Double Counting FBAR Values: A Common Query from Expats

Updated on March 3, 2024
Let's explore how transferring funds between foreign bank accounts affects FBAR reporting obligations.

In this week’s Real Tax Questions From Real Expats, we're exploring how transferring funds between foreign bank accounts affects FBAR reporting obligations.

The Scenario

A US citizen living abroad with two non-US bank accounts transferred $9,000 from one account to another. The question is whether this movement of funds crosses the FBAR threshold of $10,000.

FBAR Filing Requirement: General Rules

FBAR (Form 114) reporting is mandatory when the aggregate balance of all non-US accounts exceeds $10,000 at any point during the year. The key factors are:

  • Highest Balance: Reporting is based on the highest account balance at any time during the year.
  • Aggregate Balances: Summing up the highest balances of all foreign accounts.
  • Threshold: The aggregate exceeding $10,000 necessitates FBAR filing, using the year-end exchange rate.

Does Transferring Funds Trigger Reporting?

Transferring funds between accounts can lead to double counting. In this case, the individual's aggregate reaches $18,000 due to the transfer, crossing the FBAR threshold. This results in a reporting requirement, despite the actual amount being less than $10,000.

Implications and Good News

While this triggers a reporting obligation, there's no tax due for FBAR filing. However, non-compliance can attract penalties up to $10,000 per year.

It's crucial for US expats to monitor their non-US bank account balances closely to ensure compliance.

For assistance with international tax issues and navigating US tax implications abroad, contact McGowin Tax LLC.


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