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FinCEN Form 114: Things You Must Know to File the FBAR Form

Do you know anything about FinCEN Form 114? You have to file the FBAR form in the US, and for that, you must know everything about upcoming deadlines, charges, and every minute detail related to the FBAR Form and FinCEN Form 114. Stay tuned at USTAXFiling to get all the details related to FinCEN form 114 and FBAR reports!

The Foreign Bank and Financial Accounts form reports foreign bank accounts to form FinCEN 114 to an agency of the US Treasury Department called Financial Crimes Enforcement Network.

Major Facts

If any fails to file an FBAR (Foreign bank and financial accounts) when needed, it might result in hefty fines.
The FBAR (Foreign bank and financial accounts) is a tax form few Americans have to file to report their foreign bank accounts.
The FBAR (Foreign bank and financial accounts) is a purely informational tax form, and it does not create any tax liability.

What is the FBAR (Foreign bank and financial accounts) report form?

The name FBAR (Foreign bank and financial accounts) is an old name for the FinCEN 114 form. The FBAR (Foreign bank and financial accounts) reports your foreign bank details to the US treasury every year. The FBAR report form is, technically, no doubt, a tax form, as it does not generate any amount or even taxes as it is run by the Department of US Treasury. The intent of the FBAR form is to be informational and has to be filed by several individuals. The FBAR form must be filed by US companies and people who own or have an interest in financial accounts or foreign bank accounts if the balance of the account exceeds particular criteria during that financial year.

As per FinCEN’s site, the term of a financial account is: A financial account is not restricted to brokerage, securities, deposit, demand, savings, time deposit or checking or other account maintained with a financial institution or another individual who is performing the services of any financial institution. A financial account includes an insurance policy with a cash value like a whole life insurance policy, commodity futures or options account, shares in a mutual fund, an annuity policy with cash value, or even a pooled fund (a fund for the general public with regular redemption and regular net asset value determination). The intent of the FBAR form is to prevent the hiding of income and offshore assets and eliminate US income tax.

Who should file the FinCEN 114 form?

Here is the list of who should file the FinCEN 114 form, which includes:

US Companies with Foreign Accounts

There is no doubt that US organizations are also subject to this rule. A US-based company is any partnership, corporation, trust, LLC, or estate that is organized or formed under the regulations of the United States.

Joint Foreign Bank Account Holders

There is a need for every joint account holder to file separate FBAR forms; each form must report the entire balance of the jointly held account. Spouses may also file a joint FBAR form with only jointly held accounts, but if a person does not have any foreign accounts separately held. There are a few exceptions to filing that include foreign financial accounts maintained abroad, and spouses jointly owned accounts on military banking facilities.

You and your spouse hold savings and jointly held checking accounts in a non-US bank. You may also have to file separate FBAR forms, and two of you must have your own separate investment accounts that will help you manage your foreign pensions. You may have to file separate FBAR forms, each form detailing the information from the savings and checking accounts and details related to your separate investment accounts. Only the investment account that is attributable to an individual needs to be reported on the separate FBAR form.
You and your spouse have a joint savings and joint checking account at the local HSBC branch in London, where you reside. These bank accounts are the only non-US financial accounts that you have. You may also file a joint FBAR form for that particular year.

Individual Foreign Bank Account Holders

US persons, either Resident Aliens who are green card holders or US citizens, should file an FBAR if they have one or more financial accounts located abroad and the total of the balances of those accounts exceeds $10,000 USD at any time during that particular year. All US individuals must file the FBAR form regardless of their circumstances or age. The guardians of minor kids and those who cannot file for themselves must file the FBAR form on behalf of their charges.

You may open a savings account for the 2-year-old kid at a non-US bank, and you can keep joint ownership so that you may manage your account. The account balance is $12,000 at the end of the financial year. You and your kid may file separate FBAR forms for that particular year, each declaring the bank account and the entire balance of $12,000 on the FBAR form.

What About Exchange Rates?

