The FBAR (aka FinCEN Form 114) is a form that US citizens who hold “monetary” assets outside the US must submit each year. This form doesn’t go to the IRS, but to the Department of the Treasury, typically on a different due date (***check the instructions***).
There are no tax consequences to filing this form. Uncle Sam just feels more comfortable knowing how well its citizens are doing. 🙂
There ARE stiff penalties for not filing… and avoiding these penalties is the primary reason for using the ***amnesty program*** (article on amnesty).
How do you know if you have to file? Unfortunately, answering this question can take almost as much work as filling out the form!
You can skip this process and just know you have to file, if at any time of the year, your bank account balances and investments together totalled US$10,000 or more. (Use the right conversion rate).
Otherwise, here’s how you find out if you have to file.
For each account, investment, pension plan, whole life insurance policy, etc. (see FBAR instructions), find the maximum value the asset reached during the year. Sum all these maximums, and convert the sum to US dollars.
If the total is $10,000 or more, you have to file the FBAR.
Not to be outdone by the Treasury Deparment, the IRS has another similar form, with a higher threshold, that goes directly to the IRS with your tax return. This is form ***8938*** (link to list of esoteric forms).
You have to file form 8938 if the sum above is $300,000 or more. You also have to file it if the sum of all assets’ YEAR END values is $200,000 or more. Otherwise, the FBAR is all you need.
Note: If you have delinquent FBAR’s or 8938’s, DO NOT file these without finding out how to avoid the late filing penalties!