If you had a financial interest in or signature authority over foreign accounts exceeding $10,000, you need to file a Foreign Bank Account Report (FBAR). An unfiled FBAR can lead to a $10,000 penalty for non-willful violations and much higher penalties for willful violations.
Aggregate Account Balance
The $10,000 threshold is based on your aggregate account balance. That means if you own two foreign accounts and their combined balance exceeds $10,000, you need to file an FBAR even if neither account exceeds $10,000 on its own.
The FBAR filing requirement is also based on the highest account balance during the year. If your account balance exceeds $10,000 for even one day during the year, you need to file an FBAR.
FATCA Filing Requirements
The Foreign Account Tax Compliance Act (FATCA) imposes different requirements on taxpayers with foreign accounts. This may require to file a Form 8938, Statement of Specified Foreign Financial Assets.
The Form 8938 filing requirements for taxpayers living in the U.S. are as follows:
- For unmarried taxpayers or married taxpayer filing separately, the filing requirement is triggered if the total value of foreign assets exceeded $50,000 on the last day of the year or $75,000 at any point during the year.
- For married taxpayers who file jointly, Form 8938 is required if the value of foreign assets exceeded $100,000 on the last day of the year or $150,000 at any time during the year.
The following requirements apply to taxpayers living overseas:
- Form 8938 is required for unmarried taxpayers or married taxpayers filing separately if foreign assets exceeded $200,000 on the last day of the year or $300,000 at any time during the year.
- For married taxpayers filing jointly, the asset thresholds are $400,000 on the last day of the year or $600,000 at any time during the year.
Unlike an FBAR, Form 8938 is filed along with your regular tax return. There is also a $10,000 penalty for failing to file Form 8938 when required.
There are many other differences in how FATCA and FBAR requirements apply to foreign accounts. Talk to a tax attorney if you need help with offshore disclosure issues.
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