# Children's fbars



## expatwien (Oct 17, 2015)

I just discovered that my children (ages 15 and 9) should have filed FBARs for the last 3 years. Is it best just to file the FBARs silently, or go through the streamlined overseas procedure? I have already filled out FBARs for 6 years, and completed tax forms for the last 3 years for them (as verification that everything is in order), but not submitted anything.


----------



## BBCWatcher (Dec 28, 2012)

It'd be unusual for children ages 15 and 9 to have had tax return filing obligations, so let's review that first.

1. In tax year 2014 there was no obligation to file if they each had gross income less than $10,500 and (oversimplifying slightly) they did not owe U.S. Self-Employment Tax. (If they had earned income only in Austria and paid Austrian social insurance contributions on all their earned income then they cannot have a U.S. SE Tax obligation. Austria has a social security treaty with the U.S. So it's very, very unlikely they'd meet the tax filing threshold based on an SE Tax obligation.)

The $10,500 threshold decreases slightly for each year in the past because the threshold is adjusted for inflation. If you're considering tax years 2013, 2012, etc. then just check those thresholds if you think either of them were close.

2. If either/both had a filing obligation, if their income consisted solely of interest and/or dividends you have the option to include their income on your tax return, and then they would not need to file. Otherwise, they would file separately.

So did they have a U.S. tax filing obligation? It's quite possible -- very common, actually -- for children to have a FinCEN Form 114 filing obligation but not a U.S. tax return filing obligation. That's a pretty big income threshold for most children.


----------



## expatwien (Oct 17, 2015)

No, they didn't have a filing responsibility. I was simply thinking of documenting the fact that no taxes were due. They could also claim a small ftc carryover for these years.


----------



## Bevdeforges (Nov 16, 2007)

How would your children have an FTC carryover if they didn't have income in their own names? (Don't forget - only income taxes are claimable as FTC.) 

Second question is whether each child has accounts totally more than $10,000 in his or her own name. If you reported the accounts (as signer or joint owner) on your own FinCEN, I wouldn't worry about filing FinCENs in the kids' names until they reach their majority. I don't think they've gotten nearly that desperate yet.
Cheers,
Bev


----------



## expatwien (Oct 17, 2015)

The accounts are in the children's names, and accrue interest (although small). The accounts of each child went over $10,000 three years ago, and have remained over that since then.

We are in Austria, where all interest income is taxed at 25%, so there should be a foreign tax credit available (as carryover), even though no US tax is due.

Our situation is complicated by the fact that I have an NRA spouse, who has signature authority over the accounts (in the children's names), while I don't have signature authority. So I think the FBARs need to be filed in the children's names.


----------



## BBCWatcher (Dec 28, 2012)

OK, so what I'd recommend is simply filing the FBARs per normal late filing practices. That's quite routine, and there's even a box on the form where you can select the reason for the late filing. And that'll settle that. File for the years when they met the threshold ($10,000), up to 6 years in the past.

As for their tax returns, you don't have to file them or even prepare them yet. At some point in the future if those FTCs become valuable to "spend" as carryovers against a future U.S. tax liability then you (or they) could file the back years with that future current year. (This is different than refunds. Refunds have to be claimed within three years of the normal filing deadline.) So just hang onto those bank and Austrian tax records for them, but that's all for now. There's no tax owed, no refund, and not even an obligation to file, so you can safely skip that and they can still take advantage of those excess FTCs if they become relevant in the future.

Unlikely that they will become relevant, by the way, if they stay in Austria.

You also have the option as mentioned above of folding their income/FTCs into your tax return, and that'd be a good thing to do if those FTCs would be valuable to you. Excess FTCs are lost if they can't be used within the 10 tax years following, so it's a good idea to use them as soon as they can be used. Whereupon you can gift them the tax savings if you like -- you don't have to keep "their" FTCs.


----------



## expatwien (Oct 17, 2015)

Thanks for your detailed response. That simplifies the situation quite a bit.


----------

