FBAR 2024: Essential Filing Requirements, Deadlines, and Insight

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The Foreign Bank Account Report (FBAR) is a critical compliance requirement under the Bank Secrecy Act (BSA), aimed at combating tax evasion and money laundering by requiring U.S. persons with foreign financial accounts to report them. U.S. citizens, residents, and entities with financial interests or signature authority over foreign accounts must file an FBAR if the total value of their foreign accounts exceeds $10,000 at any point during the year. This requirement covers various accounts such as bank accounts, brokerage accounts, mutual funds, and foreign pension plans.

Filing an FBAR is done electronically through the BSA E-Filing System using FinCEN Form 114. The Internal Revenue Service (IRS) enforces compliance by investigating civil violations and imposing penalties for non-compliance including fines and potential criminal tax charges for willful violations. Even minor mistakes in filing can lead to significant penalties, making it essential for taxpayers to ensure accurate and timely filing.

What is FBAR?

An FBAR, or a Foreign Bank and Financial Accounts Report, is an annual report of a U.S. person’s or entity’s overseas financial holdings. This report aims to inform the Financial Crimes Enforcement Network and, by extension, the IRS of American funds overseas to prevent financial crimes like money laundering and tax evasion. Often, American expatriates, citizens with overseas financial interests, and domestic corporations engaging in business overseas are subject to FBAR filing. As the IRS updates FBAR filing requirements, those subject to reporting should remain informed.

The purpose of the FBAR is to prevent the use of foreign financial accounts to evade U.S. taxes or hide illicit economic activities. While maintaining foreign accounts is legitimate, the FBAR helps the U.S. government to trace foreign-held assets and ensure all income is reported to the IRS. For 2024, this compliance is more critical than ever due to heightened IRS enforcement and scrutiny.

FBAR filing is required for certain United States Persons “USPs” with over $10,000 across all qualified foreign financial accounts. Eligible USPs include domestic citizens, resident aliens, expatriates, and certain domestic entities. According to IRS guidance, the term ‘foreign financial accounts’ refers to, but is not limited to, bank accounts, securities accounts, commodity futures, and options accounts held overseas. Individuals with a direct or indirect interest in foreign financial accounts may also be subject to FBAR filing. Understanding your FBAR reporting liability is crucial, especially if you hold financial accounts overseas. For assistance and guidance on FBAR filing, USPs can call the Dual Licensed International Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing today at (800) 681-1295.

What’s New for FBAR in 2024?

With the Corporate Transparency Act (CTA) taking effect in 2024, FinCEN’s new filing requirements can be daunting for businesses in California. CTA is a federal law combating financial crimes such as money laundering and terrorist financing. It requires certain businesses to report their beneficial ownership information to FinCEN. This information helps FinCEN maintain a national database of company ownership, enhancing transparency and financial regulations.

Another significant update for 2024 is a Supreme Court ruling in the Bittner case, which redefined how penalties for non-willful violations are applied. Previously, penalties were assessed per account, which could result in massive fines for taxpayers with multiple unreported accounts. Now, the penalties apply per report, capping the fine for non-willful violations at $10,000 per report. This change offers considerable relief for individuals with multiple foreign accounts.

Additionally, the IRS removed its previous mitigation guidelines for non-willful FBAR violations, which had allowed penalties to be reduced based on certain factors like cooperation and the size of the unreported accounts. Now, IRS examiners have broader discretion when determining penalties, which could lead to more varied outcomes. This increased flexibility highlights the importance of complete and accurate reporting, as taxpayers can no longer rely on structured reductions to mitigate potential fines. These updates are part of the IRS’s ongoing effort to streamline enforcement while adapting penalties to individual circumstances

How Can the Tax Law Offices of David W. Klasing Help U.S. Taxpayers Comply with FBAR?

U.S. taxpayers who fail to make required offshore disclosures under either the Report of Foreign Bank & Financial Accounts (FBAR) or the Foreign Account & Tax Compliance Act (FATCA) can face harsh penalties and sanctions. Taxpayers must satisfy all disclosure obligations, or they are likely to face enforcement action from the IRS or the Department of Justice. Whether you fear consequences due to past filing failures (undisclosed Foreign Accounts) or have already been contacted by the IRS, the experienced, dual-licensed international tax attorneys and CPAs at the Tax Law Offices of David W. Klasing can fight for you. Our dual-licensed FBAR Tax attorneys and CPAs are dedicated to mitigating the consequences faced by taxpayers who have failed to maintain international account compliance. However, time is often of the essence when filing FBAR and addressing offshore tax situations.

