FBAR Time Again

[JimGant]

The Financial Crimes Enforcement Network (FinCEN), a branch of Treasury located in Vienna, Virginia, hasn't changed its FBAR form (FinCEN Form 114) from last year. I've already filed, and it was just a matter of unsigning last year's form, plugging in the new data, then saving, attaching and sending. Email confirmation shortly thereafter.

 

But, what's really weird is that FinCEN (unlike the more flexible IRS, where you're actually reporting income, not just information) insists on using the end of year FX rate from Treasury's Fiscal Center (and which usually is not available until mid-January). However, if Fiscal Center doesn't have the FX rate by 1 Jan (actually they say if they don't have the "rate for your particular country," not that they're untimely about reporting -- but I fudged somewhat on this), then use a similar, supportable rate, like that of Bank of Thailand, which had the Interbank rate of 32.659 on the last business day of Dec. I did this last year, without any problem, so don't expect any problems this year -- although I'd love to have the chance to discuss their criteria with them.

 

Using a simple scenario, let's see where their policy sucks. Suppose you have a single bank account at Bangkok Bank (and no other accounts in Thailand), with only 500 baht in it. On 4 Jan 2017, you ACH $10,000 to this account. Passing New York, where $10 is removed, $9,990 crosses the pond. 500 baht is removed on the receiving end, netting out the 500 baht currently in the account. Thus, with the TT rate for Bangkok Bank on 4 Jan 2017 being 35.72, you end up with 356,843 baht -- or exactly $9990 at the Jan 4 Bangkok Bank TT rate (Bank of Thailand's Interbank rate of 35.89 reduces this to $9943). And to further cement events, the next day you withdraw all the money, buy a used car, and close the account. And never open any more accounts in Thailand. Sounds like you never tripped the $10,000 wire requiring FBAR filing.....

 

......except FinCEN, unlike the IRS, won't let you use the relevant FX rate for the date in question. Instead, in about two weeks, the Fiscal Center rate will be published, and it will be a few satang down from the Bank of Thailand's end of year rate of 32.659. And they insist you use only the end of year rate.

 

Thus, your 356,843 baht account balance on 4 Jan is now worth $10,926. Welcome to FBAR country.

 

Admittedly, a remote scenario. But ridiculous, nevertheless. If folks are not submitting until mid Jan, or later, because of the FX requirement, FinCEN just has fewer days to process all those FBARs (although I'm not sure what processing criteria, if any, exists for this mountain of meaningless, non taxable numbers......).

 

'Tis the season.

[ubonjoe]

Where are you getting the 32.659 baht exchange rate from. On Bangkok Banks exchange rate page the TT rate was 32.45 baht to the dollar on the 29th at 14:50. See: http://www.bangkokbank.com/BangkokBank/WebServices/Rates/Pages/FX_Rates.aspx

[JimGant]

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Where are you getting the 32.659 baht exchange rate from. On Bangkok Banks exchange rate page the TT rate was 32.45 baht to the dollar on the 29th at 14:50.

https://www.bot.or.th/english/statistics/_layouts/application/exchangerate/exchangerate.aspx

The BofThailand's weighted interbank rate is always several satang above Bangkok Bank's TT rate, and even slightly above Visa's rate. It is also as close to what Treasury's Fiscal Center has historically reported, so it was my selected surrogate for end of year reporting.

 

If you use a rate other than what they want, they say they'd like an explanation. On the FBAR form, the only place to write ad hoc is when you say "you're filing late" and have an "other" reason for doing so. Thus, in that block, I posted:

 

Quote

ACTUALLY, I'M FILING EARLY. BUT NO TREASURY FISCAL FX RATE HAS YET BEEN PUBLISHED. THUS, PER GUIDANCE ABOUT 'WHEN NO TREASURY FISCAL SERVICE RATE AVAILABLE," I'VE USED THE END-OF-YEAR INTERBANK EXCHANGE RATE PUBLISHED BY THE BANK OF THAILAND -- THEIR EQUIVALENT TO OUR FEDERAL RESERVE BANK. HISTORICALLY, THIS RATE HAS BEEN THE SAME, OR NEARLY SO, FOR THE END OF YEAR RATE EVENTUALLY POSTED BY THE TREASURY FISCAL SERVICE.

 

[ubonjoe]

A off topic post meant to derail the topic has been removed along with expected replies to it.

[ubonjoe]

14 hours ago, JimGant said:

The BofThailand's weighted interbank rate is always several satang above Bangkok Bank's TT rate, and even slightly above Visa's rate. It is also as close to what Treasury's Fiscal Center has historically reported, so it was my selected surrogate for end of year reporting.

