Think non-citizens do not need an FBAR? Think again.

The United States government requires the Reports of Foreign Financial and Bank Accounts (FBAR) forms for United States citizens with ownership or signatory authority over certain foreign assets. However, there are also certain situations when a non-citizen may need to file an FBAR. Three examples include:

 

  • Green card test. The government requires any individual that holds a green card at any point during the year to file an FBAR.
  • Substantial presence test. The government also often requires an FBAR of those who stay in the United States for at least 31 days and at least 183 days over as pan of three-years that include the current tax year. The law has specific definitions for what constitutes a “day” when determining qualification. For example, the Internal Revenue Service (IRS) considers 8 hours within the U.S. during the previous year one full day in the country. In contrast, the agency requires only 3 hours presence in the country the year before to constitute a full day within the U.S. Exceptions can apply, such as those who enter the country for the purposes of entertainment, government relations or for medical procedures.
  • First-year election. The government defines this situation as one where a resident alien opts to be treated as a resident alien during his or her first year in the United States.

Those who believe they may need to file an FBAR are wise to seek legal counsel. A failure to properly report foreign assets can result in serious penalties, including allegations of criminal wrongdoing. An attorney experienced in this niche area of the law can review the process and discuss the best options to bring your accounts into compliance with applicable tax laws.

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