Your FBARs (FinCEN Report 114) are now due on the date your tax return is due (as opposed to the old June 30thd deadline). The form requires you to fill in your high balance of the year, but answering this seemingly simple question can get baffling complicated. Here we'll cover some of the most common issues.
When funds have been transferred between accounts, do you have to report them twice or more for FBAR balances?
Many filers — rightly so — are a bit paranoid that if they put down the high balance of accounts they'll look like much more wealthy than they are.
The truth is no one is looking at you funny because you are showing that you had $1,000,000 in accounts instead of the $750k that you actually had (or that you show as having $150k when you actually only had $50k). It seems like a lot of our clients are concerned about the fact that their funds are counted multiple times when doing FBAR reporting because of transfers between their accounts during the year. Treasury Department understands that this is something that happens – the record keeping requirements strictly require the "the maximum account value of each account during the reporting period."
For FBAR purposes there is no need to reduce account balances on account of double counting, and it is actually improper to do so. We need to report the maximum balance in each account at any time during the year, regardless of how many times the same funds are included in those balances. But, since there is no tax or penalty associated with this, there is absolutely no harm in having the same funds counted twice.
Is there any downside to having funds counted twice?
I would ask the inverse question. Is there any upside to under-valuing your account values? The answer is no. If you file your FBARs on time, there is absolutely no downside to having funds counted twice. It is what the law actually requires.
As we mentioned above, it is simply a reporting measure; if you fail to file your FBARS, however, then you'll run into some problems. Remember, there is no penalty for late filing of FBARs…just failure to file. Also, you are required to keep your bank account information for 5 years – failure to hold on to this information can also lead to FBAR penalties.
So assuming you e-file your FBARs by the correct deadline, you will have nothing to worry about. If you are concerned about missing or misfiled FBARs, contact us to schedule a confidential, complimentary consultation. Call us at 888-727-8796 or email info@irsmedic.com. We help US taxpayers from all over the world file their FBARs and get into compliance.