FinCEN needs you to convert the balance of your foreign financial accounts to US dollars before you enter it on the FBAR form. You don’t have to convert your financial funds to UDS, and it is the total balance on paper. FinCEN needs you to use the US treasury foreign exchange rate as of 31 December of the year in question. The US treasury also ensures to publish the rate every year.

What Are the Requirements?

If you have any interest in or own any foreign financial accounts, you should assess their balances every year to consider if you have to file an FBAR Form. The FBAR form should be filed every year if the entire balance of your foreign financial accounts exceeds $10,000 during that financial year. Foreign financial accounts include but are not at all restricted to savings, brokerage, deposits, securities, checking, or any other account that is held with a financial institution. Foreign financial accounts also include annuities with mutual funds, cash-out value, or even whole life insurance policies.

What Details Do You Need to Prepare the FinCEN Form 114?

To complete the FBAR form report, you must fill in the following details:

Your foreign bank’s addresses and names
Your social security number, ITIN, name and address
Your foreign bank addresses and names
The maximum amount available in your foreign financial account during the year that is converted to US dollars
The address, name, and even social security number of any of all joint owners of the account
The type of account: securities, bank, or even other
Your foreign bank account number for every account

Note

You must ensure to enter all identifying numbers and phone numbers in a single text string without characters; a phone number that may not be entered as 555-222-3333 but must be entered as 5552223333

When you record your maximum account balance, ensure to record all amounts in US dollars that are rounded up to the next complete dollar. If your accounts are held in a different currency, you may convert the maximum account balance for each account into US dollars. You may convert the foreign currency by using the financial management service rate of treasury or even choose the exchange rates under reference and guidance on website www.fms.treas.gov for the last day of the year.

If there is no Treasury Financial Management Service rate available, then you may use another verifiable exchange rate and ensure that you offer the source of that rate. In valuing the currency of the particular nation that uses multiple exchange rates, you may use the rate that is applicable if the currency in the account was converted into dollars on the last day of the year.

How to File FBAR and When?

FinCEN needs that all the FBAR forms must be electronically filed through the website. So, when should you file FBAR, and how to file it? Several expert tax preparers can file electronically using the software, too. The Foreign bank and financial accounts report is due on 15 April. There is an automatic extension available for US citizens residing overseas, which extends to the due date of 15 October.

Is There a Record Retention Timeframe?

Those individuals who have to file an FBAR form may also have to keep the records of their bank details to prove their form entries to FinCEN at the time of an audit. You should keep the following details for six years:

Type of account
Account number
Name that the account is held in
Address and number of the foreign financial institution
You may keep a copy of the FBAR (Foreign bank and financial accounts) that is filed every year that may assist you in satisfying your needs.
Maximum value of the bank account during the financial year

Are There Any Penalties?

The charges for not filing an FBAR form, if needed, are up to $12,921. The charges are not assessed if there is reasonable cause for not filing, and the account balance is reported properly.

Suppose you fail to report an account number or account that is subject to charges equal to the greater of 50 percent or $129,210 of the account balance at the violation time. There are wilful violations that are subject to criminal prosecution.

Can I Have Anyone File FinCEN 114 for Me?

FBARs can be filed and completed on your behalf or the owner of the foreign accounts by a third-party preparer such as an expert tax professional. The owner of the filer who is using a third-party preparer should complete and maintain a record of FinCEN form 114a, FinCEN BSA is an E-filing signature authorization record, to authorize the third-party filing. You don’t have to send or file the completed form 114a to FinCEN form. You may hang onto that form in case the IRS requests it. Spouses who file a joint FBAR can use form 114a to designate or authorize which partner may sign the report.

What if you need assistance or an FBAR Example?

If you need any help related to FBAR form filing, then you may connect with USTAXFiling anytime. Our USTAXFiling experts are here to resolve all your doubts related to USTAXFiling. Our USTAXfiling experts are highly educated and skilled, so you don’t have to worry about anything while we take care of your income tax filing. Our expat accountants at USTAXFiling have helped several expats file their FinCEN 114 and are happy to help you, too.