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FBAR Reporting Requirements...
FBAR Reporting Requirements
If you’re a U.S. taxpayer (a citizen or resident) with financial interests in foreign accounts, you may need to file the Foreign Bank Account Report (FBAR). The FBAR, formally known as FinCEN Form 114, is required under the Bank Secrecy Act and helps the government combat money laundering and tax evasion. Here’s what you need to know to ensure you’re compliant for the 2024 filing season:
Threshold for Reporting:
You must file an FBAR if you have a financial interest in or signature authority over one or more foreign financial accounts, and the aggregate value of those accounts exceeds $10,000 at any time during the calendar year.
Types of Accounts:
FBAR requirements cover a broad range of accounts including bank accounts, brokerage accounts, mutual funds, and certain other types of financial accounts held at foreign institutions.
Filing Deadline:
The FBAR is due on April 15th, with an automatic extension available until October 15th. However, this extension is not automatic; you need to file for it. Note, that these are the same filing deadlines for U.S. individual taxpayers.
No Need to File with Your Tax Return:
Unlike other tax forms, the FBAR is not filed with your income tax return. Instead, it’s submitted electronically through the Financial Crimes Enforcement Network (FinCEN) website.
Penalties for Non-Compliance:
The penalties for failing to file can be severe. Civil penalties can reach up to $10,000 per violation if non-willful, and significantly more if the violation is deemed willful. Ensuring timely and accurate reporting is crucial. Note that the full scope of these penalties can amount to 1/2 of the balance in each asset account. Also note that criminal penalties are also possible.
Record-Keeping:
Maintain detailed records of your foreign accounts, including statements, to substantiate the information reported on your FBAR. These records should be kept for at least five years. Even if you don't receive a Form 1099, you still have an obligation to report these foreign accounts as well as the income derived from them.
Complex Situations:
If you’re unsure whether you need to file or have complex situations such as accounts held by a trust or corporation, consulting a tax professional with expertise in international tax compliance can be highly beneficial.
Filing an FBAR may seem daunting, but staying informed and organized can help you navigate the process smoothly. Make sure to review your foreign financial accounts and prepare your filing well before the deadline to avoid any last-minute stress.
Stay compliant and keep your financial affairs in order!
If you have questions, don’t hesitate to reach out to us at Liberty Tax Defenders. (817.995.5008 or info@libertytaxdefenders.com).
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To your success!
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