FBAR & FATCA Reporting Checker

They're two separate reporting requirements that often apply at the same time:

• FBAR (FinCEN 114) is filed with the US Treasury / Financial Crimes Enforcement Network. It's a separate filing — not part of your tax return. It's filed electronically through the BSA E-Filing system.
• FATCA (Form 8938) is filed with the IRS and is attached to your Form 1040 tax return.

The thresholds are different, the filing methods are different, and the penalties are different — but if you have significant foreign accounts, you'll often need to file both.

Don't panic — you have options. The IRS offers programs to help taxpayers get caught up:

• Streamlined Filing Compliance Procedures — for taxpayers who can certify their failure to file was non-willful (not intentional). There are two tracks: Streamlined Domestic Offshore (for US residents) and Streamlined Foreign Offshore (for those living abroad, with no penalty).
• Delinquent FBAR Submission Procedures — if you only need to catch up on FBARs and have already reported all income.
• Reasonable Cause — you may avoid penalties if you can show reasonable cause for the late filing.

The most important thing is to come into compliance. Penalties for willful non-filing are severe, but the IRS treats voluntary disclosure much more favorably. A qualified advisor can help you determine the best path.

The conversion rules differ by form:

• FBAR: Work out the maximum value of each account in its local currency first, then convert that figure using the Treasury Reporting Rate of Exchange for the last day of the calendar year. It is the year-end rate, not the best or highest rate during the year.
• FATCA (Form 8938): Same approach. Determine the value in local currency, then convert using the Treasury rate for the last day of the tax year. Do not use the IRS yearly average rates for this: those are for translating income, not for valuing assets.

For Israeli accounts: Use the Treasury year-end rate for NIS, the same as any other currency. The Bank of Israel representative rate is useful for your own records and for Israeli reporting, but it is not the rate these US forms call for.

A PFIC (Passive Foreign Investment Company) is a foreign-based corporation that meets certain income or asset tests. Most Israeli mutual funds, money market funds, and sub-accounts within pension and provident funds are classified as PFICs.

Owning a PFIC can require Form 8621 for each PFIC you hold, and the tax treatment is generally unfavorable unless you make an election such as QEF or Mark-to-Market. There is a limited exception rather than a hard rule that every share must be reported: broadly, where the total value of your PFIC stock stays at or under $25,000 (or $50,000 on a joint return) at year end, and you had no excess distribution and no gain on a disposition, a return-year filing may not be required. The conditions are specific, so check them against your own facts.

This is one of the more complex areas of US-Israel cross-border tax — working with a knowledgeable advisor is highly recommended.

Israeli retirement accounts (keren pensia, kupat gemel, keren hishtalmut, etc.) can trigger multiple US reporting requirements:

• FBAR & FATCA — yes, these accounts must be reported if you meet the thresholds.
• PFIC — the underlying investments in these accounts are often PFICs (Israeli mutual funds).
• Form 3520/3520-A — under some interpretations, Israeli pension and provident funds may be treated as foreign trusts, which require separate reporting. This is a complex and evolving area.

The US-Israel tax treaty may provide some relief, but the reporting requirements generally still apply. Consult a cross-border tax specialist.