First time FBAR questions.

I was just filling out the online FBAR form and ran into a few questions:

1. I need to list all accounts, correct? Not just the one that went over $10k?

2. Is this http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Treasury-Department-End-of-Year-Exchange-Rates the currency conversion rates I should be using (when they update for 2013)?

3. The principal joint owner is my husband, but he does not have a TIN. Do we need to get one or can I just say foreign?

Thanks!

The only permissible exchange rate is the US Treasury rate; which is not yet published for 12/31/13. See: http://www.fms.treas.gov/intn.html

You can call or email for FBAR help here:
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Telephone-Numbers-for-FBAR-and-Title-31-Help

FWIW, If I have 1 account that goes over $10k then I report all accounts.  Easy enough to do for me as I only have 1 other account.

The official exchange rate listed above is the one to use but it pays to err on the side of caution.  I keep a spreadsheet that records the balances at the end of each month, as per the bank statement, but if it is close to $10k then I report it anyway.  There is no penalty for reporting bank accounts that don't exceed $10k, and you pay no taxes for having a balance in excess of $10k, but if you fail to report one, and, say, your bank does report it because there was a day it exceed $10k then you may get an inquiry from the US government.  (not sure which department, IRS, Treasury, FINCEN?)

Sorry I can't help with your other questions.

Remember that FBAR is required if the aggregate of your foreign accounts is $10k or more. So if you have 2 accounts each with a maximum balance during the year of $4999 no FBAR is required as the sum of the balances is less than $10k. If one were to be $4999 and the other $5001 (total of $10k) the FBAR is required.

All non-US bank and financial accounts are reportable on the FBAR for any year if the aggregate (total) is ever greater than $10,000.

While the limits are higher, the 8938 follows roughly the same theme.

Thanks guys. I knew it was aggregate of all the accounts but one of them is like 8k and the other is like £400 max so I wasn't sure if I really needed to include it, but I definitely will.

When do they usually release the new exchange rate?

When do they usually release the new exchange rate?

It is usually available in February when I do my taxes and file my FBAR.  However, in your case a small difference in exchange rates doesn't matter if you are keen to get it done before February.  The IRS will accept other sites such as XE.com for the exchange rate.

http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Currency-and-Currency-Exchange-Rates

Make all income tax determinations in your functional currency. If your functional currency is the U.S. dollar, you must immediately translate into dollars all items of income, expense, etc. (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U.S. Embassies.
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Governmental Resources

    Treasury Department's Currency Exchange Rate
    Federal Reserve Bank
    U.S. Department of Agriculture

External Resources

    Oanda.com
    xe.com
    x-rates.com

References/Related Topics

    Miscellaneous International Tax Issues
    Yearly Average Currency Exchange Rates

The FBAR is not an IRS form. It is a Treasury form and the only permissible rate is the Treasury rate for 31 December each year, that can be found at the link given earlier. Last year the Treasury had this published by 16 January; so it should be available within the next couple of weeks.

WHAT EXHANGE RATES ARE ACCEPTABLE?

For anyone filing US tax returns it has always been a lengthy hunt each year around both the IRS and the US Treasury website to find out which exchange rates might be acceptable. Thankfully, the IRS are improving and publishing clear guidelines; which can all be found at the links below.

INCOME TAX

The average IRS “Unofficial Rates” for recent years can be found:

http://london.usembassy.gov/irs/irsxchng.html and

http://photos.state.gov/libraries/unitedkingdom/164203/irs/Exchange_Rate_Handout_IRS_London.pdf

These rates have all been adjusted quite substantially from November 2011 to include a significant change in IRS practice – so any returns that were prepared based on any exchange rates previously published will show quite different results: http://www.irs.gov/Individuals/International-Taxpayers/Yearly-Average-Currency-Exchange-Rates.

FBARs and Form 8938

These additional returns (reporting non-US financial accounts and assets) both typically require conversion into US dollars using the US Treasury exchange rate on 31st December each year. As these rates are not published in full in the Treasury website, the IRS has been kind enough to provide several years of rates here: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Treasury-Department-End-of-Year-Exchange-Rates.

All non-US bank and financial accounts are reportable on the FBAR for any year if the aggregate (total) is ever greater than $10,000.

While the limits are higher, the 8938 follows roughly the same theme.

I don't think this is strictly correct. The instructions are to take the maximum value of each account for the year and if they total more than $10,000 an FBAR must be submitted.

