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Currency Exchange

When completing the FBAR, the exchange rates posted by the U.S. treasury for the given tax year should be used for converting foreign currency to U.S. dollars. The Treasury Reporting Rates of Exchange can be found here.

FBAR (Foreign Bank Account Reporting)

Specified foreign financial assets include the following:

  • Financial accounts maintained by a foreign financial institution
  • The following foreign financial assets if they are held for investment and not held in an account maintained by a financial institution:
  • Stock or securities issued by someone that is not a U.S. person (including stock or securities issued by a person organized under the laws of a U.S. possession)
  • Any interest in a foreign entity
  • Any financial instrument or contract that has an issuer or counterparty that is not a U.S. person (including a financial contract issued by, or with, a counterparty that is a person organized under the laws of a U.S. possession).
Type of Account Form 8938 FBAR
Financial (deposit and custodial) accounts held at foreign financial institutions Yes Yes
Financial account held at a foreign branch of a U.S. financial institution No Yes
Financial account held at a U.S. branch of a foreign financial institution No No
Foreign financial account for which you have signature authority No, unless you otherwise have an interest in the account as described above Yes, subject to exceptions
Foreign stock or securities held in a financial account at a foreign financial institution The account itself is subject to reporting, but the contents of the account do not have to be separately reported The account itself is subject to reporting, but the contents of the account do not have to be separately reported
Foreign stock or securities not held in a financial account Yes No
Foreign partnership interests Yes No
Indirect interests in foreign financial assets through an entity No Yes, if sufficient ownership or beneficial interest (i.e., a greater than 50 percent interest) in the entity.
Foreign mutual funds Yes Yes
Domestic mutual fund investing in foreign stocks and securities No No
Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor Yes, as to both foreign accounts and foreign non-account investment assets Yes, as to foreign accounts
Foreign-issued life insurance or annuity contract with a cash value Yes Yes
Foreign hedge funds and foreign private equity funds Yes No
Foreign real estate held directly No No
Foreign real estate held through a foreign entity No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate No
Foreign currency held directly No No
Precious Metals held directly No No
Personal property, held directly, such as art, antiques, jewelry, cars and other collectibles No No
“Social Security”- type program benefits provided by a foreign government No No

The annual due date for filing Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts is April 15.  This date change was mandated by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41 (the Act).  Specifically, section 2006(b)(11) of the Act changes the FBAR due date to April 15 to coincide with the Federal income tax filing season. To implement the statute with minimal burden to the public and FinCEN, FinCEN will grant filers failing to meet the FBAR annual due date of April 15 an automatic extension to October 15 each year (please note that this may change in future years).

Tag: FBAR

Generally, all foreign accounts for which you have a financial interest or signature authority will need to be reported on the FBAR, as long as the combined total exceeds $10,000 at any time during the year. In addition, these accounts are required to be reported on Form 8938 if they exceed the following thresholds:

Specified individuals living in the U.S.:

  • Unmarried individual (or married filing separately): If the total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.
  • Married individual filing jointly: If the total value of assets was more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the year.

Specified individuals living outside the U.S.:

  • Unmarried individual (or married filing separately): If the total value of all assets was more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.
  • Married individual filing jointly: If the total value of assets was more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year.

All income from foreign accounts in which you have a financial interest must be reported on your individual tax return.

Foreign Pensions

Just as with domestic pensions or annuities, the taxable amount generally is the Gross Distribution minus the Cost (investment in the contract). Income received from foreign pensions or annuities may be fully or partly taxable, even if you do not receive a Form 1099 or other similar document reporting the amount of the income. In general, your foreign pension and retirement plan should also be reported on the FBAR and Form 8938, if required. Depending on how the plan is structured, there may be additional reporting requirements on Forms 8621 and 3520. We suggest contacting a tax professional that specializes in taxation for expats if you are unsure of the filing requirements related to your foreign pension or retirement plan.

Forms

The FBAR is an annual report that must be filed by any U.S. person who has a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account, exceeding certain thresholds.

