Last week we discussed two forms that may need to be filed if you have foreign accounts. This week, we will look at the fictional case of Steve and Marie, married U.S. citizens who live in the United States but travel to Canada regularly.
Steve and Marie love to travel and in recent years have become enamored by Canada, making several trips a year to enjoy the natural landscape. To make their regular travel easier, Steve and Marie decided to open and maintain a Canadian bank account. They keep a small amount in a checking account but maintain the majority of the money in a savings account so that they can earn interest on it. The cumulative balance in the accounts is $12,000 USD throughout the year.
Since their savings account earns interest, Steve and Marie must report the interest income on their U.S. tax return. Because the cumulative balance in their foreign bank accounts is more than $10,000 USD, they must file an FBAR as well. However, because the highest cumulative balance of the two accounts is below the 8938 filing threshold, they do not need to file Form 8938.
If you have foreign bank accounts of a similar nature or have any questions related to foreign reporting requirements, please reach out to us so we can help.