Does an fbar need to be filed for a foreign bank account if the account had less than $10,000.00 usd, but it had just over $10,000 in the foreign currency (nzd)?

[californiasummer]

I'm specifically wondering if the $10,000 reporting limit is for the amount of money in the bank when it is converted to United States Dollars. Thanks!

[KarenJ · Accepted solution]

Yes, you need to convert the money to USD.  You need to file an FBAR if you had a financial interest in or signature authority over foreign financial accounts and the aggregate value of the foreign financial accounts exceeds $10,000 USD on any one day in the calendar year.

[californiasummer]

Thanks for that! So to clarify, if the foreign account had $10,001 New Zealand Dollars on one day, which converts to about $6,912 USD, than the foreign account would not be required to file an FBAR?

[KarenJ]

That is correct.  You do not have to file if it is less than $10,000 USD.

[californiasummer]

Thanks so much! I really appreciate your expertise!

[KarenJ]

You are quite welcome!

[californiasummer]

I have another more complicated question I wonder if you could help with. I am trying to figure out where to enter my foreign earned income. I am taxed in NZ on all of my income, but I have had multiple jobs, some of which have been classified as an"independent contractor." Do you know if this can be entered in the Foreign Earned Income and Exclusion section: "A statement from my foreign employer (could be cash)"? Or do I need to put it somewhere else as "self-employment"? Usually, this is film work and I am taxed before I receive the payment, and I receive a statement saying how much tax has been taken out.

[californiasummer]

I read in "Double Taxation Relief (United States of America) Order 1983"

"Article 14
Independent Personal Services
Income derived by an individual who is a resident of a Contracting State from the performance of personal services in an independent capacity shall be taxable only in that State, unless such services are performed in the other Contracting State and:
• (a)the individual is present in that other State for a period or periods aggregating more than 183 days in any consecutive twelve month period; or
• (b)the individual has a fixed base regularly available to him in that other State for the purpose of performing his activities, in which case so much of the income as is attributable to that fixed base may be taxed in such other State."

[KarenJ]

I cannot comment on your treaty article except to say that the US will consider it has the right to tax your income if you are a US citizen or green card holder.  There is something in a treaty called the Savings Clause that gives the right of each country to tax its own residents as if no tax treaty existed.  I don't know if there is  totalization agreement with NZ so that you pay social security taxes in only one country.  You might check that.  For your foreign self-employment income as my TurboTax colleague Lina answered another taxpayer:

 You would enter business deductions under the section"Schedule C".  To report foreign earned income from self-employed, you would need to report in two places.  One is under the "Schedule C" where you can report all your business income and deductions.  The other place is under the "Foreign income".   This will not double your income.  Under the Foreign Income section, you will be prompted to answer questions related to the foreign earned income exclusion which reduces your taxable income and reflects on line 21 Schedule 1.

To enter under Schedule C:

    Sign into your account and select Take me to my return
    At the right upper corner, in the search box, type in schedule C and Enter
    Select Jump to schedule C
    On screen, Did you have any self-employment income or expenses?  select Yes to continue

To enter under Foreign Income:

    At the right upper corner, in the search box, type in foreign income and Enter
    Select Jump to foreign income

[californiasummer]

Thank you for your reply!