The number shown on the BOT website appears to be an average of buying/selling rates for the day. 

The easy solution would be to do more than one transfer after taking some of the money out of the bank to avoid going of over $10k.

I never have over $10k total in my bank accounts so don't have to worry about the reporting. Having a Thai wife that is not subject to US taxes (not a citizen or resident) helps to avoid that.

[JimGant]

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The number shown on the BOT website appears to be an average of buying/selling rates for the day. 

Indeed, it replicates the mid-market rate, as does the Treasury Fiscal Center's rate. (Last year's end of year rate for BOT was 35.82; for Treasury Fiscal Center, the rate was 35.77.)

 

And as said, the IRS, unlike FinCEN, isn't picky about the rate you use -- as long as it's supportable and consistent. So, you can use an average yearly rate for periodic payments; or the rate for the day of payment. In the latter situation, use the selling rate for dollars, which is completely supportable, since this is the amount of dollars in hand that you'd get with the baht interest earned. Or you could use the TT rate -- but you'd then have more dollar earnings to declare on your tax filing. Example: Today's Bangkok Bank TT rate is 32.27; selling rate for the dollar is 32.69. If you had 20000 baht in interest paid today, using the TT rate would have $8 more in taxable earnings.

 

Not talking real money here -- just highlighting the inconsistencies within branches of the Treasury. (Haven't heard anything further about the merger of FBAR and FATCA reporting. Apparently, it makes too much sense to ever happen.....)

[ProbPossConf]

FBAR filing is due on April 15, same as the Federal tax filing deadline, and one can get an automatic 6 month extension. This change was effective for the 2016 tax year filing done in April 2017.

[JimGant]

Right. I just like to get things done well ahead of the deadline. And I see now where Turbotax won't have all the finalized forms until Jan 11 for 2017 tax filing. Not that I've got a big refund coming, but that's another one I like to get out of the way -- and since I've already got all my 1099 data on a spreadsheet, no need to wait.

[CMBob]

A couple of comments:

 

(1)  The OP says he's already filed his FBAR for 2017.  Under the rules as I understand them, you have to use the US Treasury baht/dollar rate (which at least in the past hasn't been the same as any Thai bank's end-of-year rate).  I've never been able to find the 12/31 rate at the Treasury site until at least a couple of weeks+ into January.  OP, given Treasury will post a thai baht to the dollar rate, is there really any basis to simply use the Bangkok Bank's rate?

 

(2)  Another poster indicated the FBAR was due by April 15th.  No, it's due to be filed (electronically only) by June 30th.  If you have more than $50,000 in foreign "accounts" at any moment during the year, then you have to file the 8938 form with your IRS tax return (which, unless you have an extension, is due April 15th). 

 

Edit:  Just checked and no Thai baht/dollar rate is available as yet.  And the instructions do require use of the Treasury's conversion rate for any currency for which Treasury publishes a rate.  It just isn't published yet.

Edited January 3, 2018 by CMBob

[JimGant]

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OP, given Treasury will post a thai baht to the dollar rate, is there really any basis to simply use the Bangkok Bank's rate?

Well, it's the B of Thailand rate I used, which has historically been within 5 satang of the eventual Treasury rate. Close enough for FBARs, where they're only putting you into tranches rounded to the nearest thousand bucks (folks in the 10-50k tranche; folks 51-100k, etc, based on highest amount account reported). It's meaningless to be so anal, and, besides, I hope to be on the high seas when their rates are finally published.

 

Here's the guidance from Form 8938 (FATCA) filing instructions, which is the same as for a FBAR filing:

 

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If no U.S. Treasury Bureau of the Fiscal Service exchange rate is available, you must use another publicly available foreign currency exchange rate for purchasing U.S. dollars and disclose the rate on Form 8938.

This is exactly the guidance I got when I queried FinCEN. And, per my above post, I included on the FBAR filing my rate source and rationale. Today I received confirmation of FBAR acceptance, by the way. But, heck, if you're not going on a cruise, just wait for the official rate to come out.

 

Quote

 Another poster indicated the FBAR was due by April 15th.  No, it's due to be filed (electronically only) by June 30th.

No, that poster's narrative was spot on. They changed the rules a few years ago, to coincide with tax filing dates.

 

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If you have more than $50,000 in foreign "accounts" at any moment during the year, then you have to file the 8938 form with your IRS tax return

Much more entailed.... If you live in the States, and are married, it's more than $100k at year's end, or $150k at any time during the year (half that if single). They're more lenient for us expats, with 400k/600k for married folks (half that for singles). And this only includes liquid/near liquid assets -- your house and rental properties need not be included. Thus, doubtful anyone reading this has, or ever will, file a Form 8938.

