# 2011 FBAR questions



## byline

I'm currently in the process of gathering info for my 2011 FBAR and have some questions:

1. At the very end of 2011, I transferred the entire amount of my RRSP from one financial institution to another. It's the same RRSP, but simply held by a different institution. How do I report this on my FBAR so that the Treasury Department understands that these are not two separate RRSPs? Should I include a letter of explanation?

2. My understanding of accounts to be reported on the FBAR is that they are income accounts (checking, savings, investments, RRSPs, etc.). However, I have read posts here by people insisting that they feel they have to report credit cards (because one could take out cash advances), travel cards and prepaid cellphone cards. I don't really understand this notion. Even if one takes out a cash advance from a credit card, that is not an income account; it's a debt account that will have to be paid off, possibly with interest. Same with a cellphone card; that is a debt account, not an income account. So surely those type of accounts don't have to be reported on an FBAR, correct?

Thanks!

Sue


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## makaloco

I had a similar issue several years ago when I first filed the FBAR. During the process of buying a home, I transferred a relatively large sum from the US into a foreign bank account, then to two other foreign accounts. On paper, it looked like I had a whopping amount of money in three foreign accounts, when it was the same money being moved around, so I attached an explanation to the FBAR so that they'd know what was going on.

Not sure about foreign credit cards (I don't have any), but it would never occur to me that prepaid cell cards might be "financial accounts". I don't even keep track of mine, let alone report them.


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## theOAP

byline said:


> I'm currently in the process of gathering info for my 2011 FBAR and have some questions:
> 
> 1. At the very end of 2011, I transferred the entire amount of my RRSP from one financial institution to another. It's the same RRSP, but simply held by a different institution. How do I report this on my FBAR so that the Treasury Department understands that these are not two separate RRSPs? Should I include a letter of explanation?
> 
> 2. My understanding of accounts to be reported on the FBAR is that they are income accounts (checking, savings, investments, RRSPs, etc.). However, I have read posts here by people insisting that they feel they have to report credit cards (because one could take out cash advances), travel cards and prepaid cellphone cards. I don't really understand this notion. Even if one takes out a cash advance from a credit card, that is not an income account; it's a debt account that will have to be paid off, possibly with interest. Same with a cellphone card; that is a debt account, not an income account. So surely those type of accounts don't have to be reported on an FBAR, correct?
> 
> Thanks!
> 
> Sue


1) You have 2 different accounts. The FBAR requests that you list all individual accounts. It makes no difference for the FBAR if it is, in fact, the same money. No explanation is required, as this is quite common. They've made the rules. If they would question it (most highly doubtful) you can smuggly reply that you are just correctly following their rules. They will agree.

2) PRE PAID credit cards do have to be reported. It's in the instructions. Also, debit cards must be reported. The question of prepaid travel cards often is discussed on forums. The conclusions usually are: if any account could conceivably fall under the definitions, report it.

It's been noted on some forums (after the last, and final release of instructions) that any pension plan (other than those government plans similar to US Social Security), including final salary and defined benefit, should be included on FBAR. All may not agree.


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## byline

theOAP said:


> 1) You have 2 different accounts. The FBAR requests that you list all individual accounts. It makes no difference for the FBAR if it is, in fact, the same money. No explanation is required, as this is quite common. They've made the rules. If they would question it (most highly doubtful) you can smuggly reply that you are just correctly following their rules. They will agree.


Thanks, that makes sense. Though I may still include a letter of explanation, just so that it is clear.



> 2) PRE PAID credit cards do have to be reported. It's in the instructions. Also, debit cards must be reported. The question of prepaid travel cards often is discussed on forums. The conclusions usually are: if any account could conceivably fall under the definitions, report it.


OK, now I'm really confused. I don't understand how one would report a debit card. A debit card is part of my checking account. My debit card doesn't have a balance, per se; my checking account (which I report) does. So why/how would I report a debit card?


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## Bevdeforges

I wouldn't bother reporting the debit card which is part of your checking account (since it's tied to the account and you've already reported that). 

People seem to be flipping out over what does and doesn't need to be reported. I figure it's mainly foreign accounts (bank and other "financial" accounts) that are reportable for the FBAR. 

There is the new FATCA reporting requirements - but those are somewhat different. The instructions (the latest version) seem to focus on foreign assets held for investment purposes, so I hardly think that debit and credit cards are included. Unless you actually have something to hide, a good faith effort is what's called for here (IMO).
Cheers,
Bev


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## byline

Bevdeforges said:


> I wouldn't bother reporting the debit card which is part of your checking account (since it's tied to the account and you've already reported that).
> 
> People seem to be flipping out over what does and doesn't need to be reported. I figure it's mainly foreign accounts (bank and other "financial" accounts) that are reportable for the FBAR.
> 
> There is the new FATCA reporting requirements - but those are somewhat different. The instructions (the latest version) seem to focus on foreign assets held for investment purposes, so I hardly think that debit and credit cards are included. Unless you actually have something to hide, a good faith effort is what's called for here (IMO).
> Cheers,
> Bev


Thanks, Bev. I think the problem I'm having (and it's an emotional one, I admit) is that if there's a misunderstanding, or something gets left out because we didn't realize it was supposed to be in there, _we_ are the ones left holding the bag. I don't like to make mistakes, but unfortunately things like this have a way of completely baffling me. If I'm going to screw something up, chances are pretty good it's going to be a government form. As long as the "good faith" part is honored, then I feel like I shouldn't have to worry. But it's the unknown of whether that will be honored that worries me. I suspect I'm not alone.

