FBAR Maximum Account Value: How to Calculate (New) 2023 (2024)

FBAR Maximum Account Value

FBAR Maximum Account Value: When a person has offshore accounts, they may have an FBAR reporting requirement with the IRS. FBAR is an acronym for FinCEN Form 114. FBAR refers to the Foreign Bank And Financial Account Form requirement — it is not limited to bank accounts.

Unlike other IRS forms, the FBAR is not an IRS form, but rather a FinCEN Form (Financial Crimes Enforcement Network). After determining which accounts are included on the FBAR (bank accounts, investment accounts, foreign pension, mutual funds, life insurance, etc.) the next step is calculating the FBAR Maximum Balance.

Please, be careful of the fear-momgering you read online.

You do not get in trouble for some innocent mistakes on a timely and “pretty much” accurately filed form, using the best information you have available after conducting your due dligence.

How to Calculate FBAR Maximum Account Value Balance

As provided by FinCEN:

“Step 1. Determine the maximum value of each account (in the currency of that account) during the calendar year being reported. The maximum value of an account is a reasonable approximation of the greatest value of currency or nonmonetary assets in the account during the calendar year.
Periodic account statements may be relied on to determine the maximum value of the account, provided that the statements fairly reflect the maximum account value during the calendar year. For Item 15, if the filer had a financial interest in more than one account, each account must be valued separately. For an account denominated in U.S. Dollars, the maximum value of the account is the largest U.S. Dollar value of the account during the report year.
Step 2. In the case of non-United States currency, convert the maximum account value for each account into United States dollars. Convert foreign currency by using the Treasury’s Financial Management Service rate (http://www.fiscal.treasury.gov/fsreports/rpt/treasRptRateExch/treasRptRateExch_home.htm) for the last day of the calendar year.
If no Treasury Financial Management Service rate is available, use another verifiable exchange rate and provide the source of that rate. In valuing currency of a country that uses multiple exchange rates, use the rate that would apply if the currency in the account were converted into United States dollars on the last day of the calendar year.
If the maximum account value of a single account or aggregate of the maximum account values of multiple accounts exceeds $10,000, an FBAR must be filed. An FBAR is not required to be filed if the person did not have $10,000 of maximum value or aggregate maximum value in foreign financial accounts at any time during the calendar year.
For United States persons with a financial interest in or signature authority over fewer than 25 accounts that are unable to determine if the aggregate maximum account values of the accounts exceeded $10,000 at any time during the calendar year, complete the appropriate Part II, III, IV, or V section for each of these accounts and check the “amount unknown” box, item 15a.”

Missed the FBAR Reporting Due Date?

When a person misses the FBAR deadline for reporting, then the FBAR is considered delinquent.

A taxpayer cannot just go back and file a late FBAR. Rather, they are required to submit to one of the Voluntary Disclosure/Tax Amnesty Programs.

Otherwise, it may be considered a quiet disclosure, which may result in significant fines and penalties including tax fraud, willfulness penalties, and an IRS special agent investigation.

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Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure.

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Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant.

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.

I am an expert in international tax law, specifically in the area of IRS offshore disclosure and FBAR reporting requirements. My expertise is derived from years of hands-on experience and in-depth knowledge of the intricate details surrounding FinCEN Form 114 (FBAR) and the associated regulations. I have successfully assisted numerous clients worldwide in navigating the complexities of offshore accounts and ensuring compliance with the IRS.

The FBAR reporting obligation arises when individuals hold offshore accounts, encompassing various financial instruments such as bank accounts, investment accounts, foreign pensions, mutual funds, and life insurance, among others. It's crucial to note that FBAR is not an IRS form; rather, it is a FinCEN Form issued by the Financial Crimes Enforcement Network.

To determine the FBAR Maximum Account Value, individuals must follow a meticulous two-step process, as outlined by FinCEN:

Step 1: Ascertain the maximum value of each account in the currency of that account during the calendar year being reported. This involves using periodic account statements that reasonably reflect the account's maximum value.

Step 2: Convert the maximum account value of each account denominated in non-United States currency into U.S. dollars. This conversion should be based on the Treasury's Financial Management Service rate for the last day of the calendar year. If this rate is unavailable, an alternative verifiable exchange rate should be used, with the source provided.

If the aggregate maximum account value exceeds $10,000 for a single account or multiple accounts, an FBAR filing is mandatory. However, no FBAR is required if the person did not have $10,000 in maximum value or aggregate maximum value in foreign financial accounts at any time during the calendar year.

In the event of a missed FBAR reporting deadline, the FBAR is considered delinquent. To rectify this, individuals must participate in one of the Voluntary Disclosure/Tax Amnesty Programs to avoid substantial fines and penalties, including tax fraud and an IRS special agent investigation.

Our FBAR lawyer team, specializing exclusively in international tax, has a proven track record of assisting clients worldwide with offshore disclosure matters. Led by a Board-Certified Tax Law Specialist with two decades of experience, our firm is trusted by other professionals globally. We have successfully handled cases related to FATCA and FBAR, ensuring that each client remains IRS offshore compliant.

Golding & Golding's commitment to excellence is evidenced by our case accomplishments and testimonials from satisfied clients. We caution against copycat tax and law firms and invite those interested in learning more about FBAR and FATCA compliance to contact our internationally recognized team at Golding & Golding. No matter where you reside, we can guide you towards IRS offshore compliance.