La Quinta, CA
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Saturday, April 11, 2015

Do Canadians Need to File FinCen 114 FBARS

Question: I've been working in the United States as a Canadian Citizen under a temporary work visa. I've got some money in a few accounts in Canada. Do I need to file FinCen 114 FBAR forms for my accounts?

Answer: FinCen 114/FBARs are required for residents and citizens of U.S.A. when they have aggregate foreign accounts with a maximum value over $10,000 USD.

Example: I look at all my Canadian/foreign bank statements. I figure the highest maximum value by looking to see when I had the most money in all my accounts combined. On June 1, the most I had in my CIBC account was $5,400 CDN (proceeds from my car), on may 12, the max for my USD account at Royal Bank was $2,200 (savings), and the max value of my chequing account was $5,900 CDN (my tax refund) on april 30. I then convert the Canadian amounts into USD

( $10,300CDN x 0.9054) + $2,200USD = $11,525.62USD

May 1 -CIBC - Highest Value  = $6,000May 1 RBC - Highest Value  = $9,000
May 1 Scotia - Highest Value = $21,000

As per my research and phone calls with the BSA, I have found some information leading to the concept of reporting the aggregate highest value on a specific date of the year (this would make sense because if you moved bank accounts around, you would not be reporting the same money twice). However, after calling in and further research, BSA states that they want the highest value of each account during the tax period. And when dealing with the FinCen report 114, the penalties for not reporting are too high to take any sort of interpretive lenience, so it is better to report the highest value of each account at any time during the tax year. 

When you file income taxes as an individual in the United States, you will file a form 1040 or a form 1040NR. To determine which shoe fits, do the following:

1. Are you a greencard holder or U.S. Citizen?

If yes, you file a 1040 even if you have never set foot into the United States in your life. If no...

2. Do you meet the Substantial Presence Test?

- Have you been inside the United States for more than 31 days in the tax year?
  If not, you automatically do not met the substantial presence test.
- If you have been in the U.S.A for more than 31 days for the given tax year, use this formula:

 (Number of days present in tax year)
+ (1/3 X number of days present in prior tax year)
+ (1/6 X number of present days in two years prior to tax year)
________ : TOTAL

Does the total equal more than 183 days? If yes, you are considered a resident for U.S. income tax purposes. You may file a form 8840 Closer Connections test if you are over the 183 days and still consider yourself a resident of Canada.

Under North American Free Trade Agreement, you cannot file as a resident in both Canada and the United States. Hey wait, I'm an American by birth and I've been living in Canada forever. What do I do? In that case you'd come see me.

To stick to the question, as a Canadian on a TN visa working temporarily in the United States as a nurse or any other field it is important to determine whether you are a resident or not. ONLY THOSE WHO ARE REQUIRED TO FILE A 1040 MUST REPORT WORLDWIDE INCOME & ASSETS (i.e. FinCen 114 FBARs for foreign assets >$10,000)

If you need help filing FinCen 114 or FBARs, contact Borders Bookkeeping.

(760) 895-3516