# FBAR (FinCEN Report 114)



## james4beach (Nov 15, 2012)

I've started filling out my FBAR to tell the US Government about all the bank accounts I own. What fun!

In the fields for the account number, to what level of detail do you provide the account number? There are varying formats for this; it may (or may not) include the institution number and transit numbers. The most minimal account number would be just the account number without transit or institution. Their instructions do not specify.

_Aside: Remember... it's not just US citizens who have to fill the FBAR. You also have to fill it if you have a US green card or if you spend too many days in the US and pass the substantial presence test (maybe even as a snowbird). Exemption from liability of US taxes does not exempt you from the obligation to file FBAR_


----------



## Guban (Jul 5, 2011)

Afaik it is just the account number. Don't they also ask for the institution and the mailing address anyways, so they always can get the other details as needed.


----------



## tenoclock (Jan 23, 2015)

Just put the account number as shown on your bank statement. They also require you to fill out the name of the bank and the address of the branch, so that's already complete information you are providing them. 


The FBARs are such a pain in the ***. Sometimes take even longer to complete than the tax return


----------



## james4beach (Nov 15, 2012)

Yeah good point, with the institution and branch details all the info is complete anyway.

I just finished entering 20 bank accounts into mine. It took me two days to compile this; finding the maximum balance is not that easy. Luckily for some accounts (like brokerage sub-accounts) you can just include a single entry for the 'master' account number, and report them as a single consolidated account.


----------



## james4beach (Nov 15, 2012)

Grrr... upon doing some google searches it seems like it's a better idea to break out individual sub-accounts. e.g. I have discount brokerage account 12345 and it has Cdn account 12345A, US account 12345B, RRSP account 12345C, etc.

In the past the IRS has given penalties "per violation" of each sub account, which greatly increases the fines, so it sounds like it's safer to report each sub account seperately.

What do you guys do?


----------



## fatcat (Nov 11, 2009)

there is a simple answer to a complicated problem 
throw everything overboard

get rid of every non-essential account you can
don't own mutual funds, don't own any even remotely exotic investments, avoid etf's, own shares directly

i am going to get down to 4 accounts and 1 usa based account (which i don't need to report)

this is going to cost canadian financial services some real money
and it will all just be shifting from the mutual fund sellers to the accountants and lawyers ... lovely :biggrin:

i just saw your above post james, i just report the main account, i don't think they want the sub-accounts james ... they have enough trouble as it is, they are swamped with information and numbers
what good would the sub-accounts do them ?
they are interested in large movements of money

maybe you should get 5 more account and you only have report one number (and keep your records of course)
if they allow this it is logical to assume that they aren't going to require the level of detail you talk about


----------



## james4beach (Nov 15, 2012)

If the Big Five banks had any brains they would lobby (or sue) like crazy to push back on these asinine US rules. It's going to hurt the Canadian banks big time. I agree, we have to slash accounts. I'm planning on closing all my RBC accounts and am going to start figuring out a strategy to cut & slash Canadian accounts.

I agree the sub-accounts seem unreasonable. The problem, as with everything in US tax law, is the aggressiveness of government lawsuits against people -- from what I read, lawsuits punished people for grouping them all together into one container. By breaking out each sub account separately you actually report higher total numbers because the maximum value of each sub account can happen at separate times. For instance sub acct A hits a peak in Jan but B hits its peak in Dec. Thus it greatly changes the total sum across each.

If a government prosecutor is in a bad mood (as apparently they often are), they could say you are evading US rules by grouping them in a container, and thus wilfully under-reporting the underlying accounts, and give you a $10,000 penalty per sub-account.

I'm not sure. I'm going to start praying each night that I don't get on the bad side of a US tax prosecutor because, let's face it, they are capable of ruining me and everything I've worked for my entire life. When I get back to Canada and am free from this "US residency" thing, don't be surprised if you see me grab a C.R.A. agent and kiss them, Times-Square style


----------



## Eclectic12 (Oct 20, 2010)

^^^^

One can argue whether they put enough effort behind the lobby attempts but I recall many articles that they did lobby, including indicating the $200 mill costs of updating their computer systems.

IMO, a big part of the problem is that with the US gov't wanting money badly *and* they know that the Canadian banks have a ton of business with US (ex. TD has US bank, Mutual Funds, ETFs etc) so they won't be shutting down lucrative parts of their business or telling customers to find another bank, unlike European banks. The result is that the US gov't knows that it's their choice.

I can't think of anything the Canadian banks could do that wouldn't hurt themselves more than the US gov't ... particularly with CRA being the official party that's handing over the info to the US. Maybe something has occurred to you?