Taxpayers who come under investigation before making a disclosure may also be ineligible for programs like Offshore Voluntary Disclosure Practice or Streamlined Disclosure. We skillfully navigate the complexities of various federal and California state voluntary disclosures, including domestic, offshore, CDTFA, and FTB voluntary disclosures, streamlined procedures, and delinquent FBAR and international information return submission procedures. To schedule a reduced-rate offshore tax consultation, call the Tax Law Offices of David W. Klasing at 888-564-1409 or contact us online here.

Who Needs to File FBAR in 2024?

A U.S. person, including citizens, residents, corporations, partnerships, limited liability companies (LLCs), trusts, and estates, must file an FBAR if they have a financial interest in or signature authority over at least one foreign financial account and if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year.

Who Qualifies as a U.S. Person?

The term ‘U.S. person’ encompasses:

U.S. citizens and residents, including individuals living abroad.
Entities created or organized in the U.S., such as corporations, partnerships, LLCs, trusts, and any entity formed under U.S. laws or its territories (including the District of Columbia, Puerto Rico, Guam, U.S. Virgin Islands, and others).
Estates formed under U.S. law.

Disregarded entities for tax purposes may also be required to file FBAR, regardless of their federal tax treatment. FBAR requirements are governed by the Bank Secrecy Act (Title 31) and are separate from the Internal Revenue Code (Title 26). When determining residency, the IRS applies the tests from Section 7701(b)(1)(A)(i)-(iii) of the U.S. Code, which includes the States, District of Columbia, U.S. territories and possessions, and certain Indian lands.

Exceptions to FBAR Filing Requirements

Several exceptions to the FBAR filing requirements exist, such as:

Trust beneficiaries (if the U.S. person, trustee, or agent of the trust files an FBAR).
Foreign financial accounts maintained on U.S. military banking facilities.
Individual Retirement Account (IRA) owners and beneficiaries.
Foreign financial accounts owned by government entities or international financial institutions.
Foreign accounts jointly owned by spouses if one spouse has already filed a timely FBAR and both spouses sign the appropriate authorization (FinCEN Form 114a).
All your foreign financial accounts are reported on a consolidated FBAR.

Types of Foreign Financial Accounts

Almost any account held at a foreign financial institution is subject to FBAR reporting if the combined value of all foreign accounts exceeds $10,000 at any point during the calendar year. This applies to both standard and less familiar account types.

Common foreign financial accounts include:

Bank accounts such as checking, savings, and time deposits.
Securities accounts, which include brokerage accounts, securities derivatives, and other financial instruments.

Beyond these standard accounts, commodity futures or options accounts and insurance or annuity policies with a cash value, such as whole life insurance policies, are also reportable. Mutual funds or similar publicly available pooled funds that calculate their net asset value regularly and offer redemption opportunities must also be reported. Examples of reportable accounts include:

Canadian retirement savings plans, like the Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA).
Mexican individual retirement accounts, such as Fondos para el Retiro and Administradoras de Fondos para el Retiro (AFORE).

However, certain accounts are not reportable under current FBAR regulations. These include foreign hedge funds, private equity funds, and accounts holding only virtual currency (unless they also carry other reportable financial assets). While FinCEN has indicated plans to amend regulations to include virtual currency as a reportable asset, this change has not yet been implemented as of 2024.

Reporting Jointly Held Accounts

When two or more individuals hold a foreign financial account together, each U.S. person with a financial interest in the account must file an FBAR and report the entire value of the account, not just their share. This rule applies whether the account is jointly maintained or if multiple persons own partial interests.

There is an exception for spouses. If all the foreign financial accounts the non-filing spouse must report are jointly owned with the filing spouse, the non-filing spouse may be exempt from filing a separate FBAR. To qualify for this exception, the following conditions must be met:

The filing spouse reports the jointly owned accounts on a timely filed FBAR.
The filing spouse signs the FBAR electronically (using a PIN in item 44).
Both spouses must have completed and signed Form 114a, the Record of Authorization to Electronically File FBARs, which must be kept in the filer’s records.

If any of these conditions are not met, both spouses must file separate FBARs, and each will be required to report the entire value of the jointly owned accounts.

Is FinCEN Form 114 the Same as FBAR?

FinCEN Form 114 is the official form used to file the Foreign Bank Account Report (FBAR). In other words, FBAR is the report, and FinCEN Form 114 is the form that U.S. persons must use to submit their FBAR to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. FinCEN is an agency within the U.S. Department of the Treasury that works alongside the IRS. FinCEN Form 114, commonly known as the “FBAR” (Foreign Bank Account Report), is used to disclose offshore bank accounts and global income to the federal government.