Edited January 3, 2018 by JimGant

[charliebadenhop]

Help me to be clear please-

1. Are you saying that we only have to report accounts when they are over $10,000 for EACH account?

2. And then- If you have more than $50,000 in total accounts during a year you have to use a different form than if you have less than $50,000?

 

 

[CMBob]

1 minute ago, JimGant said:

 No, that poster's narrative was spot on. They changed the rules a few years ago, to coincide with tax filing dates.

Thanks for that info....just checked Treasury's guidelines and it was changed to April 15th.  No worry, I file mine by the end of January anyway (or as soon as I see the published baht/dollar rate).

[charliebadenhop]

Is the exact rate one uses so important?

 

I would think any number that is "close" would be acceptable, since you don't wind up paying tax etc. on the quote you make.

 

 

[CMBob]

8 minutes ago, charliebadenhop said:

Help me to be clear please-

1. Are you saying that we only have to report accounts when they are over $10,000 for EACH account?

2. And then- If you have more than $50,000 in total accounts during a year you have to use a different form than if you have less than $50,000?

 

 

If all your foreign assets (expansive definition - bank accounts, stock accounts, etc.) total $10,000 or more at any one moment during the year, you must file (electronically) the FBAR.  If all of those accounts total $50,000 or more at any one moment during the year, then you're also required to file the 8938 form with your tax return (one apparent exception - don't have to file it if you're not required to file a tax return). 

Edited January 3, 2018 by CMBob

[charliebadenhop]

Thanks Bob.

 

In the past, I have had more than $50,000 and always used the same form!

:-)

 

Or at least I think I did. 

[CMBob]

Two separate forms....one (FBAR) filed online and one paper form (8938) filed with your tax return. If you've met the $50,000 threshold, you must file both.  And the penalties are horrendous if Treasury goes after you (having read the allegations in the federal indictment against Paul Manafort, it would seem that convictions on the FBAR/FATCA counts could mean he may have to pay a ton of money). 

[Searat7]

As I recall FBAR requires you to show the highest balance you had in each account during the course of the year. I start with dollars in FX account, then move to a baht holding account and finally to my savings account connected to my ATM card......so this kind of reporting grossly overstates how much money I have in Thailand.

[ricklev]

19 minutes ago, CMBob said:

If all your foreign assets (expansive definition - bank accounts, stock accounts, etc.) total $10,000 or more at any one moment during the year, you must file (electronically) the FBAR.  If all of those accounts total $50,000 or more at any one moment during the year, then you're also required to file the 8938 form with your tax return (one apparent exception - don't have to file it if you're not required to file a tax return). 

It's a much higher threshold if you live in Thailand  330 days or more.

 

https://www.irs.gov/businesses/corporations/do-i-need-to-file-form-8938-statement-of-specified-foreign-financial-assets

 

If you are a taxpayer living abroad you must file if:

• You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
• You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

Edited January 3, 2018 by ricklev

[CMBob]

Just now, Searat7 said:

As I recall FBAR requires you to show the highest balance you had in each account during the course of the year. I start with dollars in FX account, then move to a baht holding account and finally to my savings account connected to my ATM card......so this kind of reporting grossly overstates how much money I have in Thailand.

Agree that proper reporting may show a gross overstatement of what you have in Thailand.  For example, if you keep 800,000 baht in an account to support a retirement extension and if you happen to change accounts during the year, you essentially have to report both accounts and the form might infer that you had 1,600,000.  But it's really no big deal as the numbers on both the FBAR and 8938 do not relate to income tax liability (income tax liability might, however, be tied to interest reported on those accounts). 

[CMBob]

17 minutes ago, ricklev said:

It's a much higher threshold if you live in Thailand  330 days or more.

Yes....probably should have noted that there are different rules for those who don't go back to the US for any significant period of time.  I go back each summer for a few months so the lower threshold applies to me.  

[JimGant]

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If all your foreign assets (expansive definition - bank accounts, stock accounts, etc.) total $10,000 or more at any one moment during the year, you must file (electronically) the FBAR.

Yes. Full stop. Forget FATCA Form 8938 for now.

 

The key phrase above is "at any one moment." Meaning, if you close your 200k baht Bangkok Bank account in the morning, and open a new account at SCB that afternoon with that same 200k baht, you do NOT have a 400k baht moment to trigger a FBAR filing. Now, if you have several other Thai bank accounts opened that same day -- and there had been no movement in them -- then you would attach their day's end value to the 200k that changed hands between BB and SCB. If then you exceed $10000, well, yep, you've got a FBAR moment. Then, because you have now triggered FBAR, every account ever opened in that year, either before or after the FBAR triggering date, needs to be reported. Thus both that Bangkok Bank account closed in the morning, and the SCB account opened, would have an entry on the FBAR form, depicting their maximum amount for the year. Kinda ridiculous, especially for the year you decide to close all those dormant 300 baht accounts -- all of which need to be reported.

