Bank Secrecy Act in 1970, and the Foreign Accounts Tax Compliance Act in 2010. These laws require US citizens with foreign bank accounts, mutual funds, or trusts to file disclosures with the Financial Crimes Enforcement Network (FinCEN), a division of the US Department of the Treasury. These reports must be filed annually.
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The law requires US citizens or residents with $10,000 or more in foreign assets, at any time during the year, to file via the BSA E-Filing System. Under the current regulations, there is a six-year statute of limitations on FBAR filings.
FinCEN’s allows third parties, including FBAR attorneys, to file on clients’ behalf.
File An FBAR: Exceptions
FBAR exceptions exist. Certain jointly owned foreign financial accounts, most US military banking accounts, Nostro accounts, and qualified IRA plans, for example, aren’t subject to FBAR reporting requirements. Plus, individuals with supervisory and signature authority, but no financial interest in the account, are exempt.
Businesses and FBAR Requirements
The law requires certain individuals and businesses with indirect ownership of foreign accounts to file FBAR’s every year. These include:
- Corporations where a US citizen or resident holds 50% of the voting power or total value of shares.
- Partnerships where the individual is either directly or indirectly entitled to 50% of the interest, profits, or capital.
- Entities where a US citizen or resident owns either directly or indirectly 50% of the voting power, equity interest, profits, or assets of the account.
Expats and Foreign Earned Income Exclusion
Expats or citizens working outside the US are also required to file an FBAR even if they qualify for foreign earned income exclusions or tax credits. For 2017, the threshold for foreign earned income exclusion is $102,100. Affected parties earning more must pay US federal income taxes on the amount earned above the threshold.
Need To File An FBAR?
Do you need to file an FBAR? If so, we can guide you through the process and handle all the paperwork.Connect With An FBAR Attorney »