FBAR
 

I had an inheritance over £50,000. I transferred £45,000 to USA. Do I need to file FBAR as my money in UK is now under $10,000. Or do I have to file because at one point int he year I had more than ¢10,000?

Re: FBAR
 

If you had a total amount...in one or more accounts...of over $10K at anytime in the tax year it must be reported.

Re: FBAR
 

Thank you.

Re: FBAR
 

As mentioned, if it was over $10,000 at any point during the year, you have to file. I would also note that if the total amount of ALL your overseas accounts is > $10,000 USD at any point in the year, then you will have to report ALL accounts. I wanted to mention this because you have one account with about $7,500 USD in it so if you happen to have a few other small ones you might find yourself in an FBAR situation.

Account #1 - £5,000 ($7,500USD)
Account #2 - £1,500 ($2,200 USD)
Account #3 - £500 ($750 USD)
Account #4 - £1 ($1.50)

You must report ALL accounts on your FBAR, even the one with £1.

Also note that the $-£ rate can shift you up into reporting should the pound strengthen over the next year or two (as it did in the mid-2000s).

Re: FBAR
 

Thank you.

Re: FBAR
 

It's worse. You can not actually have $10k in money and still have to file. Just moving $5k between two accounts in a year will cause a need to file.
Also in a inheritance situation you can have a financial interest in accounts not owned by you while the executor sorts out the estate. We reported my wife's late mother accounts on our FBAR for the year she died.

Re: FBAR
 

Not quite correct.

The official wording is:

Therefore moving $5k between accounts does not affect the aggregate value at that time.

However, when you complete the FBAR you need to put the maximum value, during the year, of each account, so on the form you may actually include that $5k twice, but such a transfer does not affect the initial assessment as to whether you need to complete the FBAR.

Re: FBAR
 

There are two different questions that tend to get confused:
1. Do I need to file? Only if the aggregate value of the foreign financial accounts exceed $10,000 at any time during the calendar year.
2. If I do need to file, what do I report? determine the maximum value of each account (in the currency of that account) during the calendar year being reported; convert those maximum values to USD using the Treasury's Financial Management Service rate; report those values for each account.

Re: FBAR
 

I'm not sure that is correct. I have understood the requirement to be on accounts over which you have signature authority. If the executor is the only one who can control the money in the account it isn't yours until they give it to you.

Including open accounts with a nil total if other accounts take you over the $10k limit. Fell foul of that one myself.

Re: FBAR
 

Signatory authority or a financial interest in. I ran it by my tax attorney. I had to include them.

Re: FBAR
 

Unfortunately that not the official word. The IRS successfully defeated a CPA in tax court arguing that what the IRS says on it's web site and forms is not legally binding (IRA rollover timing, once a year stuff). Only the tax code itself has any weight. To understand if you have to file the FBAR you have to go to title 31. I have seen legal types weight in in the past that transfer amounts are counted twice. There might have been a change in 2014 though that changed this.

Re: FBAR
 

So although you earlier state this definitively, you are now unsure?

I've seen legal types weigh in with all sorts of rubbish - it is what they do for living, after all.

You may be right. Some citation would help. Luckily I am unaffected by any lack of clarity in this area.

Re: FBAR
 

If in doubt then file the FBAR report. It takes very little time and doesn't even cost the price of a stamp these days.

Re: FBAR
 

Actually the situation doesn't arise as the money cannot be in 2 accounts at the same time. Therefore the aggregate amount stays the same.

Re: FBAR
 

I would agree with that. That's my position.

No-one in their right mind would posit otherwise, but I do however acknowledge that Neillc37 is talking about the IRS and lawyers, so "in their right mind" is not so cut and dried ;)

Re: FBAR
 

So I was sure. After searching I saw references to changes in 2014 so I became unsure again. Like anything with the tax code it becomes out of date the moment you look at it.
Later you state that you policy was to file anyway but you said you don't have to file under the definition of aggregate from the form. So you were not taking the safe position.

I think this is the place it's defined:

31 CFR 1010.306 - Filing of reports.

(c) Reports required to be filed by § 1010.350 shall be filed with the Commissioner of Internal Revenue on or before June 30 of each calendar year with respect to foreign financial accounts exceeding $10,000 maintained during the previous calendar year.

So incredibly vague.

Re: FBAR
 

Strewth. No wonder tax accountants are strange. Dealing with this sort of stuff would drive me back to drink !

Re: FBAR
 

Obviously written to ensure that tax attorneys make some money.

Re: FBAR
 

oh!

Re: FBAR
 

I think it's been updated but I can't find it yet. Too hard to find anything.

Re: FBAR
 

It amazed me that the US is in all out war to extract money from anything foreign that's not tax compliant but the rules are full of grey areas. Do you need to file 3520 for this or that pension etc.

Sec 1291 that describes the tax on foreign mutual funds is incredibly complex. You encode this tax into for 8621. When I did this in software I found cases that were undefined wrt distributing the excess distributions among dividends. I had to invent something reasonable to do in at least one case.
When I filled my return (400+ form 8621s) the IRS agent told me the numbers were wrong. We pointed her to a completely different place in CFR (26 CFR 1.1291-9 - Deemed dividend election) describing the rule we used.
She agreed we were right. Said that they couldn't do the calculation I had done in their software. She said they did a back of the envelope calc to check my numbers and they then just accepted my return.
Total joke when you think about it. Might be OK if they were not enforcing this stuff with an iron fist.

Re: FBAR
 

and don't forget about the new FATCA requirements https://www.irs.gov/Businesses/Corpo...or-Individuals

Re: FBAR
 

But the money can be reported in two different accounts on the same day, therefore it may appear to be two different lots of money.

Remember it takes minutes to transfer money in the UK not days.

Re: FBAR
 

Start of business day Account A $6000, Account B $1000 aggregate $7000

transfer $5000 from a to b

Close of business day Account A $1000, Account B $6000 aggregate $7000

Re: FBAR
 

Do all banks report the account daily total end of the day? Do some report the account daily total at the start of the business day?

Another example. I deposit $5000 from my checking into savings, it appears immediately in my savings account , however it takes 3 days for it to be deducted from my checking account. For those 3 days it appears I have $10,000 , but in reality it is the same $5000. This mostly happens with online savings accounts , so they pay interest from day of deposit.

Re: FBAR
 

This is exactly the approach I take.

I make a pdf copy of each monthly bank statement and there is one balance listed for each day of the month. It is the highest daily balance of each account that I report. I only have 2 accounts, checking and savings. I transfer money between the accounts all the time and those transfers happen same day. I don't record the highest value an account gets to during the day for FBAR, I rely on the bank statements.

Re: FBAR
 

When I do a transfer from one account to another either with NatWest in the UK checking to savings, or OnPoint here checking to savings, the transfer is deducted from one and deposited in the other account immediately. Banks normally report the balance for the day at end of business.

Re: FBAR
 

My Barclays online savings account takes a while to deduct the money. The opposite happens with citibank, the money disappears for 3 days.

Re: FBAR
 

Thanks to all for excellent information.