Monday, May 28, 2012

Bellevue Tax Law | FBAR Deadline is June 30th


The deadline to file your 2011, TDF 90-22.1 (FBAR) is June 30th, 2012.  The FBAR is filed separately from your regular tax return and mailed to the Department of Treasury in Detroit.  

The FBAR is required to be filed even if you don’t have to file a regular tax return.  Unlike your tax return, June 30th, is the date the FBAR must be received by the Department of Treasury, NOT the date the envelope is postmarked.   So, make sure you give it at least a few days, if not a week or more, to get to Detroit on time. 

Any US person with $10,000 or more, at anytime during the year, in foreign financial accounts must file the FBAR.   The $10,000 requirement is based on the combined value of all your accounts and not each individual account.  A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution).  If the accounts are in a foreign currency you must convert the balances to US dollars based on the December 31, 2011 exchange rates found on the treasury website.  So, if you have two accounts each containing $6,000 dollars you need to file the FBAR.  The $10,000 value is based on the maximum balances at any time during the year.  Thus, if the aggregate balance of the account(s) reached $10,000 for five minutes on one day of the year, you are required to file.

A US person is any US citizen, no matter where you live, residents, and US entities.  A US citizen or resident living abroad is required to file the FBAR.  US based businesses (partnership, corporations, sole proprietorships, s-corps, etc.) and trusts are also required to file the FBAR.  If you own more than a certain percentage (usually 50%) of one of these types of business or trusts you will have to file two FBARs; one the entity and one personally. 

If you have signature authority, but are not the owner, of a foreign financial account that that meets the filing requirements you are required to file an FBAR.  The signature authority rules apply to business accounts even if you do not own 50% of the business linked to the account.  A debit card on a foreign account could be considered as having signature authority.

The penalties for not filing the FBAR are steep.  If you have any type of foreign account and do not think you are required to file; at least contact someone to verify that you are correct.

As with everything related to the IRS, it is difficult to provide comprehensive information related to taxes on the web.  Please do not rely on this article without consulting your tax professional.  If you are unsure about whether you have a requirement to file this form contact a tax professional.