FBAR: Payment Apps, Joint and Family Accounts, Maximum Value

Which accounts go on the FBAR?

An account goes on your FBAR when two things are true: it is a financial account located outside the US, and you have a financial interest in it or signature authority over it. Once your accounts' maximum values add up to more than $10,000 at any time in the year, every such account is listed, each with its own maximum value (FinCEN instructions). Who must file and the threshold basics are in foreign account reporting.

Whether the account earns income, or is taxed at all, does not matter (IRS FBAR page). If a US IRA or a US 401(a), 403(a) or 403(b) plan holds a foreign account, you as owner, participant or beneficiary do not report it; a retirement account you hold abroad is not covered by this exception (31 CFR 1010.350(g)(4)). Also not reportable on the FBAR: interests in foreign hedge funds and private equity funds (they can still belong on Form 8938; see foreign account reporting), and accounts at a financial institution on a US military installation, even one abroad (Publication 5569).

A case is not simple when family money is involved, when an account is held in someone else's name, when you have 25 or more accounts, or when past FBARs left accounts out. For each account, gather the name on it, the account number, the institution's name and address, the type and every statement for the year. Keep each account's details and maximum value for 5 years (IRS FBAR page).

Do payment app and multi-currency accounts go on the FBAR?

A payment app or e-money balance held by a provider outside the US is likely a reportable account, but FinCEN has issued no guidance that names these services. The answer comes from the definitions: a financial account includes one kept with "a person performing the services of a financial institution," and "other financial account" includes an account with a person in the business of accepting deposits as a financial agency (Publication 5569; 31 CFR 1010.350(c)(3)).

Where the account is located decides it, not the provider's nationality. Your account terms and statements name the company that holds your balance and where. A balance kept by a provider's office in the US is not a foreign account; one kept by an office outside the US may be, even if the provider is a US company. That is a reading of the definitions, not a published rule. Where a US provider holds foreign-currency balances through partners abroad, the location is unclear; that case needs judgment.

Whether each currency balance or savings pot is a separate account has no official answer. Each account is valued separately, and the form asks for each account's number or other designation. A practical reading: a pot or currency balance with its own account number (such as its own bank account number) is listed as its own account; balances that share one number are one account. A foreign account holding only virtual currency is not reportable under the current rule, though FinCEN has said it plans to change that (Publication 5569).

Is a TFSA, ISA or other tax-free savings account reported on the FBAR?

Yes, if it is held at a bank, broker or fund outside the US. The IRS names the Canadian TFSA and RRSP and the Mexican retirement accounts (AFORE) as reportable foreign financial accounts (Publication 5569). A tax break at home does not change the FBAR test. A savings or investment wrapper elsewhere, such as a UK ISA or a French PEA, is tested the same way: what matters is the account and who keeps it.

An insurance or annuity policy with a cash value, such as whole life insurance, is a financial account; the policy holder reports it at its cash value (31 CFR 1010.350(c)(3); IRM 4.26.16.2.2). Other US rules for these policies are in insurance policies bought abroad.

Pensions and how to value them are covered in foreign pension reporting. Funds inside a TFSA or other account may need Form 8621; see PFIC form filing and, for Canadians, TFSAs and FHSAs for US citizens.

Are several CDs or time deposits one account or many?

A time deposit or certificate of deposit is a bank account in its own right (final rule preamble; IRM 4.26.16.2.2). No official guidance addresses several deposits under one customer number. Where each deposit has its own account number or other designation, listing each one separately matches the form, which asks for each account's number and maximum value.

At 25 or more accounts in which you have a financial interest, the form changes. Check "Yes" at item 14a, enter the number of accounts, and skip the account-by-account parts (Parts II and III). You must still keep the full details and provide them if FinCEN or the IRS asks (31 CFR 1010.350(g); FinCEN instructions). Item 14b is the version for 25 or more accounts where you have signature authority only; there you still identify each account owner in Part IV.

FBAR joint account with a non-US spouse: what do I report?

You report the full value of a joint account, not your share (Publication 5569; IRM 4.26.16.2.3). Your spouse's separate accounts are not yours unless you are a named owner, the account is held for you, or you can sign on it; family attribution does not apply to the FBAR (IRM 4.26.16.2.3). Joint accounts go in Part III, where you enter the number of other joint owners and your spouse's details as the principal joint owner; a foreign tax number is accepted at item 25, and joint-owner items you do not know are left blank (FinCEN instructions).

A spouse who is not a US person has no FBAR of their own. A spouse who is not a citizen but holds a green card, or meets the substantial presence test, is a US resident for the FBAR and files their own report, even while living abroad (31 CFR 1010.350(b); IRM 4.26.16.2.1.2). An income tax election to treat a nonresident spouse as a US resident does not make that spouse a US person for FBAR purposes (IRM 4.26.16.2.1.2). When both spouses are US persons, one FBAR can cover both only if all of the other spouse's reportable accounts are joint, the FBAR is filed on time, and both sign Form 114a. More on a nonresident spouse is in married to a nonresident.

Do my children's or parents' accounts count, including a power of attorney?

A family member's account counts for you in three cases: your name is on it, it is held for you, or you can instruct the institution to move its money.

The power of attorney rule comes from an IRS example: a person with an unused power of attorney over parents' accounts abroad must file if it gives signature authority (Publication 5569). Authority only to buy or sell investments, with no power to take money out, is not signature authority (IRM 4.26.16.2.4). Read the document and the bank's records to see what it actually allows.

A child who is a US person files their own FBAR if their own total crosses the threshold; a parent or guardian files and signs it when the child cannot (FinCEN instructions). Where a parent holds an account for a child, the child may also have a financial interest through the parent as agent, so each US person tests their own total.