Cheers


----------



## fatcat (Nov 11, 2009)

james4beach said:


> If the Big Five banks had any brains they would lobby (or sue) like crazy to push back on these asinine US rules. It's going to hurt the Canadian banks big time. I agree, we have to slash accounts. I'm planning on closing all my RBC accounts and am going to start figuring out a strategy to cut & slash Canadian accounts.
> 
> I agree the sub-accounts seem unreasonable. The problem, as with everything in US tax law, is the aggressiveness of government lawsuits against people -- from what I read, lawsuits punished people for grouping them all together into one container. By breaking out each sub account separately you actually report higher total numbers because the maximum value of each sub account can happen at separate times. For instance sub acct A hits a peak in Jan but B hits its peak in Dec. Thus it greatly changes the total sum across each.
> 
> ...


i really doubt that prosecutors are staying up late at night wondering what hard working (or retired) middle class taxpayer they can financially ruin ... 

first, these kinds of cases would drag on for years as people fought them (which costs precious resources) and would gather plenty of bad press in the meantime, it would have the effect of driving people underground and would _inhibit_ reporting ... 

second, it's morally unfair and believe it or not i think the irs and treasury actually know this and want to use a soft stick ... the commissioner of the irs even admitted as much according to a tax lawyer i spoke with ... absolute confusion reigns, no-one knows what to do in many cases

this is a process that will take about a decade to fully put in place i think and people will be given leeway to learn the system before massive type fines come down

in the end, the tax prosecutor and you have to stand in front of judge and the the tax guy has to convince the judge that james should be fined 10K or 50K or whatever merely because he didn't fill out a form ... not because he didn't pay tax, not because he owes any money but merely because he didn't fill out a form ... this can be a tough sell

on account numbers, i have a tdw account that is like 55X55 and has an a-sub and a b-sub, like 55X55A and 55X55B, but waterhouse refers to my account as 55X55 so thats what i put on the form, one account number: 55X55


----------



## Eclectic12 (Oct 20, 2010)

fatcat said:


> ... on account numbers, i have a tdw account that is like 55X55 and has an a-sub and a b-sub, like 55X55A and 55X55B, but waterhouse refers to my account as 55X55 so thats what i put on the form, one account number: 55X55


YMMV ... my co-worker has 276### for cash account plus a LIRA and 821### for TFSA and RRSP ... we didn't cover the margin accounts so I'm not sure what they are.


Cheers


----------



## james4beach (Nov 15, 2012)

Well I've now got a draft of my FBAR, and it's only 14 pages.

Now on to form 8938! Tip for everyone... the TaxACT software (free federal version) includes Form 8938. You can fill it in electronically. Using the desktop download version, I'm also able to "print" the form so effectively I'm using the TaxACT software purely to fill form 8938. Otherwise it's going to be a bl--dy nightmare entering all twenty something accounts onto this using the "continuation" sheets.


----------



## fatcat (Nov 11, 2009)

james4beach said:


> Well I've now got a draft of my FBAR, and it's only 14 pages.
> 
> Now on to form 8938! Tip for everyone... the TaxACT software (free federal version) includes Form 8938. You can fill it in electronically. Using the desktop download version, I'm also able to "print" the form so effectively I'm using the TaxACT software purely to fill form 8938. Otherwise it's going to be a bl--dy nightmare entering all twenty something accounts onto this using the "continuation" sheets.


james, james, you do suffer so ... welcome to the club
we meet at the local dennys, bring a big hanky :biggrin:
i'm tellin you, throw it ALL overboard


----------



## james4beach (Nov 15, 2012)

I'm not even a US citizen or green card holder! I'll do a reading from my journal at the next meeting.

So far, I've spent 10 to 15 hours preparing these documents. It's taking forever to sift through account statements and I still have to double check them. I had forgotten about accounts closed in 2014; add those in and I'm up to 24 accounts.

FBAR form: 14 pages
8938 form: 13 pages

I would recommend the work flow... start with FBAR, it's quicker to fill. Use it as a template and do 8938 after, as it's more involved. Try TaxACT as a tool for this. Remember that RRSPs no longer have a separate form and now go on form 8938, into Part VI. The I.R.S. instructions for form 8938 specifically describe how to handle the RRSP; there is no longer form 8891.


----------



## james4beach (Nov 15, 2012)

By the way, think of how great a privacy and identity theft risk these two forms are. Here's a list of all of my bank and investment accounts, bank numbers, and some critical individual identifiers.

