When American expats are their 2014 tax returns, it is very important that they also do not forget about filing their 2014 FBAR by June 30, 2015. If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the BSA may require you to report the account yearly. The big change is that FinCEN Form 114 supersedes TD F 90-22.1
Filing 2014 FBAR on FinCen 114 by June 30 2015
The IRS continues to focus on reporting foreign bank accounts. Filing the FBAR properly on FinCEN Form 114 will be more important than ever before. Now that the FBAR forms are filed electronically, it will be much easier for the IRS to check data with banks who are reporting this through the Foreign Account Tax Compliance Act (FATCA). As FATCA compliance becomes more prevalent amount international banks, it will be interesting to see how to see how the IRS uses it to find foreign bank accounts of Americans.
FinCEN Form 114 supersedes TD F 90-22.1
In March 2012, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced a one-year exemption from mandatory electronic filing of the FBAR. The exemption for electronic filing of the FBAR was available until July 1, 2013, and is now considered ended unless the Treasury Department announces another extension.
The 2014 is a separate document that is not filed with the IRS, but rather filed with another Department of the Treasury division that enforces financial crimes. In 2013, the FBAR got a new name and is now known as FinCen Form 114. Since the new FinCen 114 form is not filed directly with the IRS, it can be something that taxpayers easily miss if they have foreign financial assets and are required to report them on the FBAR for 2014. It is important to remember that if you filed TD F 90-22.1 before, you must currently file FinCen Form 114.
Why File an FBAR in 2014?
This form is not that complicated and requires that the taxpayer list their foreign bank and financial holdings. The taxpayer should report the highest balance in these foreign accounts. It should be the best practice to when in doubt report foreign financial assets on the FBAR form. Failure to file an FBAR in 2014 can lead to substantial penalties that could of been easily avoided by filing the FinCen form on time. The penalties certainly can be significant. They can be up to $10,000 for even a non-willful failure, and that’s a penalty that applies per account. For example, if someone had 10 bank accounts that were not properly reported on their 2014 FBAR they could be liable for up to $100,000 in penalties!
Thus, the FBAR is relevant to both American expats (U.S. Citizens living abroad) and also to inpats (foreign citizens who have kept bank accounts in their home countries.).
Filing 2014 FBAR with FinCen 114
The e-filing system allows the filer to enter the calendar year reported, including past years, on the online FinCEN Report 114. It also offers filers an option to “explain a late filing” or to select “Other” and enter up to 750-characters within a text box to provide a further explanation of the late filing or to indicate whether the filing is made in conjunction with an IRS compliance program.
Individual filers can now file their FBAR, now known as Form 114, online with the following link:
Instructions for filling out the electronic FBAR for 2015 are here:
More Information About Foreign Financial Assets on 2014 FBAR. The IRS held a “webinar” on June 4, 2014 devoted to the subject of the new electronic FBAR filing requirements. The video recording (about 1 hour) is visible here: “Reporting Foreign Financial Accounts on the Electronic FBAR”
What is Form 8938 and FATCA?
When filing an FBAR, it is important not to forget about form 8938. American expat taxpayers may need to file this form in addition to the FBAR if their foreign financial assets exceed a certain threshold. New Form 8938, Statement of Specified Foreign Financial Assets, is similar to the FBAR but has some important differences. The threshold for filing Form 8938 is higher than the FBAR (and the threshold varies depending on the taxpayer’s status and location). Form 8938 also applies – at this time – to only specified individuals and covers only specified foreign financial assets. This form is also known as the FATCA form and came into effect due to the FATCA law on foreign bank accounts that affects Americans living abroad.