Foreign Asset Reporting
Does it apply to you?
Whether you live abroad or within the US, for U.S. citizens and green card holders, the Financial Crime Enforcement Network (FINCEN) and the IRS require reporting centered around foreign bank accounts and foreign financial assets (foreign life insurance policies, pensions, mutual funds, etc.).
The reporting is merely informational and does not result in any additional U.S. tax. However, there could be very stiff penalties for failing to comply with this requirement. Let us evaluate your situation to identify any necessary reporting related to your foreign financial activities.
FinCen 114 (Foreign Bank Account Report)
An FBAR is required on foreign bank accounts which have a total aggregate value of $10,000 or greater. So if you either have one foreign bank account or ten, and their total aggregate value at one point exceeded $10,000, then it is likely that you need to report the accounts. This form is filed separately from your tax return.
Form 8938 – Statement of Specified Foreign Financial Assets
Requires reporting for any financial account maintained by a foreign financial institution or any foreign financial asset. It is similar to an FBAR, but a little bit more encompassing. For U.S. taxpayers residing within the U.S., the filing threshold is $50,00; for U.S. taxpayers living outside the U.S., the threshold is $200,000. Lastly, this tax form is included in your U.S. tax return filing.