# Do you need to file Fbar on crypto exchanges



## jeremyisthere (Jul 26, 2021)

Cryptocurrencies are defined as property, now you don't have to declare to the IRS or the us government that you own foreign property anywhere, the sale is taxable I get it but not the actual ownership - nowhere to declare. Since cryptocurrency is property I don't have to declare when I own it but I do have to pay tax on selling it, I get that too. So logically if you don't trade and just have say 100k sitting on a crypto exchange outside the US, say bitstamp (Luxembourg) or Binance (Hong Kong) you should be fine not file Fbar on having assets in said crypto exchange. What are your thoughts


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## Bevdeforges (Nov 16, 2007)

At the moment, cryptocurrency holdings are not reportable on your FBAR. However, you may want to take a look at what the Fincen folks have to say about this:
https://www.fincen.gov/sites/defaul...ual Currency Reporting on the FBAR 123020.pdf
The final sentence of that statement:


> However, FinCEN intends to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account under 31 CFR 1010.350.


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## Moulard (Feb 3, 2017)

Wrong.

As of the 2020 tax return, you now have to declare on your 1040 whether or not you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency.

If you disposed of any virtual currency that was held as a capital asset through a sale, exchange, or transfer, use Form 8949 to figure your capital gain or loss and report it on Schedule D.

If you received any virtual currency as compensation for services or disposed of any virtual currency that you held for sale to customers in a trade or business, you must report the income as you would report other income of the same type.

As to FinCen Form 114 AKA the FBAR I would believe that it would meet the definition of a foreign financial account and you have a financial interest in that account and it is thus reportable but the new proposed regulations will remove any doubt.


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## jeremyisthere (Jul 26, 2021)

Ok. Now since you seem to know a bit about crypto for expats, my other question was that as an expat, or maybe even in general, you can exempt $250,000 on capital gains from properties as long as you hold them for at least 2 years, right. Now since cryptocurrency has been defined as property for the IRS, does the same apply to crypto?! In other words if I hold crypto for more than 2 years can I exempt 250k on long term capital gains or what is the ruling there.
I was playing around with turbotax, paid myself 102k as income (with the foreign income exemption applied) and then 152k as longterm capital gains and the result still showed as no taxes owned/no refund. Once I put capital gains at 155k it started calculated taxes.


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## Moulard (Feb 3, 2017)

The 250,000k exemption only applies to the sale of your main home.


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## jeremyisthere (Jul 26, 2021)

So are there no other exemptions for longterm capital gains for expats.
I don't know how to read turbotax then. I am married, entered 102k as income and 152k as longterm crypto gains and it says there is no tax due. I know under 80k long term gains are taxfree, but could it be that it calculates $108,700 income exclusion for me, 108,700 income exclusion for my wife (even though she does not work) and maybe the $24800 on top of it? Is that possible... I know you might not be a tax guy but maybe you know something...


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## Bevdeforges (Nov 16, 2007)

The income exclusion applies only to "earned income" - of which capital gains are not. Earned income is salary and wages or similar compensation from a sole proprietorship. It sounds like you are entering your cryptocurrency transactions incorrectly into the system. They need to go in separately as capital gains - not "property" but capital gains or investment income.


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## Moulard (Feb 3, 2017)

jeremyisthere said:


> So are there no other exemptions for longterm capital gains for expats.


No. Not really .. unless there is something specific in the US-Netherlands tax treaty (highly unlikely)... but that said, there are other means to reduce and offset any US tax liability you might face

The sale of crypto would be considered the sale of personal goods and thus any income generated in the form of capital gains would be considered sourced where you live.

So, in your case, I assume the Netherlands would have the primary right to tax the gain.

I am not familiar with that particular tax treaty, but if it follows the standard, the US would offer you a tax credit for income taxes paid to the Belastingdienst.

If Dutch taxes on capital gains was higher than the US, you would end up owing no US income tax on the gain. If Dutch taxes on the gain were lower you would only end up owning the US the difference between the two.

For more broad advice on filing as an expat, no better place to start that Pub 54



https://www.irs.gov/pub/irs-pdf/p54.pdf



It covers things like the foreign earned income exclusion, foreign tax credits and the like.


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