Lesser Known Facts About FBAR Filling
The Foreign Bank Account Report (FBAR) is a form that must be filed annually by U.S. taxpayers with financial interests in or signature authority over foreign financial accounts. While many taxpayers are familiar with the basics of FBAR filing, there are a number of lesser-known facts about the FBAR that are important to understand with the help of a CPA in Princeton, NJ.
- FBAR is not just for individuals.
While many think of FBAR as a form only individuals must file, it is essential to note that businesses and other entities may also be required to file FBAR. For example, a U.S. corporation with a foreign subsidiary may be required to file FBAR if the subsidiary has a foreign financial account. Also, trusts and estates may be required to file FBAR if they have foreign financial accounts.
- FBAR is separate from tax returns.
It is important to note that FBAR is a separate form from a taxpayer’s federal tax return and must be filed separately. While the due date for FBAR is the same as the due date for tax returns, the two forms serve different purposes and require different information.
- FBAR filing is required for all foreign financial accounts.
FBAR filing is required for all foreign financial accounts, regardless of whether they generate income. For example, if a taxpayer has a foreign bank account for personal expenses, they must still file FBAR if the account exceeds $10,000 in value at any time during the year.
- FBAR is a disclosure form, not a tax form.
It is important to note that FBAR is a disclosure form, not a tax one. The purpose of FBAR is to provide information to the government about foreign financial accounts, not to report income or pay taxes on foreign assets. However, failure to report foreign assets on FBAR can result in penalties and fines.
- Penalties for failing to file FBAR can be severe.
Penalties for failing to file FBAR can be severe and may include fines, penalties, and even criminal charges in extreme cases. The penalties for failing to file FBAR can range from $10,000 per violation to 50% of the balance in the foreign account at the time of the violation. Additionally, failure to file FBAR may also result in criminal charges, including tax evasion, money laundering, and other financial crimes.
- FBAR filing is not automatic
Unlike other forms, such as tax returns, FBAR filing is not automatic. Taxpayers must take action to file FBAR each year if they have foreign financial accounts. If taxpayers fail to file FBAR, they may be subject to penalties and fines, even if they are unaware of the requirement.