# FBAR/8938 max account value



## debbie790

Hi,

a. Does maximum account value means value at the end of the day or any time during that day?

b. What if there is a transfer between two (2) accounts? In that case what is the maximum value for each of those accounts?

Thanks
Debbie


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## Bevdeforges

Maximum account value means the max balance at any point during the year. They do accept a "reasonable" approach to the balance - such as the highest balance reported to you during the year based on monthly statements. (So, that would be the highest month-end balance.) In fact, there is no penalty for over-reporting so what some folks do is determine the high balance based on whatever reasonable process - and then add $1000 to $5000 just be be "sure."

If there is a transfer between two accounts, you report the high balance for each account. Yes, the amount is "doubled" but that happens all the time and they're well aware of that. As far as that is concerned, they don't actually "tie" the balance you report as the high balance to anything on your tax return. It's possible to have a six-figure account that you report that shows up nowhere on your tax return because it doesn't pay interest.
Cheers,
Bev


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## debbie790

To avoid "doubling", can I just use ending monthly balances? Would this be considered a "reasonable" approach? Please note that I do online banking and have access to daily account balances.


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## BBCWatcher

Why are you trying to avoid "doubling"? Just tell the damn truth. Are you laundering drug money, funding a child pornography ring, or sending money to ISIL/ISIS?

The first and only rule in financial reporting is don't act guilty unless you are.


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## debbie790

BBCWatcher said:


> Why are you trying to avoid "doubling"? Just tell the damn truth. Are you laundering drug money, funding a child pornography ring, or sending money to ISIL/ISIS?
> 
> The first and only rule in financial reporting is don't act guilty unless you are.


Lets try to be civil. Thank You!


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## Bevdeforges

debbie790 said:


> To avoid "doubling", can I just use ending monthly balances? Would this be considered a "reasonable" approach? Please note that I do online banking and have access to daily account balances.


The point is still, just don't play games with them. The doubling you speak of is something that happens to zillions of people every year. It won't "look funny" or anything. Last year I closed out a bank account in one country and transferred the funds here to France. According to the rules, I report both accounts - the high balance for the account I closed being the amount I transferred, so it also shows up in my French account, effectively "doubled." 

Don't waste your time trying to game the system. It doubtful anyone will spend more than maybe two seconds "reviewing" your filing - unless it looks "odd" for some reason. Really and truly, the simplest and most direct approach without trying to second guess them is the best.
Cheers,
Bev


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## makaloco

I agree that you're better off reporting the true highest balance at any point during the year for each account. There's no reason to avoid "doubling". One year my amount was "tripled" because I was moving funds around to buy a house here in Mexico. Paranoid creature that I am, I attached a brief explanatory note to my FBAR, but it probably wasn't necessary.


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## Ex NRASpouse

I just used to make a note on my own "working papers" of any transfers that led to duplicating (or tripling). That way I could rest easy knowing that I could explain in the unlikely event of queries from the IRS.


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## debbie790

My concern was doubling/tripling due to transfers. But as all of you suggested, keep it simple and it should be ok.

Thank You.


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## debbie790

One more thing, only "doubling" makes me eligible for filing 8938. In that case, do I need to submit 8938?


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## BBCWatcher

Yes.


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## Bevdeforges

debbie790 said:


> One more thing, only "doubling" makes me eligible for filing 8938. In that case, do I need to submit 8938?


The threshold for filing an 8938 is higher for those who live overseas, and it's based on the total value of all "specified financial assets" subject to reporting. I would think you could easily argue that if the maximum combined value of the assets subject to report never exceeded the threshold, you don't need to file the form.

Vastly simplified example, but let's say for some reason you had $100,000 in an account that you transfered twice during a given year. For the FBAR, yes, you'd have to report all three accounts at the full $100,000 max value. But for 8938 purposes, the combined total of all your reportable financial assets is still only $100,000, which is below the threshold for filing the form. See here for some further explanation: Comparison of Form 8938 and FBAR Requirements
Cheers,
Bev


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## BBCWatcher

It's a trick question, Bev.  If you're made eligible to file Form 8938 do you need to file the form? Answer: Yes.

Bev is now explaining the filing threshold for Form 8938 and how it works. If you're, in fact, _not_ eligible (haven't met the threshold, as defined in the instructions, and contrary to your stated predicate), then you don't need file Form 8938. That said, there is no penalty for over-reporting. There are penalties for underreporting and/or reporting false information.

Understood?


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## ForeignBody

For 8938 I think two separate things are being confused:

1. Do I have to report? That is based on the "all specified financial assets *at the end of the year*, so there is no "doubling". If you do have to report then

2. What is reported is the total of the *maximum value of each account during the year*, so that does involve possible "doubling".


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## Bevdeforges

Check the instructions for form 8938: http://www.irs.gov/pub/irs-pdf/i8938.pdf

For both US residents and overseas residents, the thresholds relate to the total value of the specified assets on the last day of the year, or if a higher threshold balance "at any time during the year." That means that if your total balance exceeded the higher figure at any given moment during the year. It does not include "doubling" of the balances, due to something like transfering money from one account to another.

Say you spent down your foreign assets by buying a $100,000 car at some point during the year. While your year-end balance may be below the threshold for the year-end balance, you would have had $100,000 more earlier on in the year before you bought the car. If your total asset balance before you bought the car was above the higher threshold, then, yes, you need to file an 8938 with your 1040. (The car is not normally a "financial asset" if it's for your own personal use.)
Cheers,
Bev


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