Foreign Bank Account Report (FBAR)—Tips and Tricks
By Orlando Gotay
I cannot stress enough the importance of the timely and correct filing of a Foreign Bank Account Report (FBAR) when required. This year’s is due by June 30, 2016, and no extensions are allowed. It is filed electronically with the Financial Crimes Enforcement Network, an office of the US Treasury, not with the IRS.
US persons have to file a FBAR if the maximum value of a foreign financial account exceeds US$10,000 at any time during 2015. “US persons” are citizens, green card holders, and “US resident aliens,” in a tax sense.
The official Treasury “rate of exchange” lists the peso at 17.3620. So, the 2015 “magical” number for a peso account is 173,620 pesos. Assuming one foreign account, one peso over that at any time during 2015 triggers a reporting obligation by the U.S. person.
If you had more than one foreign account, the maximum value of each must be figured out. If the sum of all those “maximum values” exceeds US$10,000 or equivalent, then all of them must be reported.
Joint accounts owned by spouses can be reported on a single, timely-filed FBAR if all the accounts are jointly owned (if both spouses agree in writing to a joint filing). Otherwise, separate FBARs are required.
Do you have a minor U.S. person/child with foreign accounts that meet the test? The child must also file a FBAR. A parent or guardian can sign if the child is too young.
Some folks use stateside corporations, partnerships, LLCs and the like to hold title to property in Mexico. Those entities are responsible to file their own FBARs if they have foreign financial accounts over US$10,000, just like US persons.
Short-term accounts—did you wire money into an escrow account to purchase real estate? Those “one-day” accounts are reportable, too.
International online accounts, such as “e-wallets”, gambling accounts (such as FirePay, PokerStars, PartyPoker) belong in an FBAR, too. What about Mexican AFORE (retirement) accounts? Yup. They are foreign financial accounts.
Do you have ‘signature authority’ over an account that is not yours? A good example is a homeowners’ association or a business. Do you have a power of attorney allowing you to control funds in someone else’s foreign account? Those are reportable–even if the power has never been exercised.
Consult the detailed rules available online prior to filing. Remember, this year’s deadline is June 30. Do it early and do it right!
Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the US Tax Court and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the tax matters of US expats in Mexico. He can be reached at firstname.lastname@example.org.