Registered Tax Return Preparer RTRP Practice Exam

To report foreign bank accounts, a taxpayer must use Form FinCEN 114, commonly known as the FBAR (Foreign Bank Account Report). This form is specifically designed for U.S. persons to disclose their financial interest in or signature authority over foreign financial accounts if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year.

The requirement to file the FBAR is separate from the regular income tax return process, and it is submitted electronically to the Financial Crimes Enforcement Network (FinCEN). By utilizing the FBAR, taxpayers comply with the Bank Secrecy Act's reporting requirements, allowing the U.S. government to monitor potential tax evasion and illicit financial activities.

While Schedule B is used to report interest and dividend income on Form 1040 and asks about foreign accounts, it does not serve as the formal reporting mechanism required by law for foreign bank accounts. Form 1040 is the standard tax return form used to report income and taxes owed, but it does not specifically cover foreign bank account reporting. Form 8606 is used to report nondeductible contributions to traditional IRAs and distributions from IRAs but is unrelated to foreign bank accounts. Thus, Form FinCEN 114 is the proper