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-   -   FBAR/8938 - the uncertain baby elephant in the room (https://britishexpats.com/forum/usa-57/fbar-8938-uncertain-baby-elephant-room-830256/)

Skint Apr 2nd 2014 12:50 pm

FBAR/8938 - the uncertain baby elephant in the room
 
In the process of filling out my FBAR/8938's for 2013.

In terms of reporting the "maximum amount in any account", are there rules/suggestions regarding what to report when sums have regularly been transferred between the accounts to gain maximum advantage from interest?

E.g. Take any date, say April 2nd. Account 1 may have £100 in it whilst Account 2 has £100,000. Account 1 suddenly offers a keener interest rate, so I move £99,900 from Account 2 to take advantage.

Therefore, both accounts' maximum value during the year is £100,000. Do I have to report that?

Or, as both accounts are under the same 'umbrella account' should I then only report that umbrella account, keeping paperwork to prove what's gone on?

It seems a bit grey area to me and could make my foreign assets seem FAR more excessive than they actually are.

Owen778 Apr 2nd 2014 1:05 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 

Originally Posted by Skint (Post 11201200)
In the process of filling out my FBAR/8938's for 2013.

In terms of reporting the "maximum amount in any account", are there rules/suggestions regarding what to report when sums have regularly been transferred between the accounts to gain maximum advantage from interest?

E.g. Take any date, say April 2nd. Account 1 may have £100 in it whilst Account 2 has £100,000. Account 1 suddenly offers a keener interest rate, so I move £99,900 from Account 2 to take advantage.

Therefore, both accounts' maximum value during the year is £100,000. Do I have to report that?

Yes.

That's the rules, no-one is really sure why. The IRS aren't suddenly going to think you have more income than you actually had, so don't worry.

Jerseygirl Apr 2nd 2014 1:12 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 

Originally Posted by Skint (Post 11201200)
In the process of filling out my FBAR/8938's for 2013.

In terms of reporting the "maximum amount in any account", are there rules/suggestions regarding what to report when sums have regularly been transferred between the accounts to gain maximum advantage from interest?

E.g. Take any date, say April 2nd. Account 1 may have £100 in it whilst Account 2 has £100,000. Account 1 suddenly offers a keener interest rate, so I move £99,900 from Account 2 to take advantage.

Therefore, both accounts' maximum value during the year is £100,000. Do I have to report that?

Or, as both accounts are under the same 'umbrella account' should I then only report that umbrella account, keeping paperwork to prove what's gone on?

It seems a bit grey area to me and could make my foreign assets seem FAR more excessive than they actually are.

Are they both foreign accounts? If both are foreign accounts you must report both. If the total of all foreign accounts exceed $10k at any point during the tax year...all foreign accounts must be reported.

MidAtlantic Apr 2nd 2014 1:14 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 

Originally Posted by Skint (Post 11201200)
In the process of filling out my FBAR/8938's for 2013.

In terms of reporting the "maximum amount in any account", are there rules/suggestions regarding what to report when sums have regularly been transferred between the accounts to gain maximum advantage from interest?

E.g. Take any date, say April 2nd. Account 1 may have £100 in it whilst Account 2 has £100,000. Account 1 suddenly offers a keener interest rate, so I move £99,900 from Account 2 to take advantage.

Therefore, both accounts' maximum value during the year is £100,000. Do I have to report that?

Or, as both accounts are under the same 'umbrella account' should I then only report that umbrella account, keeping paperwork to prove what's gone on?

It seems a bit grey area to me and could make my foreign assets seem FAR more excessive than they actually are.

You use the maximum amount for each account during the year. Yes that is double counting. Yes it doesn't make sense. But that is what you do.

Yorkieabroad Apr 2nd 2014 2:33 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 
I can't help thinking that a simple additional box asking the maximum total of all combined accounts would greatly clarify the information the IRS gets, because under the current system they really have no idea at all about the true level of a persons overseas assets. I suppose it depends what they are actually trying to do with the info.....

