My child and I are dual citizens resident in Canada. She has a simple bank account, with myself listed as co-owner on the account. (I don't think a minor can hold a bank account without a parent being listed on the account.) The money in the account belongs to her, and exceeds the FBAR reporting threshold. The interest earned however is small and not enough to make it necessary for her to file US income taxes. Some questions:
When listing this account on my FBAR, do I list myself as "joint owner" or as merely having "signing authority"?
I believe that all of the interest income is attributable to my child even though I am co-listed as owner of the account. Is this accurate?
In what circumstances do I need to list this on the 8938?
Reporting a child's account
Moderator: Mark T Serbinski CA CPA
In the US the interst is considered hers -- as long as you do not use any of the funds for purposes other than for her benefit.
In Canada the interest is taxable to you, the contributor and parent -- unless you set it up in trust.
On FBAR, I would put joint owner, but if you prefer signing authority that's fine. When you say "exceeds the FBAR reporting threshold", be careful. even if it had $1, the SUM of all accounts under your control exceeding the $10K limit would make it and all other accounts reportable. There is no minimum account value that avoids reporting.
For 8938 purposes, I would consider it half yours, just to be on the safe side. You have a very high thresshold for filing 8938.
In Canada the interest is taxable to you, the contributor and parent -- unless you set it up in trust.
On FBAR, I would put joint owner, but if you prefer signing authority that's fine. When you say "exceeds the FBAR reporting threshold", be careful. even if it had $1, the SUM of all accounts under your control exceeding the $10K limit would make it and all other accounts reportable. There is no minimum account value that avoids reporting.
For 8938 purposes, I would consider it half yours, just to be on the safe side. You have a very high thresshold for filing 8938.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks, that seems reasonable. Part of what was concerning me was that by listing myself as "joint owner", and listing the account on the 8938, it might raise questions about why I wasn't reporting any interest from the account. (Since said interest actually belongs to my daughter, who doesn't have to file.) If questioned by this I have a ready answer, but I'd rather not draw unnecessary questions.
On the other hand, if I listed myself as merely having signing authority, that might be cleaner, and accounts where I have signing authority but no financial interest don't have to be listed on the 8938. In some ways that's much better and in my opinion more accurate. But on the other hand the IRS is so touchy right now about reporting requirements that I lean towards over-reporting accounts that I don't need to report, just to be safe.
(Yes, I understand that the FBAR threshold is the sum of all accounts. What it means in this case is that I have to file an FBAR for my daughter, since her account alone exceeds the threshold.)
On the other hand, if I listed myself as merely having signing authority, that might be cleaner, and accounts where I have signing authority but no financial interest don't have to be listed on the 8938. In some ways that's much better and in my opinion more accurate. But on the other hand the IRS is so touchy right now about reporting requirements that I lean towards over-reporting accounts that I don't need to report, just to be safe.
(Yes, I understand that the FBAR threshold is the sum of all accounts. What it means in this case is that I have to file an FBAR for my daughter, since her account alone exceeds the threshold.)