Identity theft central. And I'm shipping it around to my accountant and the I.R.S. Man I hope there aren't any crooked interns, and that my accountant's computer is free from malware, and that the I.R.S. is careful with what they do with this info.


----------



## fatcat (Nov 11, 2009)

james4beach said:


> I'm not even a US citizen or green card holder! I'll do a reading from my journal at the next meeting.
> 
> So far, I've spent 10 to 15 hours preparing these documents. It's taking forever to sift through account statements and I still have to double check them. I had forgotten about accounts closed in 2014; add those in and I'm up to 24 accounts.
> 
> ...


i use simple tax for my canadian ... then fill in the fbar and submit that and then hand the fbar and canadian form to my usa tax prep guy, he then fills in the 8938 and preps the form which i mail in ...


----------



## fatcat (Nov 11, 2009)

james4beach said:


> By the way, think of how great a privacy and identity theft risk these two forms are. Here's a list of all of my bank and investment accounts, bank numbers, and some critical individual identifiers.
> 
> Identity theft central. And I'm shipping it around to my accountant and the I.R.S. Man I hope there aren't any crooked interns, and that my accountant's computer is free from malware, and that the I.R.S. is careful with what they do with this info.


its the keys to the kingdom ... i have thrown in the towel on this ... i just let it go, there is so much chance for malfeasance, but what can you do ? ... not much ... again, having as few accounts that you keep a close eye on is the plan i have enacted


----------



## tenoclock (Jan 23, 2015)

While it's good to be as accurate as possible, you don't really have to spend hours and hours trying to find out the maximum values in each Canadian account.. Take it from a risk and reward perspective.. Unless you are a high net worth individual, the differences in the maximum values and year end values (which are much more easier to report) are not material. Once you factor in exchange rate differences between CAD/USD, it could get very complicated and time consuming very easily. IRS or the US treasury is not going to come after you because you under reported $2,000 on an informational form.. 

If you have considerable assets and significant year over year net income, then I believe the best way forward is to get a professional to prepare these forms. That way you save your time (and time is money, especially 20+ hours), and you also have some form of legal protection against big mishaps.


----------



## Guban (Jul 5, 2011)

tenoclock said:


> While it's good to be as accurate as possible, you don't really have to spend hours and hours trying to find out the maximum values in each Canadian account.. Take it from a risk and reward perspective.. Unless you are a high net worth individual, the differences in the maximum values and year end values (which are much more easier to report) are not material. Once you factor in exchange rate differences between CAD/USD, it could get very complicated and time consuming very easily. IRS or the US treasury is not going to come after you because you under reported $2,000 on an informational form..
> 
> If you have considerable assets and significant year over year net income, then I believe the best way forward is to get a professional to prepare these forms. That way you save your time (and time is money, especially 20+ hours), and you also have some form of legal protection against big mishaps.


Or you can just over estimate by $2,000 or whatever. You definitely won't get charged for over claiming.

Not sure about the legal protection. You, as the tax payer signs off on the forms. Did you see how fatcat's usa tax prep guy doesn't even mail it in for him?! The tax prep guy can say that he didn't even send it, any errors are all due to fatcat.


----------



## fatcat (Nov 11, 2009)

Guban said:


> Or you can just over estimate by $2,000 or whatever. You definitely won't get charged for over claiming.
> 
> Not sure about the legal protection. You, as the tax payer signs off on the forms. Did you see how fatcat's usa tax prep guy doesn't even mail it in for him?! The tax prep guy can say that he didn't even send it, any errors are all due to fatcat.


you are correct ... using the accountant is no cover

this isn't rocket science and should and can be done to the penny

you go online or to your statements and you put them in order from january and then look at the balance column for all 12 months ... whatever high balance you hit is the number you then take and divide by the end-of-year treasury official exchange rate to express in usa dollars

all of this does require accurate record keeping but the actual work, if the records are in order is not so bad

nevertheless, having as few accounts as possible is the order of the day


----------



## james4beach (Nov 15, 2012)

My accountant is going to check over all of these. The reason I can't just tell them to "go make them for me" is that they don't have the account statements. What's taking me all the time is finding those statements... I will face this time burden whether or not I pay a guy to fill the forms for me.

Yes: reducing accounts is the way to go. I will start doing this; 24 accounts is way too much.


----------



## tenoclock (Jan 23, 2015)

Correct me if I am wrong, but you would not even have to do all this if you simply had 25 instead of 24 accounts. Then you simply declare that on the FBAR, leave out Part 2 and 3, and wait to see if the US Treasury asks for more info :biggrin:


----------



## james4beach (Nov 15, 2012)

Yeah that seems to be the case with the FBAR. I only discovered that after I started filling them. The irony. I am actually planning on re-re-checking in case I missed one account

But form 8938 (which is just as critical) doesn't have that short-cut, I don't think. And it's the more detailed form in any case so either way, the work has to be done.


