Foreign? File FBAR or be FUBAR.
When I graduated from high school, I enlisted in the Marines, which among other things broadened my vocabulary to include such classic and modern military acronyms as Fouled (to put it politely) Up Beyond All Recognition (FUBAR).
Many Americans spend some of their lives in other countries, and if they haven’t realized that the IRS and Treasury Department want to know about their foreign asset holdings, and will impose stiff penalties for not being provided that information, that’s where their financial and legal affairs might be headed.
Conveniently, Treasury has provided an easy-to-remember acronym to help you avoid this problem. Americans are required to report certain foreign financial accounts on FinCEN Form 114, known by the acronym “FBAR.” The form is actually entitled “Report of Foreign Bank and Financial Accounts,” but I guess Treasury didn’t think RFBFA was quite as memorable as FBAR – they’re right, don’t you think?
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, or trust with a value exceeding $10,000 at any time during the calendar year, you’re obligated to file.
In addition, the Foreign Account Tax Compliance Act (FATCA) requires certain U.S. taxpayers who hold foreign financial assets with an aggregate value of more than the reporting threshold (at least $50,000) to report information about those assets to the IRS on Form 8938, which must be attached to the taxpayer’s annual income tax return. The reporting threshold is higher for certain individuals, including married taxpayers filing a joint return, and for certain taxpayers living in a foreign country.
If you are subject to FATCA filing requirements and don’t file appropriately, that could be a significant SNAFU. Look it up if you need to.
If you have questions about overseas estate planning or tax filing requirements, email me.