Does money held by a notary, lawyer or escrow agent count?

It can. You have a financial interest in a foreign account whose owner of record is "an agent, nominee, attorney, or a person acting in some other capacity" on your behalf with respect to the account (FinCEN instructions; 31 CFR 1010.350(e)(2)). The IRS example is a brother who keeps accounts abroad in his name but uses them only on the filer's instructions (Publication 5569).

No official guidance applies this rule to a notary's or lawyer's client account, a pooled escrow account, or money held during a property purchase. Whether the agent is acting on your behalf with respect to the account depends on the agreement and on whose instructions control the money. Gather the escrow or deposit agreement, the account details and the dates money was held, and treat this as a case that needs judgment.

How do I calculate the FBAR maximum account value?

The maximum value is a reasonable approximation of the highest value of cash and other assets in the account during the calendar year. Find it in the account's own currency, convert it to US dollars, and round up to the next whole dollar (FinCEN instructions).

1. Collect every statement for the year. Statements issued at least quarterly may be used if they fairly reflect the account's peak (Publication 5569).
2. Take the highest balance shown on any statement, not the year-end balance. If an account had no periodic statements, use the highest value at any time in the year (IRM 4.26.16.2.2.2).
3. If you know of a higher balance between statements, such as a large deposit that left soon after, the statements may not fairly reflect the peak; then use the higher figure.
4. Convert at the year-end rate (next section) and round up.

If the value cannot be determined, check "amount unknown" at item 15a. The instructions also direct filers with fewer than 25 accounts who cannot tell whether their total crossed the threshold to list each account and check that box (FinCEN instructions). Ask the institution for statements before relying on it.

Which exchange rate do I use, and what if money moved between my accounts?

Use the Treasury Reporting Rates of Exchange for the last day of the calendar year, for every account, whatever the date of the peak. If Treasury publishes no rate for a currency, use another verifiable rate and give its source (FinCEN instructions). Treasury states each rate as units of foreign currency per US dollar, so divide the foreign amount by the rate (Treasury rates).

Each account is valued on its own, and the threshold test adds those separate maximums (FinCEN instructions). So money that moved between your accounts can appear in each account's maximum, and the total can be higher than the money you ever held.

What about a negative balance, or an account opened or closed during the year?

If an account's value works out below zero, such as an overdrawn account, enter zero as its maximum value (FinCEN instructions). It is still listed if you must file.

An account opened or closed during the year is reported for that year, because the rule applies to each year in which the relationship existed (31 CFR 1010.350(a)). Its maximum value is the highest value while it was open. Statements are the main record of that value, so keep copies before an account closes.

Bank, securities or other: which account type do I pick?

Item 16 offers Bank, Securities or Other; for Other, add a short description (FinCEN instructions). Pick by what the institution does with the account, following the regulation's definitions (31 CFR 1010.350(c)).

For a tax-favored account, choose by what it holds and who keeps it: a TFSA of deposits at a bank is Bank; one holding shares at a broker is Securities.

How do I amend an FBAR that missed an account or listed a wrong one?

File a new, complete FBAR for that year with the Amend box checked, and enter the Prior Report BSA Identifier of the report you are fixing. If you do not know the identifier, enter fourteen zeros (FinCEN instructions). The amended report repeats every account, not only the corrected one (IRM 4.26.16.3.12). An account left off a filed FBAR was not reported on time, so a civil penalty is possible, up to $16,536 for a non-willful failure; where there was reasonable cause and the amended report properly shows the account, no penalty is imposed (FinCEN instructions; Publication 5569). Keep a note of why the account was missed.

The identifier was sent by email or through the filing system's secure messages when you filed. If you filed by the automatic extension date without full information, the IRS expects you to amend when the missing information arrives (Publication 5569). Check whether the account's income was on your tax return too. If whole years are missing, choosing a procedure is covered in streamlined vs. delinquent foreign reporting.

Example

These examples are illustrative; all amounts are in US dollars at the Treasury year-end rate.

A multi-currency payment account in the Netherlands

A US citizen living in the Netherlands has three accounts. A multi-currency payment account with a provider located there holds euro and pound balances under one account number; its highest value is $6,500. A local bank account peaks at $5,000. A savings pot with its own account number peaks at $2,000.

Treating the payment account as reportable, the three maximums add to $13,500, more than $10,000. She files and lists all three accounts, each with its own maximum, even though no single account passed $10,000.

Joint account with parents and a power of attorney

A green card holder in California is a joint owner, with her parents, of an account abroad that peaks at $30,000, so she is over the threshold and files. She lists it in Part III at the full $30,000, not a third. Her parents also have a separate account, and her power of attorney lets her instruct that bank to pay money out. She has never used it. She lists that account in Part IV as signature authority, with its maximum value.

An amended FBAR for a missed savings pot

A filer's FBAR left out a savings pot. It held $0 at year-end but $200 in March. He files an amended FBAR for that year with the Amend box checked, lists every account again, and shows the pot with a maximum value of $200.

Different for you?

• You are not sure you must file at all, or also need Form 8938: start with foreign account reporting.
• The account belongs to your company, or you can sign on an employer's account: see FBAR for company accounts abroad.
• The account is a pension or retirement scheme: see foreign pension reporting.
• You missed FBARs for past years: compare routes in streamlined vs. delinquent foreign reporting and get FBAR filing help.
• You live in Canada and missed FBARs or TFSA forms: see missed FBAR or TFSA forms.
• Family money, a notary's or escrow account, or many accounts and statements to sort: these depend on documents and judgment; get FBAR filing help.