The IRS recently released an updated Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts. The FBAR is the primary way for California residents to report offshore bank accounts. It is an important form to file accurately because a Californian may have reporting requirements if they have a financial interest or signature authority over a foreign account even if that account does not produce income.
Generally, the FBAR is required when the value of a United States person’s accounts exceeds $10,000 in a calendar year. A United States person includes U.S. citizens, residents, and entities such as corporations or partnerships. Many Californians hold offshore bank accounts indirectly through partnerships or corporations, and these entities are required to file FBARs if the aggregate value of the foreign accounts exceeds the $10,000 mark. This is true even if the entity that holds an offshore account has a different federal tax treatment. An experienced California tax law attorney can advise clients that have interests in offshore accounts through trusts or other entities whether a FBAR should be filed.
The FBAR is also a unique form because it is not filed with a California resident’s income taxes, but rather by June 30th of the year following the year being reported on the FBAR. There are also no extensions allowed for the FBAR. Some accounts owned jointly by spouses and correspondent accounts are exceptions to the FBAR filing requirement. A tax law attorney that specializes in offshore accounts can determine whether a California resident qualifies for an exception.
Source: IRS Form TD F 90-22.1