FBAR refers to FinCEN Form 114, which was previously known as the Report of Foreign Bank and Financial Accounts.
A US company that controls a non-US entity with bank accounts in the respective country (which had more than a $10,000 cumulative balance at any point during 2022).
The penalty amount for non-filing is $10000.
The FBAR 2023 deadline coincides with the income tax return due date, which is April 15th, with an automatic extension available until 16 October.
The FBAR aims to address tax evasion, particularly by requiring U.S. entities to report funds and assets held in foreign banks.
You are required to submit FBAR to FinCEN, which stands for the U.S. Treasury Department's Financial Crimes Enforcement Network.
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.
FBAR requires reporting on various foreign financial accounts, including bank and investment accounts, and certain foreign retirement or pension accounts if they meet the reporting threshold.
You may need one, the other, or both. FBAR is filed with the Financial Crimes Enforcement Network (and is based on calendar year), whereas Form 8938 goes to the IRS as part of your federal tax filing (and is based on your chosen tax year). FBAR is judged based on foreign balances controlled by your US entity's foreign accounts or its controlled entities foreign accounts, whereas Form 8938 is judged based on a threshold of specified passive income. See here for more details: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
Generally, foreign real estate isn't reported on an FBAR except when held through a foreign financial account like a foreign bank account, where exceptions may apply.
Yes, both Form 8938 and FBAR might be necessary since they serve different purposes and have separate reporting thresholds. While FBAR has its requirements, Form 8938 is part of your annual tax return and may need to be filed, even if you're already submitting FBAR.
Some exceptions and rules may apply, especially for entities like trusts and tax-exempt organisations. Consult Inkle today for entity-specific guidance.
