FATCA and FBAR reporting

[goldstone]

I would be very grateful if folks could confirm my understanding of the requirement for FATCA and FBAR reporting.

A Canadian couple are currently living and working in the USA. They meet the substantial presence test in 2023 and so are resident aliens and subject to US tax on their full year income.
One of them has a Canadian dollar GIC with a Canadian bank with a value greater than US$ 100k. Consequently, this has to be reported on appropriate FATCA and FBAR forms. Is this correct ?

By the way, the question comes up now because of trying to open an online savings account in the US. The bank won't open the account if the applicant is subject to FATCA. I can't understand why this would be an issue to them....

[nelsona]

FBAR:
Once you have an account (your GIC is considered an account), then all your foreign accounts need to be reported. So, no brainer here.

FATCA
Needing to report foreign assets, is NOT quite the same as being "subject to FATCA" (which really means "subject to FATCA withholding"). Every US taxpayer must report foreign assets. Form 8938 is used to report certain foreign assets, depending on the reporting thresholds. That applies to everyone. There is no withholding involved here.

"Subject to FATCA withholding". in the context of the bank would be asking more in line with Form 8957, if you have set up or had controlling interest in a foreign financial entity that would be subject to FATCA reporting/withholding. I'm quite sure you are not.

Can I ask what form they are asking this on? As most US bank employees would not be cognizant of FATCA. Did you bring it up in some conversation?

Do realize that I have never heard of a CDn living in US, with or without an SSN, from being unable to open a US bank account, regardless of foreign assets. So I wouldn't worry about this; answer haw you need to get by thy online robot.

[goldstone]

Thanks Nelsona.

This came up trying to open an online BMO Alto savings account. At the end of the application they required the applicant to certify a number of things, one of which was ' I am exempt from FATCA reporting '.

As you say, every US taxpayer has to report foreign assets above a certain threshold. BMO must have had something more than that in mind with their certification request.

[ND]

It would seem that this particular BMO online account (vs a pure USA bank) may for FATCA purposes be considered a Cdn bank (and as reference Form W-8BEN-E definitions list many branch and variable institutions who are sucked into FATCA). It won't be linked to BMO's main banking data system and BMO is probably concerned that it won't be able to track FATCA clients who enroll and BMO would thereby violate FATCA. Therefore, it's decided to simply not allow FATCA subject taxpayers to enroll.

FYI, see non-tax cons of this account here: https://www.reddit.com/r/FinancialPlann ... alto_hysa/

[nelsona]

Probably correct. There are plenty of hi-interest online banks with no Cdn affiliation that our poster can seek out.

[goldstone]

All good thoughts, thanks.