The Foreign Bank Account Report (FBAR) is an important reporting obligation for foreign financial account holder U.S. taxpayers. Within the same context, fulfilling FinCEN Form 114 establishes compliance with FBAR requirements and prevents penalties for not complying with FBAR.
Who Needs to File FBAR?
The Importance
This guide is designed to present who needs to file FBAR, how to file FBAR Form 114, the FBAR filing deadline alongside typical mistakes to prevent.
As indicated above, FBAR is mandatory for U.S. taxpayers with foreign financial accounts. If the total account balance exceeds $10,000 at any time during the year, FinCEN Form 114 must be filed electronically with the Financial Crimes Enforcement Network (FinCEN), not the IRS.
| FBAR (FinCEN Form 114) | FATCA (Form 8938) | |
|---|---|---|
| Definition | It reports foreign financial accounts (bank accounts, brokerage accounts, etc.). | It reports foreign financial assets (including accounts, stocks and trusts). |
| Filing Requirement | In case total foreign account balances exceed $10,000 at any time during the year. | If total foreign assets exceed IRS thresholds ($50,000+ for single filers, higher for expats). |
| Reporting Agency | Financial Crimes Enforcement Network (FinCEN). | Internal Revenue Service (IRS). |
| Threshold | $10,000+ total across all foreign accounts. | $50,000+ (varies based on residency and filing status). |
| Form Used | FinCEN Form 114. | IRS Form 8938. |
| Penalty for Non-Compliance | Fines of $10,000+ per violation. | Penalties start at $10,000 and can increase. |
FBAR Filing is required for U.S. persons with foreign financial accounts exceeding $10,000 at any time during the year. You must file FinCEN Form 114 if:
It is filled electronically via the BSA E-Filing System by following the actions outlined below:
Even unintentional lapses in FBAR compliance can result in fine payments, legal consequences as well as audits. However, late filers have options in terms of IRS voluntary disclosure programs.
| Step | Details |
|---|---|
| Determine the Requirement | When foreign financial accounts exceed $10,000 at any time during the year, FBAR Form 114 becomes an obligation. It applies to U.S. citizens, green card holders, residents as well as business entities. |
| Collect Account Details | Collect bank names, account numbers and highest balances during the year. Foreign bank accounts, investment accounts and mutual funds should be included. |
| Complete Online FinCEN Form 114 | The BSA E-Filing System must be used to fill out the Foreign Bank Account Report (FBAR). Always double-check for errors before submitting. |
| Submit Before the Due Date | The FBAR filing deadline is April 15. Late filings may result in penalty payments starting at $10,000 per violation. |
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Yes, you can file FinCEN Form 114 online through the BSA E-Filing System.
You may face penalties, but voluntary disclosure programs may help reduce them.
Currently, cryptocurrency holdings are not explicitly required, but future regulations may change.
Yes, if a business holds foreign accounts exceeding $10,000, it must file.
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