A U.S. person includes U.S. citizens, U.S. residents, entities, including but not limited to, corporations, partnerships or limited liability companies, created or organized in the United States or under the laws of the United States, along with trusts or estates formed under the laws of the United States.

The report must be filed if the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the year. The FBAR is due on April 15th, but FinCEN will allow filers an automatic extension to October 15th. For willful violations, the penalty may be the greater of $124,588 or 50 percent of the balance in the account at the time of the violation, for each violation. Non-willful violations that are not due to reasonable cause can be subject to penalties up to $12,459 per violation.

Category: Forms

Offshore Voluntary Disclosure Program

The purpose of the Offshore Voluntary Disclosure Program (OVDP) is to bring taxpayers that have used undisclosed foreign accounts and assets, including those held through undisclosed foreign entities, to avoid or evade tax into compliance with United States tax and related laws. Taxpayers holding undisclosed foreign accounts and assets, including those held through undisclosed foreign entities, should make a voluntary disclosure, as it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution for all issues relating to tax noncompliance and failing to file FBARs.

In contrast, taxpayers simply filing amended returns or filing through the Streamlined Filing Compliance Procedures do not eliminate the risk of criminal prosecution. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, as well as an increased risk of criminal prosecution. The IRS remains actively engaged in identifying those with undisclosed foreign financial accounts and assets.

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Currency Exchange

When completing the FBAR, the exchange rates posted by the U.S. treasury for the given tax year should be used for converting foreign currency to U.S. dollars. The Treasury Reporting Rates of Exchange can be found here.

FBAR (Foreign Bank Account Reporting)

The annual due date for filing Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts is April 15.  This date change was mandated by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41 (the Act).  Specifically, section 2006(b)(11) of the Act changes the FBAR due date to April 15 to coincide with the Federal income tax filing season. To implement the statute with minimal burden to the public and FinCEN, FinCEN will grant filers failing to meet the FBAR annual due date of April 15 an automatic extension to October 15 each year (please note that this may change in future years).

Tag: FBAR

Specified foreign financial assets include the following:

  • Financial accounts maintained by a foreign financial institution
  • The following foreign financial assets if they are held for investment and not held in an account maintained by a financial institution:
  • Stock or securities issued by someone that is not a U.S. person (including stock or securities issued by a person organized under the laws of a U.S. possession)
  • Any interest in a foreign entity
  • Any financial instrument or contract that has an issuer or counterparty that is not a U.S. person (including a financial contract issued by, or with, a counterparty that is a person organized under the laws of a U.S. possession).
Type of Account Form 8938 FBAR
Financial (deposit and custodial) accounts held at foreign financial institutions Yes Yes
Financial account held at a foreign branch of a U.S. financial institution No Yes
Financial account held at a U.S. branch of a foreign financial institution No No
Foreign financial account for which you have signature authority No, unless you otherwise have an interest in the account as described above Yes, subject to exceptions
Foreign stock or securities held in a financial account at a foreign financial institution The account itself is subject to reporting, but the contents of the account do not have to be separately reported The account itself is subject to reporting, but the contents of the account do not have to be separately reported
Foreign stock or securities not held in a financial account Yes No
Foreign partnership interests Yes No
Indirect interests in foreign financial assets through an entity No Yes, if sufficient ownership or beneficial interest (i.e., a greater than 50 percent interest) in the entity.
Foreign mutual funds Yes Yes
Domestic mutual fund investing in foreign stocks and securities No No
Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor Yes, as to both foreign accounts and foreign non-account investment assets Yes, as to foreign accounts
Foreign-issued life insurance or annuity contract with a cash value Yes Yes
Foreign hedge funds and foreign private equity funds Yes No
Foreign real estate held directly No No
Foreign real estate held through a foreign entity No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate No
Foreign currency held directly No No
Precious Metals held directly No No
Personal property, held directly, such as art, antiques, jewelry, cars and other collectibles No No
“Social Security”- type program benefits provided by a foreign government No No

Generally, all foreign accounts for which you have a financial interest or signature authority will need to be reported on the FBAR, as long as the combined total exceeds $10,000 at any time during the year. In addition, these accounts are required to be reported on Form 8938 if they exceed the following thresholds:

Specified individuals living in the U.S.:

  • Unmarried individual (or married filing separately): If the total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.
  • Married individual filing jointly: If the total value of assets was more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the year.

