Straight to the point today: Here’s some tips on completing your FBAR filings:
- Keep detailed records of all foreign financial accounts: to accurately complete the FBAR, you need detailed records of all foreign financial accounts, including account numbers, balances, address of institution/bank, and other info like that.
- Be aware of the reporting thresholds: The FBAR reporting threshold is $10,000 USD, meaning that if the aggregate value of your foreign financial accounts exceeds $10,000 at any point during the year, you must file an FBAR. It’s important to be aware of this threshold and to keep track of the value of your foreign financial accounts throughout the year.
- Use the correct exchange rate: The FBAR requires that foreign financial accounts be reported in U.S. dollars. When converting foreign currency into U.S. dollars, it’s important to use the correct exchange rate. The U.S. Treasury publishes exchange rates on a monthly basis that can be used for this purpose. Bank of Canada has one here: https://www.bankofcanada.ca/rates/exchange/daily-exchange-rates-lookup/
- Understand the difference between signature authority and financial interest: The FBAR requires reporting of foreign financial accounts for which you have either signature authority or a financial interest. In normal-people language: If you have signing authority on a bank account, you likely have to report it. (Are you a volunteer at a non-profit? Do you have signing authority on the NPO bank account? You’re caught by this.) It’s important to understand the difference between these two categories and to report all accounts that meet the reporting requirements.
- Sub it out: Yeah this is a bit of a cop-out, but completing the FBAR correctly can sometimes be a bit of a headache. If you don’t want to deal with it, just pay someone else to do it. Then that outfit can deal with the headaches and the risks. And you can sit back and enjoy one of those beverages that have a little umbrella and a pineapple slice in them instead. Or something.
**Note: What is written here is not formal tax advice. I’m not your CPA. It’s possible, or dare I say even probable, that the comments and opinions expressed here contain material errors, or that important stuff has been left out. Don’t use this info to make important decisions. Hire a pro to help you.