theOAP

CAUTION:
The exchange rate on the Treasury site that Robin has linked changes quarterly. Be sure the rate you are using is for the 4th quarter, and is the rate for 31 December.

The rate currently showing, for example, is for the 3rd quarter.

Giantaxe

XE has historical exchange rate data for every day going back to 1995.

lansbury

Yep but my CPA does the FBAR on the highest value on any day of the year, and the IRS average exchange rate to get it to $s.

theOAP

Ah, the old problem. Even CPAs can make mistakes, and often do.

lansbury

Another thought.

What do you do about an endowment life insurance policy which:-

a) has a surrender value which is unknown unless you apply to cash it in

and

b) has an estimated maturing value exceeding $10K on November 30, 2012

theOAP

I'll offer you my guess, but it is only a guess (ask your CPA? ).

If it can be surrendered before maturity (as in tomorrow), you will need to determine that value and declare its highest surrender value during the year. Life insurance policies held in foreign countries are reportable on FBAR.

Since you live in the US, be sure to clarify this for Form 8938. The lowest thresholds are for those resident in the US. A foreign policy is prime meat for 8938.

I now await the inevitable post which will prove me wrong, and I will not be surprised.

robin1234

Yes.. FBAR has one set of instructions, Form 8938 different instructions.. FBAR (if I remember correctly) allows you to use any appropriate exchange rate, but Form 8938 tells you to use one specific official, published source.

theOAP

From the latest FBAR instructions (2011):

In the case of non-United States currency, convert the maximum account value for each account into United States dollars. Convert foreign currency by using the Treasury's Financial Management Service rate (this rate may be found at www.fms.treas.gov) from the last day of the calendar year. If no Treasury Financial Management Service rate is available, use another verifiable exchange rate and provide the source of that rate.

theOAP

Just to add to my previous post on life insurance policies. From the latest (2011) FBAR rules:


A financial account also includes........, an insurance policy with a cash value (such as a whole life insurance policy), .......

nun

All my income worldwide will also be declared if I return to the UK with the intention to stay and I figured that the ROTH would make things easier as there's no tax consequences in the US or the UK. Some reading lead me to the conclusion that I'll enter the ROTH in SA-106 and claim exemption from UK tax because of the Treaty Article 17, blah blah in the "Any other information" section of SA-100

celticgrid

I am sure that so far for the FBAR I have used average exchange rates and stated where the rate came from. Whether I should or not, or whether they've now changed that, I'll worry about with checking the instructions for the imminent form completion exercise. Keeps me on my toes.

As for endowments, that's a whole different problem. Valuation will have to be on the basis that the highest surrender value during the year was at the end of the year - there's no other way that is practical.

In a year when an endowment matures, presumably it means another example of double reporting...the value of the endowment, while it was still active, and the value of the account the maturity value gets paid into. Senseless.

lansbury

I'll declare at the value it would payout if I died. There is no way to workout what the surrender value would be, unless you surrender it.

theOAP

Just a tip: be sure the exemption takes place on the body of SA-106, or an additional form. The UK accountant (the one I'm using to attempt to double my monthly withholdings) told me they don't always read the "Any other information" (Page TR 6, line 19). They didn't in my case. Remember my comment about the new computer programme being 'God'. By the time you retire, it will probably be entirely different anyway.

nun

Yes, in the SA-106 overseas pensions column F, taxable amount, I'll enter 0
Is it best to attach a sheet or write in the margin to explain the treaty exemption and point them to the "any other information" section of SA-100?

theOAP

You can try writing on the form. The accountant said they automatically discard any 'cover letters' straight in the bin. That seems to be what happened when I tried to tell them that I would be receiving the French pensions until I die.