Unlike income tax returns submitted to the IRS, the FBAR must be filed electronically with FinCEN using its BSA E-Filing System. There is no paper version of the FBAR; it can only be filed online.

Don’t Risk Penalties: Ensure Proper FBAR Filing with the Tax Law Offices of David W. Klasing

Determining foreign account and asset reporting requirements can be an incredibly complex task. Don’t risk steep civil and criminal tax penalties or, at worst, criminal tax prosecution by failing to file. If you met the eligibility thresholds in past years but did not file an FBAR as required, or if your FBAR report was misleading or inaccurate, the best thing you can do is reach out to a skilled dual-licensed Tax Attorney and CPA at Tax Law Offices of David W. Klasing as soon as possible. The longer you wait to deal with your issue, the more likely it is that the IRS will catch on to your conduct and begin an audit or criminal tax investigation. Once such an audit or investigation has already started, this will severely limit our ability to mitigate the damage. At that point, we will have to focus on defending an eggshell audit or defending against a criminal investigation to try to prevent criminal charges from being filed against you and minimize the financial damages.

If you get in touch with us prior to the audit or investigation beginning, however, we may be able to get you into a voluntary or streamlined disclosure program, or even just amend your returns if the mistake was minor, unintentional, and recent. Voluntary and streamlined disclosure programs offer taxpayers the opportunity to disclose past errors regarding FBAR in exchange for a near-guaranteed pass on criminal prosecution as well as significantly lower fines and other financial penalties. Which of these programs you may want to avail yourself of will largely depend on whether your actions were willful and on your status as a domestic, expat, or foreign taxpayer. As always, consult with an experienced dual licensed Tax Attorney & CPA like those at the Tax Law Offices of David W. Klasing before making any decisions about amending your returns or entering into a voluntary or streamlined disclosure program so that we can advise you of any potential downside you could face and guide you through the often-complex process. To schedule a reduced-rate FBAR consultation, call us at 888-640-3408 or contact us online today.

FBAR 2024: Requirements, Deadlines, and How To File

How to File FBAR

To comply with FBAR requirements, you must file the report electronically using FinCEN’s BSA E-Filing System. Unlike your federal tax return, the FBAR is not filed with the IRS; it is submitted directly to FinCEN. Here’s a step-by-step guide on how to file your FBAR.

Electronic Filing Process

Prepare Your Computer
1. Filing must be done electronically, so ensure that your computer is secure and up to date. Avoid using public or shared computers. Perform a virus and malware scan on your device before proceeding.
2. Make sure Adobe Reader is installed as the default PDF reader on your system, as this is required to complete the form.
Access the FBAR E-Filing System
1. Navigate to FinCEN’s BSA E-Filing System website and click the “Prepare FBAR” button. This will download the FinCEN Form 114 PDF.
2. Open the form directly in Adobe Reader to avoid compatibility issues.
Complete the Form
1. Begin by filling in the “Filing name” field to create a descriptive identifier for your FBAR submission.
2. Proceed to fill out each line item on the form, such as filer type (individual, business entity, etc.) and account details. Follow the instructions provided for each section to ensure accuracy.
Validate and Sign
1. After completing the form, click the “Validate” button to check for any missing required fields or formatting errors. Correct any issues that arise.
2. Click “Sign the Form” to electronically sign it. A prompt will appear asking you to confirm your signature. Click “Yes” to acknowledge the electronic signature.
Save and Upload the Completed Form
1. Save the signed form in a location that’s easily accessible, such as your desktop.
2. Return to the BSA E-Filing System, click “Submit FBAR,” and upload the saved file. Provide your email address, name, and phone number, then click “Submit”.
Confirmation and Tracking
1. Upon successful submission, you will receive a tracking ID for your FBAR in the format of FF14-XXXXXXXXXX. A confirmation email will also be sent to the address provided.
2. Within two days, a follow-up email will confirm that your FBAR has been processed and will include a 14-digit BSA identifier.
3. Alternative Filing Options

If you are unable to file electronically, you can request an exemption by contacting FinCEN’s Resource Center. Upon approval, FinCEN will provide a paper form to complete and mail. Note that the IRS will not accept paper filings of older forms, such as TD F 90-22.1, or printed versions of FinCEN Form 114.

To have someone file on your behalf, complete FinCEN Report 114a, which authorizes another person to file the FBAR. You don’t need to submit this form with the filing, but keep it for your records in case the IRS or FinCEN requests it.

In addition to Form 114, certain taxpayers with foreign assets may also have to submit Form 8938 (Statement of Specified Foreign Financial Assets). This form is meant to be filed with your income tax return and may include the foreign accounts noted in your FBAR filing. Form 8938 is three pages long and will prompt you for information such as the number and maximum value of your deposit accounts and the descriptions and identifying numbers of your assets.

