FBAR stands for Foreign Bank Account Report, and it’s a form that U.S. taxpayers may need to file if they have certain foreign financial accounts. The purpose of the FBAR is to help the U.S. government keep track of U.S. taxpayers who have financial accounts outside of the United States, and ensure tax compliance. And/or make sure you aren’t a Terrorist, or something. (“Tell Uncle Sam where you hide your cash, or else.”)
So, who needs to file an FBAR? If you’re a U.S. citizen or resident alien, you may need to 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.
This can include things like foreign bank accounts, brokerage accounts, and mutual funds. It’s important to note that even if the account is held jointly with someone else, you still need to report your share of the account on the FBAR.
The FBAR (Formally the FinCEN Form 114) is another one of those where if you don’t file, you could face some pretty steep penalties. If the IRS finds that you willfully failed to file an FBAR, they can impose a penalty of up to 50% of the balance in the account at the time of the violation or $100,000, whichever is greater. For non-willful failures, you potentially get slapped with a $10,000 per account penalty. (Although the US Supreme Court recently ruled on this, and now it might just be $10,000 in total. Regardless, it stings.)
So in summary, if you happen to be a formal US Person, and you hold bank accounts outside of the US, you may need to file these. Sharpen your pencil, as this is another one of those tax forms that can take quite a bit of time and requires a lot of detail.
For some thrilling reading: https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
**Note: What is written here is not formal tax advice. I’m not your CPA. It’s possible, or dare I say even probable, that the comments and opinions expressed here contain material errors, or that important stuff has been left out. Don’t use this info to make tax filing decisions. Hire a pro to help you.