Specified individuals living outside the U.S.:

  • Unmarried individual (or married filing separately): If the total value of all assets was more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.
  • Married individual filing jointly: If the total value of assets was more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year.

All income from foreign accounts in which you have a financial interest must be reported on your individual tax return.

Foreign Pensions

Just as with domestic pensions or annuities, the taxable amount generally is the Gross Distribution minus the Cost (investment in the contract). Income received from foreign pensions or annuities may be fully or partly taxable, even if you do not receive a Form 1099 or other similar document reporting the amount of the income. In general, your foreign pension and retirement plan should also be reported on the FBAR and Form 8938, if required. Depending on how the plan is structured, there may be additional reporting requirements on Forms 8621 and 3520. We suggest contacting a tax professional that specializes in taxation for expats if you are unsure of the filing requirements related to your foreign pension or retirement plan.

Forms

The FBAR is an annual report that must be filed by any U.S. person who has a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account, exceeding certain thresholds.

A U.S. person includes U.S. citizens, U.S. residents, entities, including but not limited to, corporations, partnerships or limited liability companies, created or organized in the United States or under the laws of the United States, along with trusts or estates formed under the laws of the United States.

The report must be filed if the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the year. The FBAR is due on April 15th, but FinCEN will allow filers an automatic extension to October 15th. For willful violations, the penalty may be the greater of $124,588 or 50 percent of the balance in the account at the time of the violation, for each violation. Non-willful violations that are not due to reasonable cause can be subject to penalties up to $12,459 per violation.

Category: Forms

Offshore Voluntary Disclosure Program

The purpose of the Offshore Voluntary Disclosure Program (OVDP) is to bring taxpayers that have used undisclosed foreign accounts and assets, including those held through undisclosed foreign entities, to avoid or evade tax into compliance with United States tax and related laws. Taxpayers holding undisclosed foreign accounts and assets, including those held through undisclosed foreign entities, should make a voluntary disclosure, as it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution for all issues relating to tax noncompliance and failing to file FBARs.

In contrast, taxpayers simply filing amended returns or filing through the Streamlined Filing Compliance Procedures do not eliminate the risk of criminal prosecution. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, as well as an increased risk of criminal prosecution. The IRS remains actively engaged in identifying those with undisclosed foreign financial accounts and assets.

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Currency Exchange

When completing the FBAR, the exchange rates posted by the U.S. treasury for the given tax year should be used for converting foreign currency to U.S. dollars. The Treasury Reporting Rates of Exchange can be found here.

FBAR (Foreign Bank Account Reporting)

Type of Account Form 8938 FBAR
Financial (deposit and custodial) accounts held at foreign financial institutions Yes Yes
Financial account held at a foreign branch of a U.S. financial institution No Yes
Financial account held at a U.S. branch of a foreign financial institution No No
Foreign financial account for which you have signature authority No, unless you otherwise have an interest in the account as described above Yes, subject to exceptions
Foreign stock or securities held in a financial account at a foreign financial institution The account itself is subject to reporting, but the contents of the account do not have to be separately reported The account itself is subject to reporting, but the contents of the account do not have to be separately reported
Foreign stock or securities not held in a financial account Yes No
Foreign partnership interests Yes No
Indirect interests in foreign financial assets through an entity No Yes, if sufficient ownership or beneficial interest (i.e., a greater than 50 percent interest) in the entity.
Foreign mutual funds Yes Yes
Domestic mutual fund investing in foreign stocks and securities No No
Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor Yes, as to both foreign accounts and foreign non-account investment assets Yes, as to foreign accounts
Foreign-issued life insurance or annuity contract with a cash value Yes Yes
Foreign hedge funds and foreign private equity funds Yes No
Foreign real estate held directly No No
Foreign real estate held through a foreign entity No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate No
Foreign currency held directly No No
Precious Metals held directly No No
Personal property, held directly, such as art, antiques, jewelry, cars and other collectibles No No
“Social Security”- type program benefits provided by a foreign government No No

