You’re an owner of one or more foreign financial accounts, and tax season is approaching. This is the first time you’ve filed taxes for them, but you have no idea what to do.
Don’t worry because you’ll learn what an FBAR (Foreign Bank Account Report) is and what it entails.
What is an FBAR, and who needs to file it?
An FBAR — which is associated with FinCEN (Financial Crimes Enforcement Network) Form 114 — is a report that U.S. citizens with bank accounts outside the U.S. have to file.
As someone who owns a foreign account, you need to file an FBAR to report the collective value of non-U.S. bank accounts with $10,000+ at any time during the tax year. You’re exempt from this requirement if you reported all your foreign bank accounts on a consolidated FBAR or if you and your spouse own a joint account and completed FinCEN Form 114a.
What foreign assets are affected by FBAR?
Some of the foreign assets you should report:
-Foreign entity interests: If you and two or more people own a business domiciled outside the U.S., it’s a foreign entity.
-Foreign trusts- Any trust you create or are a part of in another country is bound by the country’s laws. American courts have no legal ruling over non-U.S. trusts.
The concepts of an FBAR can be overwhelming, especially if it’s a new subject for you. But they can be easier to comprehend with the proper guidance. Consider seeking legal assistance to get started.