The FBAR and FATCA: what’s the difference? (Part 1 of 3)

When filing your individual tax return this year, you may find yourself asking: what’s an FBAR? What’s a FATCA? Why am I required file them both and give the same information twice?All these government requirements can be quite puzzling. In this blog, we’ll discuss the FBAR and if you’re required to file one.The FBAR—Report of Foreign Bank and Financial Accounts—must be filed by June 30 this year by anyone with financial interest or signature authority in one or more foreign accounts when the aggregate value of the account(s) exceed $10,000 at any time during the preceding calendar year.  (NOTE:  beginning with the 2016 tax year - filed in 2017 - the FBAR will be due April 15, with your 1040.  The good news, though, is that you’ll also be able to file an extension if needed. See our blog for other changes coming.)Confused? Let’s break that statement down a little.Anyone refers to a U.S. citizen, U.S. resident, domestic entity, trust, or estate.Financial interest is not limited to owners of foreign accounts. Persons acting as agents, or those with controlling interest in an entity—who own a foreign financial account—must file an FBAR.Signature authority refers to possessing control over the disposition of property in the account. For example, if your elderly parents live in a foreign country (defined as any geographical area outside the United States and its territories), and you hold a financial power of attorney, you also must file an FBAR.Your foreign account is stated in foreign funds.  How do you know if those funds exceed $10,000 during the year? Step 1, of course: monitor your account often.If your activity causes the account to fluctuate significantly, you’ll need to watch it very frequently…at least until the first time the funds hit $10,000. After this occurrence, you know you’re required to file!If you own multiple accounts, you’ll also need to watch them closely until the combined value exceeds $10,000. Many currency conversion tools are available online, and the Bureau of the Fiscal Service offers current and historical rates.You must file the FBAR electronically, as the IRS eliminated its paper returns. For 2015 (filed in 2016), no extensions for this filing are permitted!In our next blog (part 2 of 3), we’ll review the FATCA and its details. Of course, if you need help with this topic or other tax issues, the experienced team at Patrick & Robinson CPAs can help. Contact us at (904) 396-5400 or Office@CPAsite.com.