21 May I have a foreign bank account. How do I report it?

Q. Does a foreign bank account get reported every year on your tax return?
— Investor

A. Reporting a foreign bank account is separate from your tax return.

An FBAR, or Foreign Bank Account Report (FinCEN Form 114), is required to be filed by all U.S. persons who have an interest in, or signatory authority over, a foreign financial account if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year, said Matthew Rheingold, an attorney with Einhorn Harris in Denville.

This includes checking or savings accounts, mutual funds, brokerage accounts and other types of foreign financial assets, he said.

He said for FBAR purposes, U.S. persons include United States citizens, green card holders, resident aliens, partnerships, corporations, LLCs, trusts and estates.

An FBAR is a reporting requirement and is not a separate tax on the balance of the accounts, he said.

“FinCEN Form 114 is a form, separate and apart from your individual tax return, which must be filed by April 15 in any year that the combined total of all foreign financial accounts is at least $10,000 at any point during the calendar year, however, an automatic extension of up to six months is available,” Rheingold said.

Failure to file this form may result in extremely harsh penalties, including punitive financial fines and/or criminal prosecution.

“For taxpayers whose lack of filing was non-willful – which means that they did not know about the reporting obligation – the fine can be $10,000 per violation,” he said. “However, if it is determined that a taxpayer purposely avoided filing or did not file an accurate FBAR, then the fine can be $100,000 or 50 percent of the balance of the account at the time of the violation – whichever is greater.”

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This story was originally published on May 21, 2019.

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