I'm seeing all sorts of misinformation being floated on Facebook groups and websites about FBAR and tax filing, so I thought it was time to right the ship and get some real facts about who has to file an FBAR (and what an FBAR is).
I sat down and spoke to Jason Stoch from UpTrend Advisory.
If you've got questions, you should join our free webinar on February 15, 2023!
What is FBAR?
A lot of this actually relates to my article on why you should tell your bank your foreign tax information.
Basically, the FBAR is a form that needs to be filed (from the IRS – the tax office, the place that really cares about this kinda stuff):
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds (we'll come to this below), the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR)
So:
- If you have money in a bank account that is yours;
- Or you are a signatory of a bank account;
- That meets some thresholds;
- You have to file an FBAR about it.
What are the thresholds for FBAR?
We've already talked about financial interest or signatory, but what are these “certain thresholds”?
Again, straight from the IRS:
the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
So this means that if you have ANY accounts overseas (probably from your home country), and the TOTAL of ALL the accounts EVER exceeded $10,000 in the calendar year… you have to file the FBAR.
So if you've separated your money into accounts all smaller than $10,000, that doesn't matter, you still have to file about ALL of them.
Who has to file an FBAR?
Again, straight from the IRS:
United States persons (defined as citizens AND residents for tax purposes – which is probably you if you are reading this) are required to file an FBAR if:
- the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
- the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
So, honestly, the answer is probably: YOU DO!
P.S. FBAR is not tax. It is part of reporting your tax, but telling them how much money is in your account does NOT directly lead to tax. This is just for reporting and ensuring that you're not smuggling cash!
