Under the Bank Secrecy Act, you must file a Foreign Bank Account Report (FBAR) if you have foreign financial accounts that go over $10,000 at any point during the year. This includes the total of all these accounts. This applies to any U.S. citizen, resident or entity who owns financial accounts in other countries, even if they do not generate income. It also applies to those with signature authority over foreign accounts, even if they don’t own them.
Common types of foreign accounts you need to report
You need to know which foreign accounts you must report on your FBAR to stay compliant. This can include:
- Savings, checking and time deposit accounts
- Brokerage accounts and investment portfolios, including stocks, bonds or other securities in foreign financial institutions
- Foreign mutual funds, even if the fund invests in U.S. securities
- Foreign life insurance policies with a cash-value component if their value exceeds the reporting threshold.
- Retirement accounts outside the U.S.
- Foreign pension accounts
Remember, this list doesn’t cover every possible reportable account. The key is whether you have a financial interest in or signature authority over the account.
What accounts do you not need to report?
While many foreign financial accounts require FBAR reporting, some are exempt. This includes:
- Correspondent or nostro accounts
- Government-owned accounts
- Accounts owned by international financial institutions
- Accounts on U.S. military banking facilities
If you’re an owner or beneficiary of an Individual Retirement Account (IRA) or a participant or beneficiary of a retirement plan that holds foreign accounts, you don’t need to report them in your FBAR. You can also skip reporting certain foreign accounts when someone else has reported them for you. For example, a trustee or agent of the trust may have already reported your foreign trust accounts. Your spouse might report all the accounts you own together on their FBAR. In these cases, you don’t need to file your own report.
Get the clarity you need
FBAR rules can be complicated, and mistakes can be costly. If you’re unsure about any of your foreign accounts or have concerns about past filings, it’s wise to consult with a tax attorney.