Foreign Bank Accounts

[MattKenzo]

Hello - Slightly off topic, but as I am stationed overseas I am obliged to have a foreign Bank account in order to pay bills etc. I understand that I must acknowledge that this account exists on my tax form, and report any sums over $10,000 via FBAR. I have always maintained a balance below that 10k Threshold, but my question is does it matter if I go over that amount? Other than reporting via FBAR, Are there tax penalties/consequence/disadvantages If I do? Thank you in advance!

[JandKit]

The FBAR is required if the aggregate value of your foreign account exceeds $10,000. In effect, if your income exceeds the $10,000 threshhold at anytime, the FBAR is required.

The FBAR is not a part of the tax return and is filed separately from your regular tax return. More information can be found here:

https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

[JandKit]

There are penalties for not filing an FBAR when required.

What Are the FBAR Penalties for Not Filing?

For those whose lack of filing was non-willful (meaning you didn’t know about your reporting obligation), the fine can be $10,000 per violation.

If it is determined that you purposely avoided filing, the fine can be $100,000 or 50% of the balance of the account at the time of the violation, whichever is greater.

[KanM361 · Accepted solution]

Hello Matt, if your bank account exceeds the amount of $10,000 their are no penalties, however, as you are aware this needs to be reported via FBAR and you need to report the interest income in your tax return if you are filing a resident return no matter if your bank balance amount is below or above $10,000 (as residents/citizens report worldwide income).

Please let me know if you need any clarification on the above or have any additional questions.

[MattKenzo]

Thank you for the answer(s)! I understand the reporting requirements to a degree, but basically is it worth the effort t keep the balance below the 10k threshold?   It can be tricky given the volatility of currency. Are there tax penalties/consequence/disadvantages If I go above the 10k amount, or is it simply that I must report it? -Thanks!

[KanM361]

If your balance goes above $10,000 at anytime during the calander year, you must file as FBAR, otherwise there are penalties.

[Jayesh P]

The foreign account containing mutual funds never exceeded $10000 in cash. However, over the period of time the total value in the mutual fund account may have exceeded the $10000. Do we need report it thru FBAR?

[MarilynG1]

For the FBAR filing,  you are only concerned with foreign account balances in the last tax year (2023).  

Here's the link for Filing an FBAR.

@Jayesh P 

[TaxSpec]

Hi Jayesh P

A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.
Here is additional info that may be informative to you:

https://bsaefiling.fincen.treas.gov/docs/FinCENFBARHelp.pdf