That results in the absurdity that you may only ever have $8,000 in total but if it is all in account A at the start of the year then you move $4,000 of it to account B later in the year you have to report because:
Account A max $8,000
Account B max $4,000
Aggregate of max values $12,000, so you must  report.

Crazy, but that is what the instructions say.

I'm striking through my post as it may well be incorrect!

Hi Anchor,

I believe Guya is correct in this point (no offense at all intended, but this is important not to get confused when people find this post in the future). The instructions on the FBAR form say exactly this:

"Who Must File an FBAR. A United States person that has a financial
interest in or signature authority over foreign financial accounts must file
an FBAR if the aggregate value of the foreign financial accounts
exceeds $10,000 at any time during the calendar year. See General
Definitions, to determine who is a United States person."

So the criteria for filing an FBAR is: if the total aggregate (sum) of all accounts at any (one) time is $10,000 or more, you must file. So in the situation you describe with the $8k and the $4k max values in your post, since the total value is not over $10k at any one time, you do not need to report.

Then, IF you need to file, the number that goes on the FBAR form is the maximum account balance for each account.

It can be a confusing criteria, but don't confuse having to report the max values on the FBAR with needing to use the max values of each account to calculate the $10k threshold. You won't find the wording "Aggregate of max values" anywhere on the FBAR form.

Anyone else, please free to correct this if I'm wrong.

*note I'm not a tax expert, but have spent many dozens of hours looking into this.... [/s]

Hi Anchor,

I believe Guya is correct in this point (no offense at all intended, but this is important not to get confused when people find this post in the future). The instructions on the FBAR form say exactly this:

"Who Must File an FBAR. A United States person that has a financial
interest in or signature authority over foreign financial accounts must file
an FBAR if the aggregate value of the foreign financial accounts
exceeds $10,000 at any time during the calendar year. See General
Definitions, to determine who is a United States person."

So the criteria for filing an FBAR is: if the total aggregate (sum) of all accounts at any (one) time is $10,000 or more, you must file. So in the situation you describe with the $8k and the $4k max values in your post, since the total value is not over $10k at any one time, you do not need to report.

Then, IF you need to file, the number that goes on the FBAR form is the maximum account balance for each account.

It can be a confusing criteria, but don't confuse having to report the max values on the FBAR with needing to use the max values of each account to calculate the $10k threshold. You won't find the wording "Aggregate of max values" anywhere on the FBAR form.

Anyone else, please free to correct this if I'm wrong.

*note I'm not a tax expert, but have spent many dozens of hours looking into this....

If you read Item 15 in the FBAR Instructions - Determining Maximum Account Value - you will find the calculation is based on the aggregate of the maximum values of each account.

Anchor, you're right! And I've crossed out my post to reflect that. I'm now quite confused, as various sources on the IRS website and on the FBAR instructions it seems to alternate between using "maximum of the aggregates" and "aggregates".

Perhaps someone else can clarify....

Anchor, you're right! And I've crossed out my post to reflect that. I'm now quite confused, as various sources on the IRS website and on the FBAR instructions it seems to alternate between using "maximum of the aggregates" and "aggregates".

Perhaps someone else can clarify....

Welcome to the world of reporting, USA style. This is but one of the many uncertainties that arise from IRS/Treasury instructions. It is similar to the requirement of an NRA spouse needing to co-sign an FBAR if there is a joint account. Reading the instructions becomes a circular argument.

In such cases, the general rule is to take the conservative approach. In other words, file when in doubt.

I agree with Anchor. It's assumed an aggregate of the maximum values of accounts for the year is used to determine the filing requirement, per Item 15. In this case, it means filing an FBAR. I have also viewed Treasury information that may indicate otherwise.

A counter argument may be made based on information found elsewhere in instructions, but if Treasury say an FBAR should have been filed, there is no argument. Only a Court ruling can determine the correct method. As far as I am aware, there is no Court ruling on this. Better safe than sorry.

I filed an FBAR for 2013 based on aggregate value according to FBAR requirements.
It was moving money from one foreign account to another that put the aggregate values over the $10,000 level. I had not realised this was the requirement.

 In researching how to explain this on my statement of wilfulness for the streamlined procedure I have come across the following in the Internal Revenue Manual
https://www.irs.gov/irm/part4/irm_04-026-016.html#d0e146 [nofollow]
stating that under 'exceptions' (4.26.16.3.6) "money moved from one foreign account to another foreign account during the year must only be counted once'.

I take it this is another uncertainty in reporting as referenced by OAP.