Foreign Info Reporting - US FBAR/FinCEN 114...

Learn more About US & Canadian Foreign Information Reporting.

Both the US & Canada have detailed foreign information reporting that they require individual taxpayers to report on an annual basis. In a world where international trade and activity is expanding at a very rapid pace, the governments want to monitor & ensure that they keep track of your foreign activities so that your worldwide income is reported & taxed at a domestic level (as appropriate). Failure to provide this reporting can result in significant penalties (information / details on these penalties are not covered in this article).

Below is a brief outline and comparison of some of these reporting requirements.

US Information Reporting

1. FBAR Reporting – FinCEN Form 114

What is the FBAR
The FBAR is a report of foreign bank and financial accounts that is reported to FINCEN (the Financial Crimes Enforcement Network) on an annual basis.

Who has to file this form

Every US person must file annually if they have a financial interest in or signature authority over at least one financial account located outside the US (provided that the aggregate value of those foreign accounts exceed USD $10,000 at any time during the calendar year being reported).

What information needs to be reported

For each account that’s reportable you must include the name on the account, the account number, the name and address of the foreign bank / financial institution, the type of account, and the maximum value in the account during each applicable tax year.

Canadian accounts that need to be included as part of this reporting include Canadian bank accounts, GIC’s, Canadian brokerage accounts, Tax Free Savings Accounts, RESP accounts, RRSP accounts and RRIF accounts. This is not a complete list and additional research should be done to determine whether your specific accounts need to be reported.

When is the filing due date

The annual filing due date is April 15 (same as your federal tax return deadline) with an automatic extension provided until October 15 each year.

2. Form 8938 Reporting – Statement of Specified Foreign Financial Assets

What is the Form 8938

Form 8938 is a statement of specified foreign financial assets and this form is part of the personal federal income tax return filing that needs to be submitted annually to the IRS.

Who has to file this form

The form needs to be submitted by US persons who exceed certain foreign financial asset thresholds. If you live outside the US the filing threshold for this form (for an unmarried taxpayer) is having more than USD $200,000 of specified foreign financial assets on the last day of the tax year, or more than USD $300,00 at ant time during the tax year. Different thresholds apply to married taxpayers filing joint returns and for US persons living in the US.

What is the difference between the FBAR and Form 8938

A lot of the information included on the FBAR is repeated / reported again on the Form 8938 but these reports are submitted to 2 different government agencies (FINCEN for the FBAR and the IRS for Form 8939). You need to comply with the filing requirements of both government agencies. The 8938 is more detailed in many regards. For a comparison between the FBAR and 8938 reporting requirements, please refer to the attached IRS link.

When is the filing due

The 8938 form s submitted with your federal income tax return and it has the same filing deadline as your underlying US income tax return (usually April 15 or June 15 depending on your specific situation).

Canadian Information Reporting

1. T1135 Foreign Income Verification Statement

What is the T1135 form

The T1135 form is a foreign income verification statement that is reported to the Canada Revenue Agency (CRA) on an annual basis.

Who has to file this form
The form needs to be completed by all Canadian resident taxpayers if at any time during the year the total cost of all of your specified foreign property is more than CAD $100,000.

What information needs to be reported

Foreign bank accounts, foreign real estate (not personal use property), foreign stocks, bonds and mutual funds (including those held in a Canadian brokerage accounts), foreign partnership interests, life insurance policies issued by foreign issuer… This list is not a complete list of reportable items and for additional information please refer to the T1135 instructions link – T1135 INSTRUCTIONS

When is the filing due

Form T1135 must be filed on or before the due date of your income tax return (usually April 30 or June 15).

How Can US Taxes Toronto Help?

We can assist with the preparation of your Foreign Information Reporting for both your US and Canadian Tax filings. Our team provides hands on ongoing support throughout this process, so that preparing and completing your tax filing is convenient and easy. If you would like to get more information on how we can help please reach out to us via our contact page.

Disclaimer

All information provided on this Foreign Information Reporting page is for educational purposes only. This information should not be relied upon in making decisions and we make no representation that the information provided is current / up to date or accurate.