(This is not to be construed as tax or legal advice. As always, discuss your situation with a qualified advisor.)
US taxpayers with international financial assets should already be well acquainted with the FBAR form and its notoriously draconian penalties for noncompliance. In case you aren’t, this article is a must read.
In short, the FBAR is perhaps the most common reporting requirement burden—but certainly not the only one—US persons with foreign financial assets have to deal with. If you have an aggregate of $10,000 or more in foreign financial accounts at any time during the year, you must file an FBAR. And if you don’t, the penalties are what can only be described as cruel and unusual.
There have been some changes lately to the FBAR that you need to know about. Namely, starting this year, it must be filed online—paper forms will no longer be accepted.
People who are unaware of the change or who forget about it and snail-mail the old paper form may be considered as late filers or worse. This can possibly subject you to a penalty. So be sure to confirm with your tax preparer or accountant that he or she is aware that the FBAR must now be filed online.
The official name of the FBAR also changed, from Treasury Form TD F 90-22.1 to FinCEN Form 114.
The deadline for the electronic FBAR filing did not change and remains June 30—no extensions are granted.
The instructions for the electronic filing process are below.
Filing an Electronic FBAR
- Click “File an Individual FBAR” on the left side of the page.
(Note that the procedure for an institution is different than for an individual. If an institution that you represent needs to file an FBAR, follow the instructions for institutions. We’ll continue this example for individuals.)
- You will then be brought to the screen below, where you can download the PDF of the FBAR (FinCen Form 114). This PDF allows you to type information into it and save the results.
- Very carefully follow the instructions and complete the information required in the FinCen Form 114 PDF. Be sure to save the document when you are finished. If you are unsure what information you need to enter in a certain field, you can move the mouse cursor over that field, hold it for a moment, and a box of text will pop up explaining what you need to enter. See the picture below for an example.
- Once everything is filled out correctly, go back to the first page and carefully follow the instructions on how to digitally sign the document, save and validate it, and then finalize it for submission.
- When you’re ready to submit the form, go back to the page from Step 3 and click the link to “File the Individual FBAR (FinCEN Form 114).” This will take you to the submission page, where you’ll need to enter some contact information and then upload the finalized FinCEN Form 114 PDF. After you have submitted it, the process is complete.
As previously mentioned, the consequences for not properly complying with FBAR filing requirements can be severe. It is therefore advisable to seek the assistance of a tax professional.
However unpleasant and uncomfortable it is to deal with the FBAR and other reporting requirements, it does not at all negate the need to internationalize.
Quite the contrary.
It is far better to deal with the burdens associated with internationalization than to leave your savings in range of a desperate government’s wrecking ball.
When you’re dealing with a desperate government, it is always better to be proactive than reactive.
In the case your bank has a Cyprus-style bail-in or your government imposes capital controls, it’s always better to be prepared a year early rather than a minute too late.
Internationalization is your ultimate insurance policy against a desperate government and its destructive measures. You can find specific guidance from Casey Research on this critically important topic by clicking here.