All bank accounts, security accounts, and retirement accounts (including defined benefit plans and pensions) located outside the US are subject to reporting on the FBAR. Citizen or legal residency-based taxation is different from the tax rules in other countries, because almost everywhere else in the world, a person only pays tax where they mainly reside.īut, back to FBARs: the basic rule is that you have to file every year if you are a US citizen, permanent resident (usually a Green Card holder), or if you spend 183 days in the US in a year the actual calculation of days spent in the US extends back to the last three years, but we will leave that alone for the present. T he US taxation system is based upon US status-whether citizenship or permanent residence-and requires any person who is considered a US person to file a tax return and any other necessary information returns, regardless of what country a US person lives in. But how do you know if you are considered a US taxpayer? Well it turns out that the US is a little unusual, compared to the rest of the world, where tax filing requirements are concerned. Further, because the US secured the cooperation of almost all major countries to identify these accounts, it is no longer possible to avoid the necessity of disclosure.įortunately, even if a US taxpayer is behind on these obligations, with a bit of work it is essentially a straightforward process to file missing FBARs. In short, the US enacted a law to identify financial accounts held by US persons abroad in order to prevent offshoring of assets and income. Under the Foreign Account Tax Compliance Act (FATCA), which was passed into law on March 18th, 2010 by the 111th US Congress, many foreign governments (including all countries we serve) became signatories to an agreement to disclose foreign accounts held by US citizens or residents living abroad. The policy reasons for requiring this filing are relatively simple. In 2013, the current version of the form (FinCEN Form 114), replaced the former Form TD F 90-22.1. The requirement to file an FBAR, in one form or another, has existed for many years. The report is formally known as FinCEN Form 114 – Report of Foreign Bank and Financial Accounts, or “FBAR”, for short.
Some may already be aware of the US requirement to file an annual report to disclose non-US assets. What is an FBAR, and when do I need to file it?
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