 

Be careful of some misleading advice out there. Here's a quote from a supposedly reputable CPA outfit:

 

Quote

The Rule: The reporting threshold is determined on an aggregate basis by adding the highest reported balance of every foreign account that the US person owned or over which he or she had signature authority during the calendar year. Thus, signature authority over a corporate account with a “high balance” of US$6,000 and maintenance of a personal account with a “high balance” of US$6,000 requires filing an FBAR reporting both accounts because the aggregate value of the accounts exceeds US$10,000.

Reporting "an aggregate basis of the highest reported balance of every account.." So, by their guidance, in my example, if the BB account I closed had its high balance the week before closure, say 300k, and the SCB account I opened that afternoon grew to 500k by year's end -- this guidance says I have a reporting threshold of 800k baht. No way Jose. Yes, you eventually report max amounts held by every one of your accounts that existed that year -- but this is NOT how you determine whether or not a FBAR filing is required.

 

 

 

[Rhys]

Thanks for the information.. on this FBAR, do you only include your account or both you and wife.  Recently married in NOVEMBER...

 

Edited January 3, 2018 by Rhys

[MyFriend You]

7 hours ago, charliebadenhop said:

Help me to be clear please-

1. Are you saying that we only have to report accounts when they are over $10,000 for EACH account?

2. And then- If you have more than $50,000 in total accounts during a year you have to use a different form than if you have less than $50,000?

 

 

Yes on both questions  but I see CMBob has explained it well.  In my case I went over $50K only for a few days, I still have to submit the 8938 as well as the FBAR.

Edited January 3, 2018 by TunnelRat69

[ubonjoe]

14 hours ago, Rhys said:

Thanks for the information.. on this FBAR, do you only include your account or both you and wife.  Recently married in NOVEMBER...

 

Only if your wife is a a US citizen or resident.

[JimGant]

19 hours ago, charliebadenhop said:

Is the exact rate one uses so important?

 

I would think any number that is "close" would be acceptable, since you don't wind up paying tax etc. on the quote you make.

Indeed.

[JimGant]

Quote

Thanks for the information.. on this FBAR, do you only include your account or both you and wife.  Recently married in NOVEMBER...

As Joe said, wife has no FBAR responsibility if not a US citizen or resident. However, if she has a joint account with you, the full amount of that account (not half) will be reported on your FBAR (in  the joint section), with the wife listed as "principal joint owner" (I know that sounds counterintuitive, but it's your FBAR, so you are the "principal owner" of this joint account. Sigh.) Anyway, leave the TIN block blank, but check the "foreign" box for TIN type.

 

Congrats on your marriage. Have you determined whether to file "Married Filing Jointly" or "Married Filing Separately?"

[Dipterocarp]

Did they change the FBAR reporting date to April 15?

[CMBob]

1 hour ago, Dipterocarp said:

Did they change the FBAR reporting date to April 15?

Apparently so although this year it's April 18 as that's when the returns are due.  As to whether you can further delay the online FBAR filing by obtaining an extension for your 1040, I'd guess not but I don't know for sure.  Given the FBAR filing is only done online and rather easy to do (once you know the Treasury's conversion rate), there's no real reason not to do it well before April. 

I keep checking daily as to the Treasury filing its 12/31/17 dollar/baht rate but it's still not published; hopefully, it's out in the next week or two (I've always done the FBAR in January and expect to do it as soon as I see the published rates). 

[JimGant]

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As to whether you can further delay the online FBAR filing by obtaining an extension for your 1040, I'd guess not but I don't know for sure. 

Automatic extension until Oct 15th this and future years (or maybe a few days later, if this falls on a weekend/holiday. Dunno).

[JimGant]

I just saw this:

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*** Important Notice *** - Effective January 8th, 2018, previously saved versions of the FBAR report (downloaded prior to December 8th, 2017) will no longer be accepted.

So, if you haven't filed your FBAR, it's no longer an easy matter of unsigning last year's FBAR, changing some dates and figures, then resigning. You now have to download their new form, which is still version 1.0, effective Oct 1, 2013 -- and where the only difference is the now obsolete June 30th reporting banner is replaced with:

Quote

The new annual due date for filing Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts is April 18.

Bad news for you folks with mucho bank accounts and carpal tunnel syndrome.

Edited February 6, 2018 by JimGant