U.S. EXPAT TAX GUIDE – IRELAND
What is an FBAR, and do Americans need to file it when living in Ireland?
As a US citizen living in Ireland, you may need to file an FBAR (Foreign Bank and Financial Accounts Report).
This requirement kicks in if you have foreign (non-US) financial accounts with a combined highest balance over US$10,000 at any point during the calendar year. The FBAR helps the US government track funds outside of the US to help combat tax evasion.
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Do all US citizens in Ireland need to file an FBAR?
The short answer is yes if your foreign financial accounts meet the $10,000 threshold.
Pension accounts must also be added. They often carry most people over the FBAR filing threshold.
The primary reason behind this requirement is the US’s citizen-based taxation system. Unlike most other countries, the US taxes its citizens on their worldwide income, regardless of where they live. Therefore, the US government requires citizens living abroad to file an FBAR if their foreign accounts exceed a certain value.
What should you consider when determining the need to file an FBAR?
Yes, if the aggregate value of your foreign accounts, including bank accounts, mutual funds, or other financial accounts, exceeds the US$10,000 threshold. This rule applies regardless of your US residency status or presence in Ireland.
Now, here are a few types of accounts included:
- Bank Accounts: This includes savings, checking, and time deposits.
- Security Accounts: For instance, brokerage accounts and securities derivatives.
- Other Financial Accounts: These could be mutual funds or any pooled funds where the assets are held in a financial account.
- Certain types of insurance policies or annuity policies with a cash value.
The IRS does not explicitly exclude retirement accounts from the FBAR requirement. Depending on the specifics, you may need to report these, too.
Do you combine account balances for FBAR?
Yes. To figure out if you must file an FBAR, add together the highest balance from each non-US account you hold, including pensions and other accounts such as Wise and PayPal accounts.
If you’re over the $10,000 threshold, report every non-US account on your FBAR, even those accounts with a zero balance and unused accounts too.
What is the deadline for filing FBAR or FinCEN Form 114?
FBARs must be filed by April 15 following the calendar year being reported, with an automatic extension available until October 15. No specific request is needed for this extension, but filing as early as possible is best to avoid last-minute issues.
What happens if you miss the deadline?
- Non-Willful Violations: If you didn’t knowingly neglect to file an FBAR, the penalty could go up to US$10,000 (to be adjusted for inflation) per violation.
- Willful Violations: If you intentionally didn’t file an FBAR, the penalty could be the greater of US$100,000 (to be adjusted for inflation) or 50% of the amount in the account at the time of the violation, per violation.
How do you file an FBAR or FinCEN Form 114?
- Access the BSA E-Filing System online. The official site is (https://bsaefiling.fincen.treas.gov/main.html).
- Fill out FinCEN Form 114, the Report of Foreign Bank and Financial Accounts. You will need to include your name, address, Social Security number, and details about each foreign account you own, including the account number, name of the financial institution, address of the financial institution, and the maximum account value during the year.
- After completing the form, review all the information for accuracy.
- Submit the form electronically.
Do you need professional help filing an FBAR?
If your financial situation is straightforward and you’re comfortable with online forms, you might manage filing independently. However, if you have multiple accounts, complex situations, or simply prefer expert guidance, consulting a tax professional experienced in expatriate taxation could be beneficial.
Here’s our guide to filing your own FBAR:
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 Germany. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.
