Filing the FBAR and FATCA: Deadline Reminders for Expats

Navigating U.S. tax compliance can be challenging for expatriates, especially when it comes to reporting foreign assets. If you are living abroad and have foreign bank accounts or financial assets, two critical reporting obligations might apply: the Foreign Bank Account Report (FBAR) and the Foreign Account Tax Compliance Act (FATCA) filings. Missing these deadlines can lead to substantial penalties. Let’s break down the essentials you need to know to stay compliant.

What Are FBAR and FATCA?

The FBAR, officially known as FinCEN Form 114, requires U.S. persons with foreign financial accounts exceeding $10,000 at any time during the calendar year to report these accounts to the Department of the Treasury. Even if you are an expatriate, this requirement applies to you. This includes not just bank accounts but also investment accounts, retirement accounts, and any accounts where you hold signature authority.

The FATCA filing requirement, on the other hand, is reported through Form 8938, attached to your federal income tax return. FATCA has a higher reporting threshold than the FBAR, varying depending on your filing status and residency. For example:

If you live abroad and file as single, the threshold is $200,000 of foreign financial assets on the last day of the year or $300,000 at any time during the year.

If you are married and filing jointly while living abroad, these thresholds double.

While both requirements involve foreign assets, they serve different purposes and have separate filing procedures. You might need to file both forms depending on your circumstances.

Key Deadlines and Penalties

FBAR Filing Deadline: The FBAR is due on April 15, but an automatic extension is granted to October 15 each year. FBAR filings are submitted electronically through the BSA E-Filing System and are not part of your tax return.

FATCA Filing Deadline: Form 8938 is due with your tax return on April 15 (or June 15 for expatriates), with a further extension to October 15 available if requested.

Failing to file the FBAR can result in severe penalties:

Non-willful violations: Up to $10,000 per violation.

Willful violations: The greater of $100,000 or 50% of the account’s balance per year.

FATCA penalties start at $10,000 for failure to file Form 8938 and can grow to a maximum of $60,000, plus potential criminal charges.

How to Stay Compliant

Understand Your Obligations: Review your foreign accounts and assets early in the year to determine if the FBAR, FATCA, or both apply to you.

Organize Your Records: Gather statements and documentation for all foreign financial accounts, including the highest balances during the year.

Consult a Professional: Filing these forms can be complicated, especially if you’re unsure about thresholds or what qualifies as a reportable asset. An enrolled agent (EA) can guide you through compliance and help you avoid costly errors.

Failing to meet your FBAR and FATCA obligations can be overwhelming and expensive. If you need assistance with foreign asset reporting or understanding your requirements, email us at info@mkhstaxgroup.com. Let us help you navigate these rules and keep your tax filings in order.