What is a Foreign Bank Account Report?
While most U.S. expats annually file their general 1040 tax returns to the Internal Revenue Service (IRS), many forget they are also required to file a Foreign Bank Account Report (FBAR) with the U.S. Department of Treasury, which was due April 18.
This is one of the many common problems U.S. expats experience in dealing with the IRS and Department of Treasury, says Pesach Woznica, President of Expat Tax CPA’s. “If you have more than $10,000 in foreign bank accounts holdings (for example, 4 accounts totaling $10,000 or more) you are required to report on all accounts using the FBAR form”, he adds.
Mr. Woznica’s firm, which specializes in assisting U.S. expats with their U.S. tax returns, has representatives in numerous countries – including Canada, Israel, the U.K., France, and Australia. While we urgently suggests expats file their FBAR returns by the deadline, the Department of Treasury does have a program for late filings without imposing a penalty, he notes. Also, considering this is the first year with the April 18 deadline, to coincide with when tax returns are due, the Department of Treasury has automatically extended the deadline for 6 months until October 15. “However, there is a real possibility this late filing program could soon end as the new federal administration is exploring various avenues to increase its revenues as quickly as possible.” There could be severe penalties, he adds.
Mr. Woznica adds that under treaty agreements with many countries, foreign banks must report to the Department of Treasury on bank accounts held by U.S. citizens. This is true for U.S. citizens with accounts in Canadian, Israeli, Australian, German, English and French banks among many other countries.
“It just isn’t worth the risk to not file the FBAR report.”
