Foreign bank accounts can be useful. Yet, they become a burden if you fall foul of the U.S. tax authorities because of them. It is crucial to understand when you need to file a Report of Foreign Bank and Financial Accounts (FBAR). Here are some questions you may have:
- How much money needs to be in the account? You must file an FBAR for an account worth more than $10,000 at any point during the year.
- Does it need to be my money? No, but if you have a financial interest in or signature authority over the account, you must file.
- What relationship must I have to the United States? If you are a U.S. citizen or resident, a U.S. trust or estate, or a company registered in the U.S., the FBAR rules apply to you.
- Should my child file one? The law does not treat children differently when it comes to FBARs. The same rules apply. The only consideration given is that a parent or guardian can file and sign for them if they cannot.
- Do I need to file an individual FBAR for each account? Not if you have filed a coordinated FBAR for all your accounts, or if your spouse has already filed for your joint foreign accounts, in which case you must complete the appropriate form for them to do this on your behalf.
Tax regulations change frequently. It can be easy to make mistakes that leave you paying too much tax or cause problems with the Internal Revenue Services (IRS). Consulting an experienced tax attorney can provide you with the peace of mind that your foreign assets comply with the law.