Tax Tip #182

Any US person with a foreign account balance of $10,000 or more at any point during the year must file the FBAR form. The threshold is an aggregate amount. For example, if there is $4,000 in one account and $7,000 in another, an FBAR filing is required. 

FBAR also applies to those who have signing authority over an overseas account, which is the authority of an individual to control the disposition of money, funds or other assets held in a financial account by direct communication to the financial institution.

In addition to cash accounts, you must also report: 

• Foreign stock or securities held in a financial account at a foreign financial institution
• Financial accounts held at a foreign branch of a US bank
• Foreign mutual funds
• Foreign-issued life insurance or annuity contract with a cash value

For those whose lack of filing was non-willful, the fine can be $10k per violation.  If it is determined that the filing was purposely avoided, the fine can be $100k or 50% of the balance of the account at the time of the violation, whichever is greater. 

Individual tax return Form 1040 asks if an FBAR exists, even if the total value is under $10k. Be sure to inform Goldstein & Loggia if this applies to you.