If you are a “US person” you must report your foreign accounts every year to the US administration. Below the 3 easy steps to file your report online for free!
What is the fincen 114?
The fincen114 is the Foreign Bank Account Report (FBAR) that is filed each year through the Financial Crimes Enforcement Network (FINCEN).
Note: the report is for information purpose only : it reports the balances of the foreign accounts – it does NOT trigger any US income tax.
STEP #1: determine if you are a “US person”
Only a United State Person must report their foreign accounts to the administration every year. An individual is considered a US person for FBAR purpose if he/she meets one of the 4 test. In the following link, the 4 tests explained: https://kbfinancials.biz/the-4-tests-to-determine-if-you-are-a-us-tax-resident/
Note: A US person can also be a trust, an estate or a domestic entity. These type of owners may also have a fincen114 filing requirement.
STEP #2 : determine if your foreign accounts meet the filing threshold
The US Person must report their foreign accounts if the sum of the maximum balance for ALL their accounts combined exceeds $10,000. Make sure to translate the balances of your accounts in US $. The foreign accounts include the following:
- Foreign bank accounts = such as checking accounts , savings accounts
- Foreign investment accounts = such as brokerage accounts, retirement accounts, life insurance, mutual funds
- Accounts in which the US person has a financial interest. For example the US person has a financial interest when he/she is the owner, or has legal title, or is a beneficiary of the account, or has signature on the account.
- Accounts in which the US person has authority . For example a US person has authority when he/she has some control over the account, such as over a custodial account, dependent account, child account.
Note: a dependent of a US person may have to also file his fincen114 separately.
STEP #3 : File online before the deadline
The fincen114 can only be filed electronically (no paper submission). In the following link the access portal to file your report online: https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
The Fincen114 is filed every year on April 15th or on October 15th (automatic extension). The fincen114 is filed separately from the US tax return (form 1040). You can file it yourself or ask a professional to file it for you.
To know more about the automatic extension: https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
To know more about other US tax deadlines: https://kbfinancials.biz/tax-calendar/
What if you have not filed your fincen114 on time?
The late filing penalties for fincen114 can be as high as 50% of the balance of the account. The good news : there are currently 3 programs that might assist you in disclosing your accounts without the risk of high penalties or criminal prosecution:
- The delinquent submission – use this program if the earnings from the foreign accounts have been reported (such as interest & dividends) on your US income tax return.
- The Streamline Domestic offshore – use this program if you physically reside in the US
- The Streamline Foreign offshore – use this program if you physically reside outside the US.
To know more about protection from penalties: https://kbfinancials.biz/5-best-defenses-against-irs-penalties/
Note: In addition to Fincen114, foreign accounts may also have to be reported on other international forms such as 8938, 8621, 3520, 5471, 5472 etc. To know more about other international tax filings: https://kbfinancials.biz/international/
As always, bear in mind the date of this article as tax laws change over time
For assistance with your international tax needs, please contact Karine Bauer, EA, JD – HERE.
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Updated on Friday April 14th, 2023