U.S. EXPAT TAX GUIDE – CHILE
Do US citizens in Chile need to file an FBAR?
Yes, US citizens and green card holders living in Chile must file an FBAR (Foreign Bank Account Report) if the total value of their foreign financial accounts exceeds US$10,000 at any point during the year. This filing helps the US government track foreign-held assets and ensures compliance with reporting rules.
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What is an FBAR?
FBAR is a separate filing from your US tax return. It’s submitted to the Financial Crimes Enforcement Network (FinCEN), not the IRS. The main goal is to disclose foreign financial accounts that might otherwise go unnoticed by US authorities.
When do you need to file an FBAR?
You are required to file an FBAR if the total balance of all your foreign accounts exceeds US$10,000 at any time during the year. This includes:
- Checking and savings accounts
- Brokerage accounts
- Mutual funds
- Retirement or pension accounts
- Digital payment platforms, like PayPal, if held outside the US
What does “aggregate” mean?
The US$10,000 threshold applies to the total value of all your foreign accounts combined. For example:
- Account 1: US$6,000
- Account 2: US$4,500
Although neither account exceeds US$10,000 individually, their combined balance is US$10,500. In this case, you must file an FBAR.
Which accounts need to be reported?
FBAR reporting covers various foreign accounts, including:
- Bank accounts (checking and savings)
- Brokerage and investment accounts
- Retirement accounts, such as foreign pensions
- Mutual funds and similar pooled investments
- Digital wallets and payment services held abroad
Even accounts with a zero balance must be reported if the total of all accounts exceeds the US$10,000 threshold.
Who is exempt from filing an FBAR?
Certain individuals and accounts may be exempt from FBAR requirements:
- Accounts owned by a U.S. government entity or international financial institution
- Accounts where the filer has no financial interest but acts as a nominee or agent for another party
- Foreign accounts owned by a U.S.-based limited liability company (LLC) may have different reporting rules depending on ownership structure
- Safe deposit boxes containing tangible items rather than cash or investments
However, these exemptions are limited, and most expats with qualifying accounts will still need to file.
Even accounts with a zero balance must be reported if the total of all accounts exceeds the US$10,000 threshold.
What happens if you don’t file an FBAR?
Failing to file an FBAR can result in severe penalties, even for unintentional violations. The penalties for willful noncompliance can reach up to US$100,000 or 50% of the account’s balance. For non-willful violations, fines are generally lower but still significant.
Missed FBAR filings?
If you haven’t filed in previous years, the IRS offers the Streamlined Tax Amnesty Program. This program allows expats to catch up on missed filings without facing harsh penalties, provided the failure to file was not intentional.
When is the FBAR deadline?
The FBAR filing deadline aligns with the US tax return deadline of April 15. However, there is an automatic extension until October 15 for all filers, giving you extra time to submit the report.
How do you file an FBAR?
FBAR must be filed electronically through the FinCEN BSA E-Filing System. It is not submitted with your federal tax return. To complete the filing, you’ll need details such as:
- The name and address of the foreign financial institution
- The account number
- The maximum balance of the account during the year
Why is FBAR filing important?
Filing an FBAR is essential to avoid fines and stay compliant with US laws. By reporting your foreign accounts, you demonstrate transparency and reduce the risk of penalties. If you’re unsure about your obligations, consulting a tax advisor with experience in expat filings is highly recommended.
Why partner with a specialist Expat accountant?
Living outside of the US can make your tax filing requirements complicated. To ensure you pay the minimum amount of taxes, it’s critical to work with an accountant who understands every aspect and avenue for reducing your tax liability. We have a dedicated team of tax accountants who work exclusively with US expats earning and investing in Chile. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.
