Critical

FBAR Filing Requirements

The Report of Foreign Bank and Financial Accounts (FBAR) must be filed by any US person with foreign financial accounts exceeding $10,000 in aggregate at any point during the year. The FBAR is filed electronically with FinCEN, not the IRS, and has its own deadline and penalty regime.

Key Points

  • The $10,000 threshold is based on the aggregate maximum value of all foreign accounts during the year.
  • FBAR covers bank accounts, investment accounts, RRSPs, TFSAs, and any account with a financial institution.
  • Non-willful penalties can reach $16,117 per account per year (inflation-adjusted).
  • Willful violations carry penalties up to the greater of $161,175 or 50% of account balances.
  • The filing deadline is April 15 with an automatic extension to October 15.

Action Items

  1. 1.Inventory all foreign financial accounts including registered plans (RRSP, TFSA, RESP).
  2. 2.Track the maximum balance of each account during the calendar year.
  3. 3.File FinCEN 114 electronically through the BSA E-Filing System by April 15 (auto-extended to October 15).
  4. 4.Answer "Yes" to Schedule B Part III question about foreign accounts on your Form 1040.

Frequently Asked Questions

Do I need to report my Canadian RRSP on the FBAR?

Yes. RRSPs, TFSAs, RESPs, and any account held at a Canadian financial institution must be included in the FBAR aggregate calculation.

What if my accounts never exceeded $10,000 in total?

If the combined maximum balances of all foreign accounts never exceeded $10,000 at any point during the year, no FBAR is required.

Related Scenarios

Critical

TFSA US Tax Trap

The Tax-Free Savings Account is tax-exempt in Canada but receives no treaty protection in the US. The IRS classifies a TFSA as a foreign grantor trust, requiring Forms 3520 and 3520-A annually. Failure to file can result in penalties starting at $10,000 per form per year.

Core

Substantial Presence Test

The Substantial Presence Test (SPT) uses a weighted formula across three years to determine if a foreign national is a US tax resident. If you meet the test, you are taxed on worldwide income. Understanding the SPT is essential for snowbirds and anyone splitting time between Canada and the US.

Advanced

Treaty Tie-Breaker Rules

When you qualify as a tax resident of both Canada and the US, Article IV of the Canada-US Tax Treaty provides a tie-breaker hierarchy to determine your treaty residence. The rules consider permanent home, centre of vital interests, habitual abode, and nationality in sequence.

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