Foreign Bank Accounts
U.S. citizens and residents aliens are subject to U.S. tax on their worldwide income.
To combat individuals using offshore financial assets to evade U.S. taxes, in March 2010 Congress passed the Foreign Account Tax Compliance Act (FATCA).
The Bank secrecy Act (BSA) of 1970, requires U.S. persons to report their financial interest in or signature authority over a foreign financial account to the Internal Revenue Service (IRS) if the account (s) aggregate value was greater than $10,000 at any point during the year.
Starting 2014, Foreign Bank Account Return (FBAR) is to be filed electronically on form FinCEN Form 114, Report of Foreign Bank and Financial Accounts. This form must be filed electronically to the Financial Crimes Enforcement Network (FinCEN).
Financial Accounts include:
- Bank accounts such as savings, checking and time deposits.
- Securities accounts such as brokerage accounts and other financial instruments.
- Online poker accounts.
- Commodity futures or option accounts
- Insurance policies with a cash value (such as a whole life policy).
- Mutual funds or similarly pooled funds.
- Any accounts that you are an authorized signor or power of attorney.
- Any account maintained in a foreign financial institution or with a person performing the services of a financial institution.
When and where to file:
Annual returns must be electronically filed before April 15th each year by logging FinCEN.gov. Taxpayers are responsible for the annual filing of this form.