Extensions Now Available for FBARs
This is the first year that the deadline to file an annual Report of Foreign Bank and Financial Accounts (FBAR or FinCEN Form 114) is April 18th. In the past, it was a June 30 due date with no extension.
Who needs to file an FBAR? The triggering threshold is $10,000 in foreign financial accounts. This is a combined valuation that surpassed the low bar at any time during 2016. Even if you only have signature authority, you may need to file this form.
Because of this low threshold, if you have foreign saving accounts or investments speak with an international tax attorney to find out if you need to file this form. FBARs have received more attention over the last decade, but there are many who may find they should have been filing.
Automatic extensions
This is also the first year that FinCEN will grant filers an automatic extension to file FBARs. With the approaching tax deadline, this is good news. This allows you until October 16, 2017 to file.
Reporting worldwide income
U.S. citizens and resident aliens (i.e. green card holders) must report worldwide income. Foreign trusts as well as foreign brokerage accounts generally fall into this category when they earn interest or dividends.
On your tax return, you might need to complete Schedule B. This is a general foreign account disclosure.
Here is an example: In 2016, a D.C. resident inherited a foreign savings account from a relative in Greece. This account would need to be disclosed on Schedule B. If the value was over $10,000, a FBAR would be required. Depending on filing status and the value of the account (more than $50,000 on December 31, 2016 or more than $75,000 during the tax year for a single taxpayer), Form 8938 may also need to be completed and filed with a tax return.
As you can see from the example, foreign account disclosure rules are complicated. In addition, fail to file the right forms and it could open you to serious civil penalties.
