December 14th, 2023
By law, all U.S. citizens and residents must report their worldwide income. This includes income from foreign trusts and foreign bank and securities accounts. There are two reporting areas to be considered:
Report of Foreign Bank and Financial Accounts (FBAR).
If a U.S. person has a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, and the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year, the Bank Secrecy Act requires the U.S. person to report the account(s) yearly by filing electronically a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR).
Statement of Specified Foreign Financial Assets (FATCA)
Form 8938 must be attached to the tax return for individual taxpayers with foreign financial assets more than a filing threshold. For example, a single taxpayer not living abroad must file Form 8938 if the total value of his or her foreign financial assets exceeds $50,000 on the last day of the year or $75,000 at any time during the year. These amounts double for those. Unlike the FBAR information this reporting requirement allows the IRS to use its full complement of tools to verify the information or lack of information filed.
To combat money laundering and promote financial transparency, there are heavy penalties for late, incomplete, or non-filing. The IRS Fact Sheet 2022-24 on reporting foreign bank and financial accounts is a useful resource for those who have foreign financial interests.
Help with FBAR and FFA reporting is available by phone at 866-270-0733 for callers within the United States and 313-234-6146 for callers outside the United States. Answers can also be found by sending an inquiry to FBARquestions@irs.gov. Call the FinCEN Resource Center at 800-949-2732 or 703-905-3975 or by e-mailing your inquiry to FRC@fincen.gov.