foreign_bank_and_financial_accounts_report_fbar [CapiPedia]

This page is read only. You can view the source, but not change it. Ask your administrator if you think this is wrong.
====== Foreign Bank and Financial Accounts Report (FBAR) ======
The Foreign Bank and Financial Accounts Report (FBAR) is an annual information return that [[U.S. person]]s must file with the United States Department of the Treasury's Financial Crimes Enforcement Network ([[FinCEN]]). Its primary purpose is to help the U.S. government track foreign accounts to identify and deter illegal activities, most notably [[tax evasion]] and money laundering. This is //not// a tax form—no tax is paid with the FBAR. Instead, it’s a transparency tool. You are required to file if the combined, or //aggregate//, value of all your foreign financial accounts exceeded $10,000 at any point during the calendar year. For example, if you had $6,000 in a German bank account and $5,000 in a Swiss brokerage account, you would need to file an FBAR because your total foreign holdings ($11,000) breached the $10,000 threshold. The report is filed electronically using FinCEN Report 114.
===== Who Needs to File an FBAR? =====
The filing requirement applies to any "[[U.S. person]]". This term is broader than many people realize and includes:
  * U.S. citizens, regardless of where they live in the world.
  * U.S. residents, which includes [[Green Card]] holders and individuals who meet the IRS's "substantial presence test".
  * U.S. entities, such as corporations, partnerships, or limited liability companies (LLCs) created or organized in the United States.
  * U.S. trusts and estates.
So, whether you're a student studying abroad with a local bank account, an expatriate working in Singapore, or an investor in New York with a foreign brokerage account to buy international stocks, you must pay close attention to this rule.
===== What Counts as a "Financial Account"? =====
The definition of a "financial account" is also quite broad. It's not just about standard bank accounts. You need to sum up the highest value each account reached during the year to see if you cross the $10,000 aggregate threshold.
Common types of reportable accounts include:
  * Bank accounts, such as savings accounts, checking accounts, and time deposits.
  * Securities and brokerage accounts that hold stocks, bonds, or other financial instruments.
  * Commodity futures or options accounts.
  * Accounts with a person who acts as a broker-dealer for [[mutual fund]]s or similar pooled funds.
  * Certain foreign retirement or pension accounts.
  * Certain foreign life insurance or annuity policies that have a cash-surrender value.
==== A Quick Note on Crypto ====
The landscape for [[cryptocurrency]] is evolving. While historically there has been ambiguity, FinCEN has issued notices indicating that foreign accounts holding virtual currency may be reportable. It's wise to be cautious and assume they are, or better yet, consult a tax professional.
===== FBAR vs. FATCA: What's the Difference? =====
Investors often confuse the FBAR with [[FATCA]] (the Foreign Account Tax Compliance Act). While they both deal with foreign assets, they are separate obligations with different rules, thresholds, and purposes. Filing one does not relieve you of the duty to file the other.
=== FBAR (FinCEN Report 114) ===
  * **Agency:** Filed with [[FinCEN]].
  * **Purpose:** A law enforcement tool to combat financial crime.
  * **Threshold:** An //aggregate// balance of over $10,000 in foreign accounts.
  * **How to File:** Filed electronically and separately from your tax return.
=== FATCA (Form 8938) ===
  * **Agency:** Filed with the [[Internal Revenue Service (IRS)]].
  * **Purpose:** A tax compliance tool to ensure U.S. taxpayers report their foreign income.
  * **Threshold:** Much higher and more complex, starting at $50,000 for single filers living in the U.S.
  * **How to File:** Filed as part of your annual federal income tax return.
===== An Investor's Takeaway =====
For a [[value investor]], the world is your oyster. You might find an undervalued company in Japan or a high-yield [[bond]] in Australia. However, global investing comes with global responsibilities.
Understanding and complying with FBAR is a non-negotiable part of your investment [[due diligence]]. The penalties for failing to file are breathtakingly severe and can obliterate your investment returns.
  * **Non-Willful Failure to File:** Can result in a penalty of over $10,000 per violation.
  * **Willful Failure to File:** Can lead to penalties of the greater of over $100,000 or **50% of the account balance** at the time of the violation, for //each// year of non-compliance.
Don't let these rules intimidate you away from international opportunities. Instead, view them as a critical part of your risk management strategy. The filing process is manageable, and being compliant protects your hard-earned capital from devastating fines. If your foreign holdings are significant or complex, seeking advice from a qualified tax professional is one of the smartest investments you can make.