Well, it seems that time is not taking any holidays. It’s already time for writing another article. Need to knock one out now to save some time later. (Strange, this fascination with time!)
Speaking of time, FBAR time is quickly approaching. Some of you, dear readers, already know what an FBAR is and what all the “who-hah” surrounding it is all about. For those of you who haven’t heard of an FBAR (or have chosen to place a mental block against it), hold on. We’re about to get into some more tax-related stuff. This “stuff” is not about tax, though, it is all about reporting.
To put it simply, the FBAR is the U.S. Treasury Department’s form TD F 90-22.1, Report of Foreign Bank and Financial Accounts. This form is used for reporting “a financial interest in or signature authority over a foreign financial account.” The “time approaching” bit relates to the timing of the report and its due date.
An FBAR must be received by the Treasury Department on or before June 30 of the year following the year being reported. (Did I say “simply”?) For an example, an FBAR for the calendar year 2012 must be received by the Treasury Department on or before June 30, 2013. You’ll note that the wording does not say, “must be postmarked by” – the FBAR has to be physically received by the Treasury Department by the due date.
Additionally, there is no extension of time to file the FBAR. An FBAR is considered either timely filed or late, period. There are substantial penalties for late filing or failing to file an FBAR.
Also, an FBAR cannot be filed with a tax return. It goes to a special Treasury Department address in Detroit, Michigan and not to an Internal Revenue Service Center. As a matter of fact, the FBAR really doesn’t have anything to do with the IRS.
DO I HAVE TO FILE AN FBAR?
Like all good answers to questions posed about government issues, the answer to the “Do I have to file?” question is: “Maybe yes, and maybe no – it all depends.”
- One of the things it depends on is whether or not you are considered a “U.S. Person.” Someone who IS NOT an U.S. Person DOES NOT have to file an FBAR. On the other hand, someone who IS an U.S. Person may or may not have to file an FBAR.
The definition of “U.S. Person” covers a lot of U.S. taxpayers, but simply stated for an individual human being: An U.S. citizen or resident alien (green card holder) are considered to be U.S. Persons for the purposes of filing an FBAR.
- Another thing it depends on is whether the U.S. Person has a financial interest in or signature authority over a foreign financial account.
Definitions abound here for phrases like “financial interest,” “signature authority,” and “financial account.” While not all inclusive, a simple understanding is whether the U.S. Person owns the account (individually or jointly), has control of the money in the account, can cause financial transactions within the account via his/her signature or acknowledgement or, in short, can make things happen with the foreign financial account.
(The foreign financial account, by the way, can be a bank deposit account, a time account, a brokerage account, or any number of accounts that are offered by a foreign financial institution – another phrase that has its own particular definition.)
- The final thing is depends on is whether the aggregate value of all of those foreign financial accounts exceeds $10,000 at any time during the calendar year.
This one is pretty straight forward. If the total value of an U.S. Person’s foreign financial accounts DOES NOT exceed $10,000, then the U.S. Person DOES NOT have to file an FBAR. If at any time during the calendar year, the total value of all of an U.S. Person’s foreign financial accounts combined exceeds $10,000 – even if for just one day – then that U.S. Person must file an FBAR.
WOW! MY HEAD HURTS!
I know the feeling. I’ve suffered such headaches many times. Let’s summarize what we’ve just learned – it’s really not as bad as it sounds:
Who Must File an FBAR. A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.
There, that should make the pain ease a little.
Completing the FBAR isn’t very painful either, despite the groans of many taxpayers who fear it. A copy of the form is available from the Internal Revenue Service web site (you can point and click on the form’s name above, if you wish). It’s mostly an administrative task to fill in the blanks with the information requested.
I would say that any difficulty would lay with the keeping track of one’s foreign financial accounts aggregate value throughout the calendar year. If that exceeds the magic $10,000, then each account has to be listed, identified and have its maximum value during the calendar year recorded.
That’s about all there is to it. June 30, 2013 is just a couple of months away – now’s a good time to go over everything and see if you need to file an FBAR. Did I mention that you can “e-file” your FBAR? You sure can at:
If you’d rather file the paper version, just remember that it must reach the Treasury Department by June 30. The address for paper filing is: U.S. Department of the Treasury, P.O. Box 32621, Detroit, MI 48232-0621, USA.
Good luck and happy filing!