Transfer money from my US bank to my foreign bank, do I still need to file FBAR and 8938?

[rick88]

Hi, I read several post I know that transferring money from my US Bank to Foreign bank is ok as the money in my US bank is already taxed.  

The question is.. Let's say I transferred 50K from Bank of America to Bank of Tokyo in 2020, both accounts owned by me,  Do I still need to file FBAR and 8938 ? since those money is not earned in a foreign country, I simply transferred the $ from one US account to a foreign account?  

Thank you.  

[Anonymous]

FBAR form 114 filing requirements from iRS

A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:

a financial interest in or signature or other authority over at least one financial account located outside the United States if the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes.

But, you don’t need to report foreign financial accounts that are:

Correspondent/Nostro accounts,
Owned by a governmental entity,
Owned by an international financial institution,
Maintained on a United States military banking facility,
Held in an individual retirement account (IRA) you own or are beneficiary of,
Held in a retirement plan of which you’re a participant or beneficiary, or
Part of a trust of which you’re a beneficiary, if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.
You don’t need to file an FBAR for the calendar year if:

All your foreign financial accounts are reported on a consolidated FBAR.
All your foreign financial accounts are jointly-owned with your spouse and:
You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly-owned accounts on a timely-filed, signed FBAR.

form 8938 per IRS

Who Must File
Unless an exception applies, you must file Form 8938 if you are a specified individual that has an interest in specified foreign financial assets and the value of those assets is more than the applicable reporting threshold.

Specified Individual
You are a specified individual if you are
one of the following.
• A U.S. citizen.
• A resident alien of the United States
for any part of the tax year (but see
Reporting Period, later).
• A nonresident alien who makes an
election to be treated as a resident alien
for purposes of filing a joint income tax
return.
• A nonresident alien who is a bona
fide resident of American Samoa or
Puerto Rico. See Pub. 570, Tax Guide
for Individuals With Income From U.S.
Possessions, for a definition of bona
fide resident.

for your filing threshold see page 3 of form 8938 instructions

https://www.irs.gov/pub/irs-pdf/i8938.pdf

[rjs · Accepted solution]

The requirements for filing the FBAR and Form 8938 are based on your foreign assets, not foreign earnings. You have to file an FBAR if you had a foreign account with a value of more than $10,000 at any time during the year. It doesn't matter where the money came from. So if you put $50,000 in a foreign account you definitely do have to file an FBAR.

You didn't give enough details to determine whether you would have to file Form 8938. If you are a U.S. citizen or resident alien, you live in the United States, and you are not married, you have to file Form 8938 if the value of your account is more than $50,000 on the last day of the year. So if you put in $50,000 and it doesn't grow at all, you would just squeak under the filing requirement. But if the account increases by just $1 you have to file.

Go to the following pages on the IRS web site for more details of the filing requirements, including the Form 8938 requirements for other situations.

Report of Foreign Bank and Financial Accounts (FBAR)

Do I need to file Form 8938, “Statement of Specified Foreign Financial Assets”?

This is not a complete discussion of the rules for filing these forms, and we do not know all the details of your situation. The rules are complex, and the penalties for not filing a required form are significant, so you might want to seek professional advice.

[rick88]

Thank you @Anonymous for the reply and the extra information.   Really appreciate this. 

[rick88]

Thank you @rjs .  This is clear.  I am married US Citizen and just moved out the US this August, I guess I will still have to file as a US resident.  I will keep the threshold lower as you suggested.  Thank you !!

[Nani12021]

Further to your reply. I have a question and clarification.

I am a Salaried Employee and working in a company in US. I get paycheck every 2 weeks once. My wife and kid was there in India till March of this year (Mar 2021).  My wife was employed in India in a company. I was transferring part of my paycheck to my wife every month and every paychek for her and my kids expense. Never ever will my account exceed $10000 at any time as my transfers are only small amounts. But in total it might exceed but will never peak out at $10000 at any time. Please advise if I have to still file the FBAR. 

Just an example:-

$1000 per paycheck multiplied by 2 per month - $2000 per month

$24000 per year .

But never more than $1000 per paycheck.

Please let me know.

Rgs,

Nan