How do I know if I need to complete the Foreign Bank Account Reporting (FBAR)?
Basically, anyone with $10,000 or more (USD equivalents included) in a foreign bank or financial account at any point during the calendar year will be required to file the FBAR. So, if your bank account in France typically has a balance of $9,950, but for one day has an extra $50, you will need to file an FBAR. Cumulative balances are also counted, so if you have $3,000 in four separate accounts, you will be required to file the FBAR. For more information, please refer to our blog post: Everything You Need to Know About the FBAR.
Do I need to report my RRSP on FBAR?
Unfortunately, there is a bit of a gray area when it comes to what needs to be reported on an FBAR. Although many feel RRSPs don’t need to be reported, the most conservative approach would be if you can access the funds and withdraw at any point, then report it on the FBAR.
Also, if applicable, you should make sure that the “yes” box is checked for question 8 on Schedule B, which reads: “[D]id you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust?” If yes, you may have to file Form 3520. RRSPs are often considered a foreign trust.
How does Form 8938 differ from Foreign Bank Account Reporting (FBAR)?
The Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank Account Report (FBAR or FinCEN Form 114) have a number of very important differences. The primary difference is that Form 8938, which is part of the FATCA laws, gets filed with your US Federal Tax Return and submitted to the IRS. In addition, the filing threshold is much higher than the FBAR, starting at $200k for US expats, and the deadline will be the same as the deadline for your Federal tax return, including extensions. The FBAR deadline will be the same as your Federal Tax Return, and you will have the option to file up to a six-month extension – however, it will be filed with the US Treasury Department. FBAR is required if you have as little as $10,000 in all of your combined foreign accounts. There are also a number of differences related to what assets need to be reported. For more information on how the FBAR differs from FATCA, please watch this video.
If my income is below the US tax filing requirement, do I still need to file FBAR or FATCA?
Unfortunately, even if you are making less income than the filing threshold (roughly $10,300 for a single individual), you must still file an FBAR if you have had more than $10,000 in your foreign accounts at any point during the year. Remember, this is an aggregate amount for all your foreign accounts.
While it’s not specifically required, we’d also recommend reporting for FATCA on a Federal Tax Return if your assets meet the filing threshold. For single filers, if you have $200,000 or more in specified foreign assets on the last day of the year or more than $300,000 at any point during the year, you must file. If you are filing married jointly, the threshold rises to $400,000 at the end of the year and $600,000 at any point during the year. Filing FATCA will eliminate any negative consequences that could potentially arise from not reporting.