As an expat, the first thing you do when you move abroad is to get a foreign bank account. However, when the tax season comes you risk facing FBAR penalties if you forget to file an FBAR due to your account. Even then, don’t panic. If the IRS has not sent you a notification about failed FBAR fillings, there’s still a chance to go penalty-free.
Meanwhile, let’s see what happens if you don’t file FBAR and the deadlines.
FBAR, What Is It?
The FBAR is simply a form that a US citizen living abroad must fill once their foreign bank accounts reach at least $10,000. If you’re an expat and your foreign account balances hit this threshold or are higher at any time during a calendar year, you should file an FBAR.
Note that, filing an FBAR doesn’t mean your foreign bank accounts will be taxed. You’re only doing this to report the amount of money you have in your foreign bank accounts. The US Department of Treasury requires all expats report their account balances to the Financial Crimes Enforcement Network (FinCEN) every year without fail.
But why must you report to the US treasury how much you own in your foreign bank accounts? Truth be told, illegal money laundering is a reality that is becoming a major concern as more US citizens are moving abroad. With that, the US government has put in place such measures to curb such kind of illegal businesses.
Who Should File An FBAR?
- US citizens living in foreign countries
- US corporations, partnerships, & LLCs
- Estates
- US residents
- Trusts
For as long as you have a foreign bank account and you’re a US citizen, whether you’re an individual or a business, you must file an FBAR. It’s a one-time activity in every calendar year. So, do it on time to avoid the penalties.
When is The Deadline to File The FBAR?
Typically, the tax day for Americans living in the United States is the 15th of April. However, just like the filing date for US citizens living abroad, there’s always an extension for the FBAR.
As an expat, there’s no need to request for extension. Automatically, expats have upto the 15th of October to file their FBAR. However, in case you’re affected by a natural disaster like flood abroad, you’re eligible for an extension beyond this date. Make sure you reach out to our tax experts for quick assistance to avoid penalties in case this happens to you.
FBAR Penalties Expats Risk In Case of a Default
Failure to report your FBAR every years attracts hefty penalties. Depending on your circumstance, if you violate any of the FBAR regulations, you may be subjected to pay certain penalties as shown below:
| Code Citation (U.S.) | Penalty Description | Current Maximum Amount |
| 31 U.S.C.5321 (a)(5)(B)(i) | Foreign Financial Agency Transaction – Non-Willful Violation of Transaction | $12,921 |
| 31 U.S.C.5321 (a)(5)(C) | Foreign Financial Agency Transaction – Willful Violation of Transaction | Greater $129,210 or 50% of the amount per 31 U.S.C.5321(a)(5)(D) |
| 31 U.S.C.5321(a)(6)(A) | Negligent Violation by Financial Institution or Non-Financial Trade or Business | $1,118 |
| 31 U.S.C.5321(a)(6)(B) | Pattern of Neglect Activity by Financial Institution or Non-Financial Trade Business | $86,976 |
Final Thoughts
As you can see, FBAR penalties are very costly. No one wants to take that direction, neither do you. Therefore, file your FBAR on time and avoid violating the regulations associated with it. Talk to a tax expert today to ensure you’re on the safe side with your FBAR filing.