OOPPS - I left my  MONEY in Canada.........

If you have a foreign bank account, if you can sign on your parents foreign account, or if you just forgot and left your IRA account in Canada, this is something you should pay attention to. If you have funds on deposit with an online casino - this rule also applies to you.  

YEARS AGO, Congress made the failure to to report offshore accounts a civil and CRIMINAL offense. If you are an American citizen living abroad or have family living abroad, you need to know this rule. 

This filing requirement is only applicable if your account has an AVERAGE balance of $10,000 at any time during the year. It doesn't matter if you have not earned any interest.  It doesn't matter what the account balance was on December 31st.

If this is applicable, you will need to file a form.  It is called FinCEN 114. Report of Foreign Bank and Financial Accounts.  It is NOT filed with your tax return.  The filing deadline is June 30 of each calendar year for accounts maintained in the previous year. 

For example if you had accounts overseas in 2014, you must file by June 30, 2015.  A post marked envelope on 6/30 does not apply here.  Your return MUST be received by 6/30. No extensions are granted.

Here are some technical definitions:

Each "United States person" having a financial interest in, or signature over, a bank, securities or other financial account in a foreign country shall report to the IRS for each year such relationship exits.  A "person" includes individuals and all forms of business entities, trusts and estates.  This includes children or any other person whose names are listed as signers on any foreign account even though they do not have a current interest in such account. 

A financial account includes a bank account (such as saving, demand, checking deposit and time deposit), brokerage account, mutual fund, unit trust or other types of financial accounts. An account set up to secure a credit card as well as a life insurance policy having a cash surrender value are financial accounts.  Individual bonds, notes or stock certificates are not financial accounts.

Foreign Country includes all geographical areas outside the US, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands and the territories and possession of the US including American Samoa, Guam and the Virgin Islands

Financial Interest includes accounts that the US person is owner of record or has legal title. It also includes accounts where the owner of record is a person acting as an agent, nominee or in some other capacity on behalf of a US person. It includes a corporation in which a US person directly/indirectly owns 50% or more of the stock.  Same goes for a partnership or trust. In these cases, both the entity and the US person have to file the FBAR.

Your Individual Income Tax Return - Don't forget to mark Schedule B on your Form 1040 with a YES - foreign owned accounts. 

There are tons of penalties - The minimum penalty is $500 for a civil penalty for negligent violation.  If you have a pattern of negligent violations, the penalty can be $50,000.

There are also civil penalties for willful violations for failure to file or filing a false FinCEN 114. All penalties can be aggregated. The criminal penalties can be as steep as $250,000 or five years in prison or both.  

For more info, check out the US Department of Treasury, Financial Crimes Enforcement Network (FinCEN).