Foreign assets - FBAR, 8938, or nowhere? Reporting small foreign bank accounts under $2000

Thanks for the breakdown! Quick follow-up - do these thresholds apply to all types of foreign accounts or just bank accounts? I have a small investment account abroad too (under $1000), but wasn't sure if different rules apply to investment accounts vs. regular bank accounts.

The FBAR and Form 8938 thresholds apply to various types of foreign financial accounts, not just bank accounts. Your foreign investment account would count toward these thresholds as well. For FBAR purposes, reportable accounts include bank accounts, securities accounts, mutual funds, and certain other financial accounts. Similarly, Form 8938 covers a broad range of foreign financial assets including accounts at financial institutions, stocks or securities issued by foreign entities, and interests in foreign entities.

How exactly does this tool work? Do you just upload your foreign account statements and it tells you what forms you need to file? I'm trying to understand if it's actually helpful for someone in my situation with multiple small accounts across different countries.

I'm skeptical about tax tools handling international situations correctly. Does it actually know all the various international tax treaties and exclusions? I've had tax pros completely mess up my foreign accounts before, so I'm wary of AI tools claiming to handle this complex area.

You upload your financial documents, and it analyzes them to identify your reporting requirements based on account types, balances, and other factors. It recognized my foreign bank statements and provided specific guidance about FBAR thresholds relevant to my situation, including a detailed explanation of when I would trigger filing requirements if my balances changed. The system actually does handle international tax treaties and various country-specific situations. It's built on international tax law and keeps up with changes to reporting requirements. I was initially skeptical too, but it correctly identified that while I didn't need an FBAR, I did need to report my foreign pension differently than I had been doing with my previous accountant.

Wait, how does this actually work? I've literally spent hours on hold with the IRS before giving up. Are you saying this service somehow gets you through the IRS phone queue faster? That seems too good to be true.

This sounds like a scam. There's no way any service can magically get you through to the IRS faster than anyone else. The IRS phone system treats all callers equally, and if they're swamped with calls, you wait like everyone else. I'm calling BS on this.

It uses a system that continually calls the IRS for you and navigates through their phone tree automatically. Once it gets a live agent, it calls your phone and connects you directly. You don't have to sit around listening to hold music for hours - the system does that part for you. The system isn't bypassing any queues or getting special treatment - it's just automating the tedious process of calling, navigating the menu options, and waiting on hold. I was skeptical too until I tried it and got connected to an actual IRS representative who answered my foreign account questions in detail.

Thanks for bringing that up about Schedule B! I completely forgot about that checkbox on Part III. So even though I don't need to file FBAR or 8938 forms, I should still check "Yes" on Schedule B for having a foreign account, right? Does that trigger any additional forms or is just checking the box sufficient?

Yes, you should check "Yes" on Schedule B Part III indicating you have a foreign account, even if you don't meet the FBAR filing threshold. Checking this box by itself doesn't trigger additional forms - it's just a disclosure requirement. If you're below the FBAR threshold of $10,000 aggregate across all foreign accounts, you won't need to file the FBAR form despite checking "Yes" on Schedule B. Same goes for Form 8938 - you only file that if you meet the much higher thresholds for that specific form.

Good point about tracking throughout the year. What's the best way to handle currency conversion for determining if you hit that $10,000 threshold? I've heard different things about using year-end rates versus rates on the specific dates.

For FBAR purposes, you should use the Treasury's published exchange rates for the last day of the calendar year to convert foreign currency amounts to USD. This applies when determining both the maximum value during the year and the year-end value. The IRS provides these rates on their website, and you should use the rate closest to December 31st of the tax year in question. If Treasury rates aren't available for your specific currency, you can use another verifiable exchange rate source, but you need to be consistent and document which source you used. The key is that all your foreign accounts should be converted using the same method and date for consistency.

That spreadsheet idea is brilliant! I wish I had thought of that earlier. I've been keeping loose track of my balances but having everything organized in one place with the currency conversions would definitely give me more confidence that I'm staying compliant. Do you happen to remember where you found the Treasury exchange rates? I've been using random online converters but having an official source would be much better for documentation purposes.

You can find the Treasury's official exchange rates on the IRS website under "Yearly Average Currency Exchange Rates" - they publish them annually for tax purposes. For FBAR reporting specifically, you'll want to use the rates from the last day of the calendar year rather than the yearly averages. The Federal Reserve also publishes daily exchange rates that are considered official sources. I bookmarked both sites when I was setting up my tracking system. Having that official documentation definitely helps if you ever need to justify your currency conversions to the IRS!