The penalties for failure to disclose your offshore accounts can be devastating and could have lasting negative repercussions for your career and your future. The Tax Law Office of David W. Klasing has developed national practices as to federal income tax issues administered by the IRS and knows how to file FBAR. Regardless of your home state or state of residency, we can address your foreign asset issues related to the BSA and FBAR disclosure. Our firm ensures accurate filings while advocating for the client’s position. To schedule an initial reduced-rate consultation with an experienced California FBAR lawyer, call The Tax Law Offices of David W. Klasing at (888) 904-4096 or contact our law offices online today.

FBAR Filing Deadlines for 2024 and 2025

For the 2024 filing year, the FBAR is due by April 15, 2025. If you miss this deadline, you will automatically receive an extension until October 15, 2025, without the need to submit a separate request. This automatic extension is provided to ensure that taxpayers have sufficient time to complete their filing and avoid penalties.

Similarly, for the 2023 filing year, the FBAR was due by April 15, 2024, with the automatic extension available until October 15, 2024.

If you are affected by a natural disaster, the government may grant additional time to file your FBAR. To confirm if you qualify for such an extension, consult the latest FBAR relief notices issued by FinCEN or the IRS. For 2024 and 2025, the government has continued to extend the filing deadline for specific groups, including employees or officers who have signature authority but no financial interest in certain foreign accounts. Those eligible for this extension should refer to the latest notices so that financial professionals can understand the details of the extended deadline.

If you missed the initial FBAR due date and failed to file by the extended October deadline, you must take swift action. Our San Francisco FBAR lawyers can work with you to determine the lowest-risk, most suitable method for satisfying the applicable reporting requirements and disclosing your foreign accounts properly, such as filing a delinquent FBAR or participating in disclosure programs like the streamlined filing compliance procedures. Note that the Offshore Voluntary Disclosure Program, which tens of thousands of taxpayers have used over the years, was formally discontinued by the IRS in September 2018, eliminating the OVDP as an option for individuals with undisclosed foreign income.

California Tax Attorneys for International Tax Issues

The IRS has ramped up its efforts to investigate and prosecute overseas tax evasion schemes. Using recent legislative efforts from the Biden administration, the federal government’s tax watchdog has increased its budget, added manpower to its workforce, and modernized its technological sophistication. These three factors combined allow for more audits and investigations with broader scopes and longer timelines. With the IRS’s enforcement tools like FATCA sharpening their detection capabilities, it’s only a matter of time before they shine a light on your hidden assets. It would be wise to take the decisive step to restore your peace of mind by reaching out to a qualified and experienced dual-licensed Irvine International Tax Attorney and CPA.

In response to the increasing scrutiny by the IRS on taxpayers with undisclosed income from foreign sources and assets, the Tax Law Office of David W. Klasing offers specialized legal assistance. Our team, experienced in international tax law, advises and assists clients who have inadvertently failed to comply with income tax laws, particularly in reporting foreign income and filing necessary returns for foreign assets. Our legal services are comprehensive, encompassing counsel on reestablishing compliance with tax obligations and representation in criminal tax investigations and prosecutions linked to non-compliance with foreign income and asset laws. We provide experienced guidance on whether to participate in the IRS’s Voluntary Disclosure programs, including the latest Streamlined Disclosure Program, both for offshore and domestic matters. Our representation extends to clients seeking to make voluntary disclosures and those facing audits due to previously unmade disclosures, and it includes handling FBAR audits. This proactive approach is crucial for clients navigating the evolving landscape of international tax compliance, helping them address their tax concerns effectively while minimizing additional liabilities and avoiding potential legal consequences.

David W. Klasing is a dually certified tax attorney-CPA providing FinCEN Form 114 preparation services for individuals and business entities throughout California and beyond. As a former public auditor, Mr. Klasing wields unparalleled knowledge of the laws and regulations surrounding FinCEN Form 114, or FBAR, which he uses to help taxpayers comply with FBAR rules while mitigating tax liabilities effectively. No matter why you have bank accounts in a foreign country – whether you are a recent immigrant to the United States, a frequent business traveler, a dual citizen, a business owner, an American expat, a member of the U.S. military, or have family members overseas – we can work to limit the interest and penalties you may owe while educating you on your rights and responsibilities concerning FinCEN Form 114 filing requirements. To set up a reduced rate initial consultation with a dually licensed Tax Attorney and CPA near you, call the Tax Law Offices of David W. Klasing today at (888) 904-4096 or schedule online.

Navigating the FBAR 2024: Essential Filing Requirements, Deadlines, and Insights