u.s. expat tax guide – chile
Do US citizens in Chile have to report Foreign Bank Accounts (FBARs)?
Yes, US citizens and green card holders living in Chile must report their foreign financial accounts if the total balance exceeds US$10,000 at any time during the year.
This is done by filing an FBAR (Foreign Bank Account Report), which helps US authorities track overseas financial activities and prevent tax evasion.
Even if you do not owe taxes on the funds in your foreign accounts, you are still required to report them.
The US government wants to ensure that taxpayers disclose their international holdings to prevent tax avoidance and maintain financial transparency.
What is an FBAR and why is it required?
The FBAR (FinCEN Form 114) is a mandatory disclosure form for Americans with foreign bank accounts. Unlike regular tax forms filed with the IRS, the FBAR is submitted to the Financial Crimes Enforcement Network (FinCEN), an agency that monitors financial transactions to prevent money laundering and fraud.
This form is not used to calculate taxes but to report foreign-held funds. Even if your foreign account does not generate income, it must still be disclosed if it meets the filing threshold.
Who needs to file an FBAR?
You must file an FBAR if:
- The total balance of all your foreign financial accounts exceeds US$10,000 at any time during the calendar year.
- You have signature authority over a foreign account, even if the money does not belong to you.
This applies to:
- Checking and savings accounts in foreign banks
- Investment accounts, including brokerage and mutual funds
- Foreign retirement accounts, depending on tax treaties
- Digital wallets and online payment platforms held outside the US
If you hold multiple foreign accounts, you must report all of them if their combined balance exceeds US$10,000.
How is the US$10,000 threshold calculated?
The US$10,000 threshold is an aggregate amount, meaning it applies to all your foreign accounts combined. Even if no single account exceeds US$10,000, you must file an FBAR if the total of all your foreign accounts does.
Example:
- Account 1: US$6,000
- Account 2: US$4,500
- Total balance: US$10,500 (FBAR required)
Even if the balance drops below US$10,000 later, the highest value during the year determines the filing requirement.
Which accounts must be reported?
The FBAR reporting requirement applies to a variety of foreign financial accounts, including:
- Bank accounts (checking and savings)
- Brokerage accounts
- Mutual funds and pooled investments
- Foreign pension and retirement accounts (if reportable under tax treaties)
- Digital payment platforms like PayPal, if held outside the US
Even accounts that you don’t actively use or those with a zero balance must be reported if their total value exceeds US$10,000 at any point in the year.
Are there any exceptions to FBAR filing?
Certain accounts and individuals may be exempt from filing an FBAR. Some common exceptions include:
- Accounts owned by a US government entity or international organization
- US military personnel with accounts at official foreign institutions
- Foreign accounts owned by US-based businesses (reported differently)
- Safe deposit boxes containing non-monetary assets (such as gold, jewelry, or documents)
However, these exceptions are limited. Most US expats with foreign financial accounts must file an FBAR.
What happens if you don’t file an FBAR?
Failing to file an FBAR can lead to severe penalties, even if the omission was accidental:
- Non-Willful Violation: Up to US$10,000 per account
- Willful Violation: The greater of US$100,000 or 50% of the account balance
How can expats fix missed FBAR filings?
If you have missed FBAR filings in previous years, the IRS offers relief programs to help expats catch up:
- Streamlined Foreign Offshore Procedure – Available for expats who unintentionally failed to file. You must submit a statement explaining the mistake, but penalties are usually waived.
- Delinquent FBAR Submission Procedure – If your US taxes were correctly filed and only the FBAR was missed, this option allows late filing without penalties.
When is the FBAR deadline?
The FBAR filing deadline is April 15, but expats receive an automatic extension until October 15. No separate request is needed.
How do you file an FBAR?
The FBAR is filed electronically through the FinCEN BSA E-Filing System. It is not submitted with your federal tax return. You will need to provide:
- The name and address of each foreign financial institution
- The account numbers
- The highest balance held in the account during the year
There is no filing fee for submitting an FBAR.
What are some common misconceptions about FBAR filing?
1. “I don’t owe taxes, so I don’t need to file an FBAR.”
- The FBAR is not about paying taxes—it’s about reporting foreign accounts. Even if you don’t owe any US tax, you still need to file an FBAR if your total foreign account balance exceeds US$10,000.
2. “Only bank accounts need to be reported.”
- Wrong. The FBAR covers more than just bank accounts. It includes:
- Investment accounts
- Mutual funds
- Certain retirement accounts in Chile, like AFPs (Administradoras de Fondos de Pensiones)
3. “Joint accounts don’t need to be reported.”
- Not true. If you share a foreign account with someone who is not a US citizen, you still have to report the full balance if your total accounts exceed US$10,000.
4. “Filing an FBAR increases my US tax bill.”
- No, it doesn’t. The FBAR is only a report, not a tax form. It does not add to your tax bill.
5. “I can file the FBAR with my tax return.”
- Incorrect. The FBAR is filed separately from your tax return. It must be submitted online through FinCEN’s system, not with the IRS.
What if you haven’t filed an FBAR?
If you forgot to file FBARs in previous years, you should not ignore it. The IRS offers a Streamlined Filing Compliance Program that allows US expats to catch up without severe penalties if the failure to file was not intentional.
Steps to fix a missed FBAR filing:
- Check Your Past Filings – Look at past years and see if your total foreign accounts ever exceeded US$10,000.
- Use the IRS Streamlined Filing Program – This lets you file late FBARs and correct past mistakes without large penalties, as long as the non-filing was not on purpose.
- Get Professional Help if Needed – US tax rules for expats are complicated, so consulting a tax expert can help you avoid penalties.
How does the US-Chile tax treaty affect FBAR and other tax obligations?
The US and Chile have a tax treaty to help prevent double taxation. However, this does not change your FBAR filing requirement. Even if you benefit from the tax treaty, you still have to file an FBAR if your foreign accounts exceed the reporting threshold.
Points about the US-Chile tax agreement:
- Prevents Double Taxation – If you pay taxes on income in Chile, the treaty helps avoid paying the same tax in the US.
- Social Security Agreement – If you work in Chile, you may not have to pay social security taxes to both countries.
- Does NOT Affect FBAR Filing – Even if the treaty reduces your tax bill, you must still report foreign accounts if they meet the filing requirement.
How does FBAR filing affect US expats?
For US expats in Chile, staying compliant with FBAR requirements helps:
- Avoid costly penalties and legal issues
- Ensure compliance with US tax laws and reporting obligations
- Maintain good standing with financial institutions, as some banks may restrict services for non-compliant US citizens