Thanks for being a voice of reason in all of this!


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## Bevdeforges

I can't guarantee that the IRS will always honor a "good faith" attempt. But in my experience, they do tend to ask questions first - and as long as you can show that you aren't trying to hide things or evade something, you can generally work it out. (If not, there is always the Taxpayer Advocate program.)
Cheers,
Bev


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## Vangrrl

byline said:


> I'm currently in the process of gathering info for my 2011 FBAR and have some questions:
> 
> 1. At the very end of 2011, I transferred the entire amount of my RRSP from one financial institution to another. It's the same RRSP, but simply held by a different institution. How do I report this on my FBAR so that the Treasury Department understands that these are not two separate RRSPs? Should I include a letter of explanation?


Unfortunately, as others have pointed out, that is the nature of the beast. I had this situation come up twice when I back-filed my US taxes recently.

In one case I reported both accounts. In the other, I did the switchover in February and decided just to report the one account (the one that was open for most of the year). Technically wrong, I know, but that's what I did.

My husband is not American, and we decided to open an account in his name only. If we ever have to transfer large amount of money (ie. moving money out of our line of credit to make a big purchase or pay a contractor etc...), we'll use that account. I know that these types of temporarily large balances are a part of life, but I just hate seeing it reported on the FBAR as if its my normal bank account balance.


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## byline

Vangrrl said:


> I know that these types of temporarily large balances are a part of life, but I just hate seeing it reported on the FBAR as if its my normal bank account balance.


I agree.


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## expat1133

byline said:


> I'm currently in the process of gathering info for my 2011 FBAR and have some questions:
> 
> 1. At the very end of 2011, I transferred the entire amount of my RRSP from one financial institution to another. It's the same RRSP, but simply held by a different institution. How do I report this on my FBAR so that the Treasury Department understands that these are not two separate RRSPs? Should I include a letter of explanation?
> 
> 2. My understanding of accounts to be reported on the FBAR is that they are income accounts (checking, savings, investments, RRSPs, etc.). However, I have read posts here by people insisting that they feel they have to report credit cards (because one could take out cash advances), travel cards and prepaid cellphone cards. I don't really understand this notion. Even if one takes out a cash advance from a credit card, that is not an income account; it's a debt account that will have to be paid off, possibly with interest. Same with a cellphone card; that is a debt account, not an income account. So surely those type of accounts don't have to be reported on an FBAR, correct?
> 
> Thanks!
> 
> Sue




just read in IRS site, dated 26-juil.-2013

Report of Foreign Bank and Financial Accounts (FBAR)

irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-(FBAR)

under

Who Must File an FBAR, Exceptions to the Reporting Requirement, item 7

7. Participants in and beneficiaries of tax-qualified retirement plans;

it seems to say that for RRSP there is no need to file FBAR, is this true? thanks


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## BBCWatcher

Is a Canadian RRSP U.S. tax qualified?


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## maz57

@ BBC; The answer to your question is no, RRSP's are not automatically US tax qualified. However, they become US tax qualified if a Form 8891 is filed for the account along with one's 1040.

But the FBAR instructions don't specifically say US tax-qualified, they only say tax-qualified and are thus unclear as to what they really mean. No harm in including them on FBAR as it is a simple reporting having nothing to do with actual tax. 

If a Form 8891 is filed with one's 1040, that account does not have to be listed on Form 8938 as it has already been reported on the 8891. Common sense suggests that there would be no useful purpose in listing a RRSP on FBAR because a Canadian government registered account would be useless for evading tax. (The FBAR is suppposed to be for stopping tax evasion, right?) But we all know common sense is in short supply when it comes to IRS rules, regulations, and instructions. 

So to the person who posed the original question, I'd say if you are going to file an FBAR at all, just list your RRSP and don't waste your time trying to figure out what those instructions are intended to really mean. It is far more important to cover that RRSP with a Form 8891 along with your 1040 to get it that tax-qualified status. Form 8891 for Canadian RRSP's is one of the few carve-outs for foreign saving plans that I am aware of.


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## BBCWatcher

maz57 said:


> But the FBAR instructions don't specifically say US tax-qualified, they only say tax-qualified and are thus unclear as to what they really mean.


They also don't say Somalian tax qualified, Japanese tax qualified, or Bavarian tax qualified.

I think they're very clear to a _reasonable person_, and that's all that matters. If the U.S. government is asking they mean U.S. tax qualified.



> The FBAR is suppposed to be for stopping tax evasion, right?


And anti-money laundering, and anti-terrorism financing, and for a few other purposes.

By the way, I typed in RRSP and FBAR at a popular Internet search site that begins with the letter G, and it became clear in about 3 seconds that Canadian RRSPs must be reported on FBARs (if you meet the FBAR filing threshold). This appears to be well travelled and well settled.


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## Bevdeforges

As Maz says, though, there's no harm reporting them if there is any doubt. I don't think they have (yet) enacted penalties for over-reporting. And the FBAR is not a tax form as such, just a reporting form.

For years I have reported my US IRA funds on the French reporting form for foreign "assurances vies" because they kind of meet the same general definition - and it assures that when I start withdrawing from my IRAs in a few years, I can't be accused of having hidden anything. 

If in doubt, disclose. What you do with them on the actual tax forms is your decision.
Cheers,
Bev


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