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Declaring foreign accounts (Schedule B and Form 90-22.1)
If you are in the United States, you should be aware of US Treasury
regulations that require you to file a form declaring all your foreign
accounts if their total value exceeds $10,000 at any time during the
year. This is Treasury form 90-22.1:
Report of Foreign Bank and Financial Accounts, commonly known as the
FBAR. See this explanation from the
Offshore Press. The penalties for not filing this form are severe: up to
5 years imprisonment and up to $500,000 in fines. The instructions say
this about who must file the form:
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Who Must File this Report. Each Unites States person, who has a
financial interest in or signature authority, or other authority over any
financial accounts, including bank, securities, or other types of
financial accounts in a foreign country, if the aggregate value of these
financial accounts exceeds $10,000 at any time during the calendar year,
must report that relationship each calendar year by filing TD F 90-22.1
with the Department of the Treasury on or before June 30, of the
succeeding year.
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But what is a financial account? Does this include a NETeller account?
How about your account at an online poker site? The instructions say:
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Financial Account. Generally includes any bank, securities,
securities derivatives or other financial instruments accounts. Such
accounts generally also encompass any accounts in which the assets are
held in a commingled fund, and the account owner holds an equity interest
in the fund. The term also means any savings, demand, checking, deposit,
time deposit, or any other account maintained with a financial
institution or other person engaged in the business of a financial
institution.
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NETeller describes itself as a financial institution and even offers an
ATM card to account holders. Any reasonable interpretation of the
instructions would include NETeller within the scope of the reporting
requirements. It's harder to say whether the instructions would also
include your account at an online poker site. If the aggregate balance
across all your online poker accounts and your NETeller account ever
exceeds $10,000, you should consult a professional to decide whether you
need to file this form for the year.
In addition to filing this form with the Treasury Department, you may
need to declare the foreign accounts on your US tax return. The
IRS instructions
for Schedule B, line 7 say:
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Check the "Yes" box on line 7a if either 1 or 2 next
applies.
1. You own more than 50% of the stock in any corporation that owns one or
more foreign bank accounts.
2. At any time during the year you had an interest in or signature or
other authority over a financial account in a foreign country (such as a
bank account, securities account, or other financial account).
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The instructions go on to note an exception in the case of small
accounts:
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Exceptions. Check the "No" box if any of the following applies to
you.
- The combined value of the accounts was $10,000 or less during the
whole year.
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(Remember: This page gives you pointers to information that may help
you understand US Treasury regulations and tax law. We do not give you
legal or tax advice. It is up to you to understand the law and file the
correct forms. If you need advice you must see a professional.)
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