Confused about the difference between FATCA and FBAR? Don’t get caught in the crossfire of incorrect filings and penalties. As an expat, it’s essential to understand the Foreign Bank Account Report and FATCA Form 8938 – the two most common forms you may need to file if you have money in foreign financial accounts. This blog post will guide you through the basics of FBAR and FATCA, provide tips for ensuring compliance, and highlight common mistakes to avoid.
WHAT IS FBAR, AND WHO IS REQUIRED TO FILE IT?
An FBAR is a report that must be filed with the U.S. Treasury Department by certain U.S. persons who have a financial interest in or signature authority over foreign financial accounts. FBAR stands for “Report of Foreign Bank and Financial Accounts.” The purpose of the FBAR is to help the U.S. government identify and combat money laundering, terrorist financing, and other financial crimes. By requiring U.S. persons to report their foreign financial accounts, the U.S. government can better track the flow of money into and out of the United States.
WHAT IS FBAR REPORTING THRESHOLD?
The threshold for filing an FBAR is generally met if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. However, there are some exceptions and special rules that may apply depending on the specific circumstances.
You’ll be required to file FBAR if all of the following are true:
● You’re a U.S. citizen, permanent resident, or domestic business entity
● You own, control, or have signature authority over a foreign bank account/s and/or other foreign financial accounts.
● The combined value of those foreign financial accounts exceeded $10,000 at any point during the tax year.