Do You Have to Report Crypto Currencies on FBARs?
Many investors have made small fortunes in the virtual currency, aka cryptocurrency, markets. As investments in virtual currencies have become more popular, investors are now dealing with the tax compliance aspects of this new type of investment.
The question is even more pressing when we mix the fact that these investments are made by US Expats who already have complex and many times confusing forms to fill out and report back to the United States. For this (and many more) reasons, one of the questions that comes to mind to American Expats who are crypto investors is whether Cryptocurrency is Reportable on an FBAR as a foreign account that holds value.
So let's start with the basics shall we?
What is an FBAR?
A Foreign Bank Account Report (FBAR), is a report that is required to be filed when the aggregate value of all your offshore bank accounts exceeds $10,000 at any point during the tax year.
Reporting Cryptocurrency on FBARs... is it necessary?
Good news! It is not necessary to report on your FBARS foreign accounts that hold virtual currency. The reason for this is that as of yet, the regulations of the Report of Foreign Bank and Financial Accounts (FBAR) do not define a foreign account holding virtual currency as a type of reportable account.
What do you have to Report?
For now, you have to report on your FBARs any account that is reportable under 31 C.F.R. 1010.350, and this may include accounts that have virtual currencies but that hold reportable assets besides virtual currency. It is those reportable assets what would subject your account to FBAR filing.
Next Steps?
You should be aware that this exception from having to report your virtual currency accounts on your FBARs can soon change. It has already been published that the Department of the Treasury is intending to propose amendments to the regulations of the Bank Secrecy Act (BSA), and that this amendments will be regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account.
If you have more questions, or need further guidance, let’s discuss. I'm always happy to provide detailed and personalized guidance through a 1:1 consultation. You may book the best day and time for you to meet by contacting me to schedule your consultation.
