A whirlwind of events happened within two weeks between the US Treasury Department, FinCen, and the IRS. It was regarding the FBAR and a new deadline for American taxpayers. Unfortunately, a flaw on a US government website led to much confusion from citizens and an important document’s postponing. To make up for the mistake, a new FBAR deadline has been announced.
What Happened: Tax News Timeline
Here is the timeline of the events that took place regarding the FBAR:
October 6: The US Treasury Department announced that the FBAR deadline is extended to December 31 of this year. However, this deadline only applies to individuals affected by recent natural disasters, like Hurricane Sally and Oregon Wildfires.
October 14: A message on the US Treasury Department website showed that the December 31 FBAR deadline now applies to all tax filers. However, this message was an error and was extracted within 24 hours on the website. Unfortunately, millions of taxpayers saw the original message, so the Treasury made another announcement.
October 16: The day FinCen clarifies the FBAR extension. They revealed they posted an incorrect message on its Bank Secrecy Act (BSA) E-Filing website on October 14. The message announced all filers could use the tax filing extension. However, it was meant only for victims of natural disasters. FinCen apologized for the mishap. To make up for the confusion, FinCen partnered with the IRS. Together they granted all filers the ability to extend their FBAR filing to October 31, 2020.
If you are not affected by natural disasters in the United States, you can file your FBAR by October 31 of this year. The IRS will see this as filing “on time.’’
If you have been or are currently being affected by natural disasters in the United States, you can file your FBAR by December 31 this year.
What is the FBAR?
The FBAR means the Foreign Bank Account Report. It is from FinCen – the Financial Crimes Enforcement Network. This means if you are a US taxpayer living abroad and have had at least $10,000 total in all your foreign financial accounts at any one time during the year, you’ll need to file an FBAR.
An example of foreign financial accounts are saving, checking, and investment accounts that are overseas. The FBAR also includes accounts you have signature authority over, such as a business account you share with your business partners.
It’s important to check your bank account statements monthly to ensure if you need to file an FBAR or not. It’s also suggested to convert your foreign monies into USD. The FBAR threshold is USD 10,000 and above.
The typical FBAR deadline is October 15 (which includes the automatic 6-month extension from April 15).
The MyExpatTaxes expat tax software makes it super affordable, simple, and fast for you to file an FBAR. You do it electronically through our program and never have to worry about filling out paperwork again.
The only issue regarding the FBAR are penalties. According to our recent blog, Filing Late FBARS as an American Abroad:
The Internal Revenue Service currently has information about US bank holders from thousands of banks around the world. This information means that it will become harder to avoid filing an FBAR. Furthermore, the IRS uses better technology and algorithms through artificial intelligence to track Americans who are not reporting.
As an American abroad, penalties can accrue if you have not been filing when you should have. Our tax professionals team does their best to ensure you don’t get penalized and save money too.
The IRS can send you a letter if they find out you didn’t file an FBAR, and in worse-case-scenario situations, you could get your citizenship revoked and have to pay a penalty fee of $10,000 or more. Don’t worry, most US expats don’t get to that point.
Can I Have a Greater Extension?
The FBAR extension deadline is really for October 31. If you want to extend your tax filing deadline for your expat taxes, you can request a greater extension to December 15. However, it is not clear if a tax extension will also extend to your FBAR, since FBARs are submitted to the US Treasury, NOT the IRS.
We layout all the specific details about here. Generally, we cannot guarantee the IRS will accept your extension request. You’ll need to write a letter explaining why you need an extension. Secondly, for which year of your tax documents you need to get an extension for. Lastly, you’ll need to mail in the letter with an international stamp to the IRS and start filing for the December 15 deadline.
If you are thinking of getting an extension, you can chat with one of our tax professionals, and we will guide you every step of the way.
Need More US Tax Support?
We’re here to help. Our expat tax software is easy to walk. It helps you effectively file taxes and the FBAR. Plus, if you need additional assistance, our team will be right there to help you. You can count on us to get your tax filing job done swiftly and timely.