FBAR and FATCA: Reporting Foreign Bank Accounts (Including Nepal)

Two reports, two agencies

FBAR (FinCEN Form 114) goes to the Treasury's Financial Crimes Enforcement Network and is filed separately from your tax return. FATCA reporting (Form 8938) goes to the IRS and is attached to Form 1040. Many people must file both.

FBAR: the $10,000 rule

If the combined highest balances of all your foreign accounts exceeded $10,000 at any moment in the year, you must file. It does not matter that the money was already taxed or that it moved between accounts. A savings account in Kathmandu with रु 14 lakh alone crosses the line.

Accounts include bank and savings accounts, fixed deposits, brokerage accounts, and accounts you merely have signature authority over, such as a parent's account you help manage.

FBAR is due April 15 with an automatic extension to October 15. There is no tax due; it is informational. Penalties for non-wilful failure can still reach $10,000 per year.

FATCA: Form 8938

Thresholds are higher and depend on where you live and your filing status. For a single filer living in the US: $50,000 at year-end or $75,000 at any time. Married joint: $100,000 / $150,000. Living abroad doubles those. Form 8938 covers "specified foreign financial assets", a broader category than FBAR. It includes foreign stock held directly and interests in foreign entities.

What about property in Nepal?

Real estate held directly is not reportable on either form. Rental income from it, however, is taxable in the US and goes on Schedule E, with a foreign tax credit for Nepal tax paid.

Missed years

The IRS Streamlined Filing Compliance Procedures allow non-wilful filers to submit three years of amended returns and six years of FBARs with a certification statement and, for US residents, a 5% penalty on the highest aggregate balance, or no penalty for those living abroad. Quiet disclosure (just filing late without the programme) is not recommended.

Practical checklist

1. List every foreign account, including dormant ones and joint accounts with family.
2. Pull the highest balance for each during the year (statements or online banking).
3. Convert to USD using the Treasury year-end rate.
4. File FBAR at bsaefiling.fincen.treas.gov; attach Form 8938 to the return if over threshold.
5. Keep records for five years.