What's an FBAR and why does it matter to me?
FBAR refers to FinCEN Form 114 (Report of Foreign Bank and Financial Accounts). The IRS requires this form be filed by U.S. citizens and residents who own – or have signature authority over – financial accounts outside of the country. This includes foreign branches of banks headquartered in the U.S. The reporting threshold is triggered when the value of all foreign accounts exceeds $10,000 at any time during the year. Reportable foreign accounts may include:
- Savings and checking accounts
- Securities and brokerage accounts
- Mutual funds, and so on
The penalties for not following mandatory FBAR regulations can be severe. If the failure to file isn't willful, the penalty can reach $10,000, unless it was due to reasonable cause.
If willful, the penalty can reach $100,000 or 50% of the total account balances – whichever is greater. You may also face criminal penalties.
If you aren't sure whether you should file FinCEN Report 114, consult with H&R Block.
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