The annual due date for filing Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts is April 15.  This date change was mandated by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41 (the Act).  Specifically, section 2006(b)(11) of the Act changes the FBAR due date to April 15 to coincide with the Federal income tax filing season. To implement the statute with minimal burden to the public and FinCEN, FinCEN will grant filers failing to meet the FBAR annual due date of April 15 an automatic extension to October 15 each year (please note that this may change in future years).

Tag: FBAR

Specified foreign financial assets include the following:

  • Financial accounts maintained by a foreign financial institution
  • The following foreign financial assets if they are held for investment and not held in an account maintained by a financial institution:
  • Stock or securities issued by someone that is not a U.S. person (including stock or securities issued by a person organized under the laws of a U.S. possession)
  • Any interest in a foreign entity
  • Any financial instrument or contract that has an issuer or counterparty that is not a U.S. person (including a financial contract issued by, or with, a counterparty that is a person organized under the laws of a U.S. possession).

Generally, all foreign accounts for which you have a financial interest or signature authority will need to be reported on the FBAR, as long as the combined total exceeds $10,000 at any time during the year. In addition, these accounts are required to be reported on Form 8938 if they exceed the following thresholds:

Specified individuals living in the U.S.:

  • Unmarried individual (or married filing separately): If the total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.
  • Married individual filing jointly: If the total value of assets was more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the year.

Specified individuals living outside the U.S.:

  • Unmarried individual (or married filing separately): If the total value of all assets was more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.
  • Married individual filing jointly: If the total value of assets was more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year.

All income from foreign accounts in which you have a financial interest must be reported on your individual tax return.

Foreign Pensions

Just as with domestic pensions or annuities, the taxable amount generally is the Gross Distribution minus the Cost (investment in the contract). Income received from foreign pensions or annuities may be fully or partly taxable, even if you do not receive a Form 1099 or other similar document reporting the amount of the income. In general, your foreign pension and retirement plan should also be reported on the FBAR and Form 8938, if required. Depending on how the plan is structured, there may be additional reporting requirements on Forms 8621 and 3520. We suggest contacting a tax professional that specializes in taxation for expats if you are unsure of the filing requirements related to your foreign pension or retirement plan.

Forms

The FBAR is an annual report that must be filed by any U.S. person who has a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account, exceeding certain thresholds.

A U.S. person includes U.S. citizens, U.S. residents, entities, including but not limited to, corporations, partnerships or limited liability companies, created or organized in the United States or under the laws of the United States, along with trusts or estates formed under the laws of the United States.

The report must be filed if the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the year. The FBAR is due on April 15th, but FinCEN will allow filers an automatic extension to October 15th. For willful violations, the penalty may be the greater of $124,588 or 50 percent of the balance in the account at the time of the violation, for each violation. Non-willful violations that are not due to reasonable cause can be subject to penalties up to $12,459 per violation.

Category: Forms

Offshore Voluntary Disclosure Program

The purpose of the Offshore Voluntary Disclosure Program (OVDP) is to bring taxpayers that have used undisclosed foreign accounts and assets, including those held through undisclosed foreign entities, to avoid or evade tax into compliance with United States tax and related laws. Taxpayers holding undisclosed foreign accounts and assets, including those held through undisclosed foreign entities, should make a voluntary disclosure, as it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution for all issues relating to tax noncompliance and failing to file FBARs.

In contrast, taxpayers simply filing amended returns or filing through the Streamlined Filing Compliance Procedures do not eliminate the risk of criminal prosecution. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, as well as an increased risk of criminal prosecution. The IRS remains actively engaged in identifying those with undisclosed foreign financial accounts and assets.

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