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If a foreign bank account was opened in February, 2017 and has more than $100,000 in funds, does it need to reported with the 2016 tax return?

 
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GeoffreyG
New Member

If a foreign bank account was opened in February, 2017 and has more than $100,000 in funds, does it need to reported with the 2016 tax return?

The answer to your question is as follows.

Assuming that you own a bank account or maintain other financial assets in a foreign country, there are certain foreign financial account reporting requirements that you must meet annually, in addition to filing a primary tax return (Form 1040, etc.)

In fact, there are two separate disclosure forms that may be required; each also has different reporting rules.  One is known as IRS Form 8938, and can be attached to the relevant yearly Form 1040 tax return.  The other is FinCen Form 114, which can only be filed via the internet.  The following Internal Revenue Service webpage describes them in some detail, and provides their dollar value reporting levels:

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

 

Form 8938 is included in TurboTax.  FinCen Form 114 is not included in TurboTax, and you would need to access that reporting webpage separately, if your foreign financial assets total over the limit(s).  Note that you can get to the FinCen reporting internet site directly through the above IRS link.

However, neither IRS Form 8938 or FinCen Form 114 are "retroactive" in the sense that a new account opened in February, 2017 would need to be reported on a 2016 disclosure form.  In other words, both reporting forms are based on the calendar year, and such an account becomes a disclosure item for 2017 (and beyond, if applicable), but not for the 2016 tax year.

Thus, a foreign account that did not exist in 2016 -- or did not exceed the 2016 dollar amount filing threshold -- does not need to be reported this year.  That said, such a foreign account will need to be reported next year on a 2017 disclosure form (or forms), even if it is opened and then later closed, both during the same calendar year.  (Such a rule is, of course, designed to help prevent money laundering and international tax evasion, which could otherwise allow individuals to continually open and subsequently close foreign financial accounts in the same year, without reporting their existence.)

Thank you for asking this important question.

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1 Reply
GeoffreyG
New Member

If a foreign bank account was opened in February, 2017 and has more than $100,000 in funds, does it need to reported with the 2016 tax return?

The answer to your question is as follows.

Assuming that you own a bank account or maintain other financial assets in a foreign country, there are certain foreign financial account reporting requirements that you must meet annually, in addition to filing a primary tax return (Form 1040, etc.)

In fact, there are two separate disclosure forms that may be required; each also has different reporting rules.  One is known as IRS Form 8938, and can be attached to the relevant yearly Form 1040 tax return.  The other is FinCen Form 114, which can only be filed via the internet.  The following Internal Revenue Service webpage describes them in some detail, and provides their dollar value reporting levels:

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

 

Form 8938 is included in TurboTax.  FinCen Form 114 is not included in TurboTax, and you would need to access that reporting webpage separately, if your foreign financial assets total over the limit(s).  Note that you can get to the FinCen reporting internet site directly through the above IRS link.

However, neither IRS Form 8938 or FinCen Form 114 are "retroactive" in the sense that a new account opened in February, 2017 would need to be reported on a 2016 disclosure form.  In other words, both reporting forms are based on the calendar year, and such an account becomes a disclosure item for 2017 (and beyond, if applicable), but not for the 2016 tax year.

Thus, a foreign account that did not exist in 2016 -- or did not exceed the 2016 dollar amount filing threshold -- does not need to be reported this year.  That said, such a foreign account will need to be reported next year on a 2017 disclosure form (or forms), even if it is opened and then later closed, both during the same calendar year.  (Such a rule is, of course, designed to help prevent money laundering and international tax evasion, which could otherwise allow individuals to continually open and subsequently close foreign financial accounts in the same year, without reporting their existence.)

Thank you for asking this important question.

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