----------



## fatcat (Nov 11, 2009)

james4beach said:


> My accountant is going to check over all of these. The reason I can't just tell them to "go make them for me" is that they don't have the account statements. What's taking me all the time is finding those statements... I will face this time burden whether or not I pay a guy to fill the forms for me.
> 
> Yes: reducing accounts is the way to go. I will start doing this; 24 accounts is way too much.


i started a spreadsheet a few years ago with high balance columns, usa converted columns, account numbers and addresses

i fill that in and move accounts closed during the year to the bottom of the sheet under a big "closed" title row

when i fill in the form each year i just delete the closed accounts for the current year and do a "save as" for the next year

i am working my toward 5 accounts in total, 1 in the usa which i don't need to report and 4 up here, all of them are online so good downloading and good record keeping habits should begin to make the process smoother

i honestly think that the irs/treasury is looking at this as a decade long process to really get everyone on the right page

we are talking about 10 million people outside the usa plus american residents with offshore assets, this adds up to a veritable tsunami of numbers ... even if they have a program to make sense of it all, which i doubt, just plugging in the numbers alone will take millions and millions of person hours just to input

i suspect these numbers (mainly for the treasury) will sit in warehouses and will only be pulled out for suspicious cases and people who hit the radar via asset hiding and terrorism or money laundering


----------



## tenoclock (Jan 23, 2015)

The number of people now giving up their US citizenship is skyrocketing, and that's precisely due to these draconian and wasteful measures by the US government. This number is going to keep on increasing.


----------



## fatcat (Nov 11, 2009)

tenoclock said:


> The number of people now giving up their US citizenship is skyrocketing, and that's precisely due to these draconian and wasteful measures by the US government. This number is going to keep on increasing.


well, not quite, a very, very small number has become a much larger very, very small number


----------



## Eclectic12 (Oct 20, 2010)

... question is how long will the growth be year by year?

2008 -> 238
2011 -> 1,780
2013 -> 2,999

http://www.bankrate.com/financing/wealth/why-give-up-u-s-citizenship/
http://www.cnbc.com/id/101406922#.

The hidden numbers are those that are no longer interested in going to the US as I recall an Asian immigration specialist commenting that when he started, most of his business was Asians wanting to go to the US. Now - he says that's only about 30% of his business.


Cheers


----------



## fatcat (Nov 11, 2009)

Eclectic12 said:


> The hidden numbers are those that are no longer interested in going to the US as I recall an Asian immigration specialist commenting that when he started, most of his business was Asians wanting to go to the US. Now - he says that's only about 30% of his business.
> 
> 
> Cheers


agree, as the word gets out about the usa's double taxation, unique on the planet among large economies, it will absolutely stop people from immigrating

but citizenship renounces will never grow beyond a paltry amount

us citizenship is still a prize worth paying for


----------



## Guban (Jul 5, 2011)

fatcat said:


> agree, as the word gets out about the usa's double taxation, unique on the planet among large economies, it will absolutely stop people from immigrating
> 
> but citizenship renounces will never grow beyond a paltry amount
> 
> us citizenship is still a prize worth paying for


I heartly agree that the US citizenship is a prized possession that many people around the world would be happy to have.

I question the double taxation, however. It seems to me that income is rarely double taxed, but the bigger issue is the nasty reporting requirements involved. Wading through the increasingly complicated tax regulations is not very nice. The time consumed is stunning, as James has already pointed out. And, he isn't even filing a full US tax return!


----------



## tenoclock (Jan 23, 2015)

fatcat said:


> well, not quite, a very, very small number has become a much larger very, very small number


Yes, but consider this, most of these individuals are multimillionaires. They are not your average Canadian or European born in the US. And this number grows yearly, the tax base shrinks as well.


----------



## Eclectic12 (Oct 20, 2010)

^^^^

As I understand it ... one does not need to be born in the US for the US gov't to consider one a citizen and subject to all the tax bits as well as reporting.

I seem to recall one poster here on CMF who was particularly ticked off that revisions to the criteria meant that the answer went from "you are not a US citizen" to "you are now, please start filing the paperwork".

I also recall some of the articles highlighting European banks dropping dual citizen clients highlighting that one dual citizen was not born in the US, had never visited the US and had no plans to move to the US but was subject to the reporting requirements.


