You might have to file a special form with FinCEN, the U.S. Treasury Department’s Financial Crimes and Enforcement Network or else face heavy penalties. This special form is commonly called “FBAR” or FinCEN Form 114, Report of Foreign Bank and Financial Accounts.
Whether you live in the U.S. or abroad, every U.S. person (U.S. citizens, resident aliens, and U.S. corporations, partnerships, LLCs, trusts, & estates) is required to file FBAR if they are an owner, nominee, or have direct ownership of the account, or if you can control the distribution of the account’s funds, you must file FBAR if the balance of all of your accounts is more than $10,000 at any point during the calendar year.
An annual FBAR (Foreign Bank Accounts Report) must be filed with the Treasury whenever a taxpayer has an interest in, or signature authority over, a foreign financial account with a value over $10,000 any time during the calendar year. It makes no difference if the average amount in the account during the year is less than $10,000 or all the money is withdrawn by the end of the year. If the account held more than $10,000 any time during the year, the FBAR must be filed. Additionally, the FBAR filing requirement is not limited to foreign accounts containing cash.
You’re also required to file a FBAR if a foreign account has non-monetary assets of more than $10,000. For example, the cash surrender value of a life insurance policy is such a non-monetary asset. The penalties for failing to file FBARs are very severe. There is a minimum $10,000 penalty if your failure to file was inadvertent and non-wilful. However, if you are found guilty of willfully not filing a FBAR, the minimum fine is $100,000 or half the value of the account, whichever is greater. La Rusa experts will help you stay compliant and avoid heavy penalties for a failure to file FBAR.