New Reporting Requirements for 2011 of Foreign Financial Assets- FBAR


Effective for the 2011 tax year and going forward, certain individuals must file a new Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (the “reporting threshold”). The reporting threshold varies depending on whether an individual lives in the United States or files a joint income tax return with his or her spouse.

Specified foreign financial assets generally include the following assets:

  • Any financial account maintained by a foreign financial institution.
  • To the extent held for investment and not held in a financial account, any stock or securities issued by someone that is not a U.S. person, any interest in a foreign entity, and any financial instrument or contract with an issuer or counterparty that is not a U.S. person.

If you satisfy the "reporting threshold" that applies to you below, you are required to File Form 8938 with your income tax return.

  • Unmarried taxpayers living in the U.S. - total value of your foreign financial assets exceeds $50,000 on the last day of the tax year or more than $75,000 at any time during the year.
  • Married taxpayers filing a joint tax return & living in the U.S. - total value of your foreign financial assets exceeds $100,000 on the last day of the tax year or more than $150,000 at any time during the year.
  • Married taxpayers filing separate tax returns & living in the U.S - total value of your foreign financial assets exceeds $50,000 on the last day of the tax year or more than $75,000 at any time during the year.
  • Taxpayer living abroad (not filing a joint return) - if your tax home is in a foreign country, you meet one of the "presence abroad" tests below & the total value of your foreign financial assets exceeds $200,000 on the last day of the tax year or more than $300,000 at any time during the year.
  • Taxpayer living abroad (filing a joint return) - if your tax home is in a foreign country, you meet one of the "presence abroad" tests below & the total value of your foreign financial assets exceeds $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

You satisfy the "presence abroad" test if you are one of the following:

  • A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
  • A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported.

Enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, the Foreign Account Tax Compliance Act (FATCA) is an attempt to minimize tax evasion by United States taxpayers holding investments in offshore accounts. The reporting provisions of FATCA are being phased in over the next few years to require U.S. taxpayers, as well as foreign financial institutions, to report directly to the IRS the ownership interests of certain financial interests. Failure to do so could result in penalties ranging from $10,000 to $500,000 or even imprisonment.

CAUTION:  Form 8938 gets attached to your annual return (ie. Form 1040) and is required to be filed by the due date (including extensions) for that return, unlike Form TD F 90-22.1 which does NOT get attached to your annual return and must be received by the IRS on or before June 30th. We recommend mailing the form 3 to 4 days prior to the deadline to ensure timely filing.

Foreign Bank and Financial Accounts (FBAR)

CAUTION:  The filing of Form 8938 does not relieve you of the requirement to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if you are otherwise required to file Form TD F 90-22.1.

U.S. persons are ALSO required to file a Report of Foreign Bank and Financial Accounts or FBAR (Form TD F 90-22.1) each year if they have a financial interest in any financial account, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. In addition, a person who has signature authority over a foreign bank or financial account must also file Form TD F 90-22.1.  Accordingly, many U.S. companies that have control over their foreign subsidiaries will be required to file a Report.

Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts is not an income tax return, and, unlike with federal income tax returns, requests for an extension of time to file a Report are not granted.  If a holder of a foreign account was required to file a Report for earlier years, however, the holder should file the delinquent Reports and attach a statement explaining why the Reports are late. No penalty will be assessed if the IRS determines that the late filings were due to reasonable cause.

Form TD F 90-22.1 does NOT get attached to your annual return and must be RECEIVED by the IRS on or before June 30th. We recommend mailing the form 3 to 4 days prior to the deadline to ensure timely filing.

If you have any questions, please contact Feeley & Driscoll's Boston International Accounting team, Email us or call 1 (888) 875-9770.

Related Forms

Updated June 2012

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