Owen778 Apr 2nd 2014 2:57 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 

Originally Posted by Yorkieabroad (Post 11201350)
I can't help thinking that a simple additional box asking the maximum total of all combined accounts would greatly clarify the information the IRS gets, because under the current system they really have no idea at all about the true level of a persons overseas assets. I suppose it depends what they are actually trying to do with the info.....

Agreed, but it makes even more sense to merge the FBAR and 8938. I don't imagine that will ever happen, though.

robin1234 Apr 2nd 2014 3:54 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 
Having just completed both for 2013, it does seem crazy that they can't combine the reporting in some way. In my case, I'm reporting almost exactly the same information, just the fields are in a slightly different order, and the 8938 has the added feature that you report interest received.

And the all new, "improved" (NOT) FBAR still has that question about whether you have more than 25 accounts, if you do you don't have to give any details!

Yorkieabroad Apr 2nd 2014 7:18 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 

Originally Posted by robin1234 (Post 11201491)
And the all new, "improved" (NOT) FBAR still has that question about whether you have more than 25 accounts, if you do you don't have to give any details!

I hadn't realized that - time to start applying!!

robin1234 Apr 2nd 2014 7:34 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 
Also, a lot of people forget to include their TfL Oyster Card in their FBAR filing

Hotscot Apr 2nd 2014 7:57 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 
Yeah right:rofl:

JAJ Apr 2nd 2014 7:58 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 

Originally Posted by robin1234 (Post 11201812)
Also, a lot of people forget to include their TfL Oyster Card in their FBAR filing

This idea keeps appearing on forums, and it leads to scaremongering. There is no evidence that personal use transport cards are financial accounts. And no evidence that the IRS/Treasury have ever asked the question.

MidAtlantic Apr 2nd 2014 8:03 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 

Originally Posted by JAJ (Post 11201862)
This idea keeps appearing on forums, and it leads to scaremongering. There is no evidence that personal use transport cards are financial accounts. And no evidence that the IRS/Treasury have ever asked the question.

I agree. And there is nothing to suggest that TfL is a financial institution

penguinsix Apr 2nd 2014 9:36 pm

Re: FBAR/8938 - the uncertain baby elephant in the room
 
I have a multiple currency account that allows me to move money between pounds or euros or yen. All of these subaccounts are tied to one single account number. I asked them if I had to report these sub accounts separately or as just one account that was tied to my account number. They wrote back just report the one account number with the total value in all the subaccounts.

Not sure if that is relevant to the original question but thought is mention it.

Yorkieabroad Apr 3rd 2014 12:27 am

Re: FBAR/8938 - the uncertain baby elephant in the room
 
Whatever next? Declaring the remaining stored value on the £20 Pay as You Go SIM card I use when I go back....:unsure:

JAJ Apr 3rd 2014 12:52 am

Re: FBAR/8938 - the uncertain baby elephant in the room
 

Originally Posted by Skint (Post 11201200)
In the process of filling out my FBAR/8938's for 2013.

In terms of reporting the "maximum amount in any account", are there rules/suggestions regarding what to report when sums have regularly been transferred between the accounts to gain maximum advantage from interest?

E.g. Take any date, say April 2nd. Account 1 may have £100 in it whilst Account 2 has £100,000. Account 1 suddenly offers a keener interest rate, so I move £99,900 from Account 2 to take advantage.

Therefore, both accounts' maximum value during the year is £100,000. Do I have to report that?

Or, as both accounts are under the same 'umbrella account' should I then only report that umbrella account, keeping paperwork to prove what's gone on?

It seems a bit grey area to me and could make my foreign assets seem FAR more excessive than they actually are.


Good question. Although it's unclear what audit procedures the IRS use on form 8938, it's likely that they are much more interested in those who aren't filing the form, rather than those who are.

The likely worst that could happen (and this is unlikely) is that you receive a "please explain" letter and you would respond by sending an explanation.

As someone else has said, if there aren't specific details in the form 8938 instructions it's a grey zone and you may be able to interpret it flexibly. If you have a single umbrella account with one account number and balance pooling for interest purposes, you could take a view that it's a single account. On the other hand, two separate accounts at the same bank should be reported separately. It's unlikely that the IRS will invest significant time and effort trying to prove you wrong.


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