Cheers


----------



## fatcat (Nov 11, 2009)

tenoclock said:


> Yes, but consider this, most of these individuals are multimillionaires. They are not your average Canadian or European born in the US. And this number grows yearly, the tax base shrinks as well.


as to taxation there is an automatic exemption in the us/canada tax treaty of something like 80K and yes, usually there are exemptions for larger amounts and offsets and so on 

indeed it is the reporting that is becoming a real burden

i suspect and HOPE we will see something like a large exemption amount or different requirements for people that reside outside of the usa and already report to a tax bureau

i think this law is aimed at wealthy individuals who live in the usa and have been hiding money offshore


----------



## Guban (Jul 5, 2011)

fatcat said:


> as to taxation there is an automatic exemption in the us/canada tax treaty of something like 80K and yes, usually there are exemptions for larger amounts and offsets and so on
> 
> indeed it is the reporting that is becoming a real burden
> 
> ...


Is the automatic exemption you are referring to the foreign earned income exemption? If so, I didn't think that was by treaty. It also only applies to income from a job, and not investment nor rental income which are deemed "passive". Oh yes, you have paperwork to apply for it.


----------



## tenoclock (Jan 23, 2015)

fatcat,

You maybe talking about the foreign earned income exclusion, and it only applies to income from work or if you are self employed.. it's about $99K.. if you own an incorporated business in Canada, that's could lead to a LOT of paperwork, and in many cases you will get double taxed if you are paying dividends because while Canada allows your dividend tax credits, US does not.. Also, if you are rich and have holding corporations for your investments to protect yourself from liability, you get taxed under the PFIC rules.. Just filing those forms is a mess. I use to work with high net worth expat individuals on their cross border tax issues few years ago, a lot of them are extremely unhappy and it' s wasn't uncommon to hear that someone is giving up US citizenship. 

Nowadays I work mostly with normal Canadians with a US citizenship (due to birth) ... and while most of them do not owe much tax to the US due to being employed or paying enough canadian taxes to claim FTCs.. they still have to pay accountants a significant amount of fees to comply with their US requirements..


----------



## fatcat (Nov 11, 2009)

tenoclock said:


> fatcat,
> 
> You maybe talking about the foreign earned income exclusion, and it only applies to income from work or if you are self employed.. it's about $99K.. if you own an incorporated business in Canada, that's could lead to a LOT of paperwork, and in many cases you will get double taxed if you are paying dividends because while Canada allows your dividend tax credits, US does not.. Also, if you are rich and have holding corporations for your investments to protect yourself from liability, you get taxed under the PFIC rules.. Just filing those forms is a mess. I use to work with high net worth expat individuals on their cross border tax issues few years ago, a lot of them are extremely unhappy and it' s wasn't uncommon to hear that someone is giving up US citizenship.
> 
> Nowadays I work mostly with normal Canadians with a US citizenship (due to birth) ... and while most of them do not owe much tax to the US due to being employed or paying enough canadian taxes to claim FTCs.. they still have to pay accountants a significant amount of fees to comply with their US requirements..


all true yes ... i though the exclusion was 80K ... 

it is all about the forms, the accountants and even the lawyers (and the consequent anxiety and worry that you might have missed something)

and it appears to be getting worse (much worse) rather than better ...

as james has said, even etf's may require special reporting (though my tax guy hasn't said anything about etf's to me yet, i am down to only 1 bond etf and 1 american based etf) just like mutual funds for which i was nicked the year before last


----------



## james4beach (Nov 15, 2012)

fatcat said:


> agree, as the word gets out about the usa's double taxation, unique on the planet among large economies, it will absolutely stop people from immigrating


By the way, I *am* filing a US return (as a nonresident, under the Tax Treaty). I'm filing in both Canada and US. There is no double taxation, the Tax Treaty takes care of that. The problem for me isn't double taxation, but the insanely detailed reporting and disclosure the US wants of assets outside the US.

These rules to report foreign assets impact a huge range of people: US citizens, green card holders, or anyone who exceeds the substantial presence test in the US... including snow birds, business travelers, Asian executives visiting American offices, etc

And absolutely, it's stopping people from immigrating. It's stopping me! I would *never*, ever, move permanently to the US.

The new US policies of the last couple years are like money-repellent spray. There is no way in hell I will ever get a green card or (heaven forbid) US citizenship. As a result, as an entrepreneur with capital, I will never bring that capital to the US, which means I will never start a new American business, I will not hire Americans, etc. And if I ever do start a successful business that grows and benefits a country, the benefit will either be to Canada, or somewhere else other than the US.


----------

