Should I Report my Wise Account on my FBAR?

May 31, 2024 | | 4 minute read
Expat Tax Blog. Tax Tips for US Americans abroad.

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Wise accounts and FBARs are different yet linked. Wise, formerly known as TransferWise, is an online bank transfer platform that allows you to hold multi-currency accounts anywhere in the world. How does this connect to FBARs? Well, when you have foreign funds, you’re likely to have to report them to the IRS or, in this case, FinCEN.

What is FBAR?

If you have no idea what the Foreign Bank Account Report (FBAR) is, let this be your introduction. The FBAR is a mandatory report you must file if you have any foreign bank accounts. However, not all bank accounts are necessary; only foreign financial accounts have a collective balance of $10,000 at any point during the year. Foreign financial accounts means bank accounts, brokerage accounts, mutual funds, and other financial accounts held in a foreign country.

As this report is also financially linked, it seems the most logical to file your FBARs with your US taxes. However, that is not true. You actually need to file your FBAR with the Financial Crimes Enforcement Network (FinCEN). However, you can eliminate the confusion and excessive steps by filing your FBARs with your taxes using an online tax service. Generally, with expat tax services, FBARs are included in your package as many expats have foreign bank accounts while abroad.

What is Wise?

Wise is a low-cost online transfer service that allows you to transfer money into multiple currencies without hidden bank fees. They also provide all the information for its customers, using the current exchange rates and explaining any additional fees in advance.

Wise is a dream for any entrepreneur, freelancer, or expat as it allows you to accept payments in foreign currencies and hold multiple currencies in a single bank. On top of that, Wise is a convenient, speedy, and secure service that can save you a ton of money.

Why do you need to Report Your Wise Account?

Why would Wise be considered a foreign bank account? Well, aside from the fact that you’re holding multiple currencies, it also has a lot to do with regulations. Wise is not a US company; in fact, it originates from the UK, with its headquarters in London. The default financial regulations fall under the Foreign Conduct Authority (FCA). Alongside the FCA, Wise is also subject to international banking regulations as it’s so globalized.

At the end, we recommend that if you have a US bank account through Wise, this can be safely left off your FBAR, as it should be set up through the US entity of Wise. However, all other non-US accounts set up through Wise should be included on your FBAR.

When should I File my FBAR?

Getting ready to report your Wise account on your FBAR? Well, there’s a time and a place. As a US expat, you’re probably familiar with the April 15 tax deadline. Well, April 15 is the official deadline for your FBARs, but as an expat, you get an extension until October 15.

It’s recommended that you get it all done (US taxes and FBARs) at once using software specialized for expats. Otherwise, it can start to get confusing and a bit difficult to keep track of. With that being said, you should take a look at what we offer in our DIY package.

If you know you only need to file an FBAR; you can also file with MyExpatTaxes under MyExpatFBAR. This year is a year to be compliant and avoid unnecessary stress.

What are the Penalties for Non-Compliance?

The FBAR may not seem important or maybe you may be thinking about not sending your report to FinCEN. However, that is far from true as FinCEN is trying to limit the amount money laundering happening globally. Therefore, if you’re not complying with FinCEN, you could be subject to some very hefty fines.

These fines can range from $10,000 to $250,000 depending on your offense. Therefore, if you are planning on not filing an FBAR, think again! However, if you simply do not know you need to file an FBAR or US taxes from abroad, you can use the Streamlined Procedure.

In short, the Streamlined Procedure allows you to catch up on your financial obligations free of penalties. If you fit into this category of filers, check out our blog outlining all the essentials for qualifying for the Streamlined Procedure.

Common Questions and Concerns

What if I have multiple foreign accounts?

You can have as many foreign bank accounts as you’d like. It only matters whether or not you exceed the threshold of $10,000 collectively. One account could have $2,000, another $5,000, and another with $6,000, which means you’ll need to file an FBAR.

How to determine if the $10,000 threshold is met.

When it comes to the FBAR, the most difficult part of your job will be to find the highest amount you’ve had in your foreign accounts over the last year. You’ll need to take that amount and convert it into US dollars. You must use the Fiscal Data Treasury Reporting Rates of Exchange rate for the last day of the calendar year, regardless of whether it’s a workday!

What if I missed the filing deadline?

If you missed the April 15 deadline, you are fine! As an expat, you get an automatic extension until October 15. If you file afterward, you could face penalties! If this is you, file as soon as possible and explain why it happened – we are all humans! Provide documentation if you can back up your excuse. Otherwise, they offer services like the Streamlined Procedure or the Delinquent FBAR Submission Procedure. If you’re feeling stressed, don’t hesitate to contact the tax professionals at MyExpatTaxes.

Lose the Stress and File your FBAR Today!

From expat to expat, we know taxes and FBARs are probably the least of your worries when life happens. However, it’s still a requirement of being a US citizen or a Green card holder abroad. With this in mind, set some reminders on your phone or sign up for our MyExpatTaxes newsletter to get all your reminders when you make an account! Here’s to being tax-compliant!

Written by Allyson Hicks

May 31, 2024 | | 4 minute read

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