Originally published: October 24, 2019

Foreign tax filing requirements are one of the most often overlooked compliance items by cryptocurrency taxpayers. These are actually some of the most important forms to ensure US taxpayers get right, because a misstep can result in hefty fines and significant jail time. In this post we’ll explain the various foreign filing requirements: Report of Foreign Bank and Financial Accounts (FBAR) & Foreign Account Tax Compliance Act (FATCA), and how CoinTracker can help you be compliant with them.

What the F … BAR?

American taxpayers who have a financial interest in or signature authority over foreign financial accounts must file an FBAR (aka FinCEN Form 114) if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. Foreign financials accounts may include crypto assets held in overseas exchanges such as Binance, Bitfinex, BitMEX, etc. in addition to foreign traditional bank accounts. Domestic exchanges such as Coinbase, Gemini, and Kraken are not included for FBAR reporting.

For example, at any time during 2019, even if for five minutes, you had cryptocurrency worth $11,000 in Binance.com, you have a FBAR filing obligation. This can also be spread across multiple accounts (e.g. $2,500 in USDT on Binance.com, $2,500 in BTC on Binance.com, $3,000 on Bitfinex and $4,000 in JPY in a Japanese Bank). Since the aggregate value of all foreign accounts (crypto and fiat) are more than $10,000, all four accounts will be subject to the FBAR filing requirement.

The good news is that FBARs have nothing to do with paying taxes: it is simply about disclosure. If you fail to correctly file your FBAR, you are subject to a $10,000 penalty per violation.

How to Comply with FBAR for Cryptocurrency

  1. If you meet the FBAR filing requirements, complete Part III of Schedule B
IRS Schedule B Form
IRS Schedule B Form

2. File FinCEN Form 114 through the BSA e-filing system (or your tax software)

FinCEN Form 114 (FBAR), Part II
FinCEN Form 114 (FBAR), Part II

Addresses of Foreign Cryptocurrency Exchanges

To make your life easier, we have tabulated the addresses of common foreign exchanges to the best of our ability:

Bibox: https://www.bibox.com

Bibox Group Holdings Limited

Vistra Corporate Services Centre

Wickhams Cay II, Road Town, Tortola

VG1110

British Virgin Islands

Source

Binance (not Binance US): https://www.binance.com

Binance Europe Services Limited

Melita Court, Level 3

Triq Giuseppe Cali, Ta’Xbiex

XBX 1420

Malta

Source

Bitfinex: https://www.bitfinex.com

1308 Bank of America Tower, 13/F

12 Harcourt Road, Central

Hong Kong

Source

BitMEX: https://www.bitmex.com

Capital City, 2nd Floor

Independence Avenue P.O. Box 1008

Victoria, Seychelles

Source

Bitstamp: https://www.bitstamp.net

Bitstamp Ltd

5 New Street Square

London EC4A 3TW

United Kingdom

Source

BTC Markets: https://www.btcmarkets.net

179 Queen Street

Suite 3, Level 8

Melbourne, Victoria

Australia

Source

CEX: https://cex.io

One Canada Square

24th Floor

Canary Wharf, London

E14 5AB

United Kingdom

Source

CoinExchange (Closing down on December 1, 2019): https://www.coinexchange.io

Australia

CoinSpot: https://www.coinspot.com.au

114 William Street

Melbourne, Victoria

Australia

Source

Cryptopia (Closed as of May 15, 2019): https://www.cryptopia.co.nz

New Zealand

Gate: https://www.gate.io

P.O. Box 31119

Grand Pavilion, Hibiscus Way

802 West Bay Road

Grand Cayman KY1-1205

Cayman Islands

Source

HitBTC: https://hitbtc.com

Hit Solution Limited

Unit 19, 7/F

One Midtown No.11

Hoi Shing Road,

Tsuen Wan, New Territories

Hong Kong

Source

Huobi Global (not Huobi.com): https://www.hbg.com

Asia Square Tower 1

8 Marina View

Central Business District, 018961

Singapore

Source

KuCoin: https://www.kucoin.com

#01-03 Ascent

20 Science Park Road

Singapore

Source

Liqui (shut down on January 28, 2019): https://liqui.io

Quoine

2-2-1 Kyobashi

Chuoku, Tokyo

104-0031

Japan

Source

OKEx: https://www.okex.com

Unit 10-02, Level 10

Menara Binjai No.2

Jalan Binjai, 50450

Kuala Lumpur, Malaysia

Source

QuadrigaCX (shut down on January 28, 2019): https://quadrigacx.com

46-1881 Steeles Avenue

West Toronto, ON M3H0A1

Canada

Source

YoBit: https://yobit.net

Russia

Note: On Part II of FinCEN Form 114, you are required to provide basic information about your overseas crypto exchanges. Unfortunately many foreign cryptocurrency exchanges make it extremely difficult to find their physical addresses. In these cases, it is acceptable to print “unknown” in the Mailing Address, City, State, Foreign postal code, and Country fields. Additionally, many of them do not provide a formal account number, so you can simply enter “0001” as a placeholder. What matters is that you are making reasonable attempts at voluntarily coming forward and disclosing your foreign holdings.

Is FBAR required for Cryptocurrency Holders?

The AICPA Virtual Currency Task Force reached out to the Treasury’s Financial Crimes Enforcement Network (FinCEN) to help practitioners understand whether FBAR filing requirements apply to US cryptocurrency holders. FinCEN responded that regulations (31 C.F.R. §1010.350(c)) do not define virtual currency held in an offshore account as a type of reportable account. Therefore, virtual currency is not required to be reported on the FBAR (at least for now). This may change in the future, especially considering the influx of stable coins, so practitioners should stay abreast on this topic. FinCEN did tell the task force:

“in consultation with the IRS, continue[s] to evaluate the value of incorporating virtual currency held offshore into the FBAR regulatory reporting requirements.”

Absent this clarity, the conservative approach would be just filing the FBAR because it is easy, quick, and no tax is owed as part of this filing.

How to Comply with FATCA for Cryptocurrency

FATCA stands for Foreign Accounts Tax Compliance Act. In order to comply with this act, you may also have to file IRS Form 8938 (in addition to the FBAR). Your filing requirement may vary depending on your filing status, thresholds and other criteria. However, the general rule is that if you have assets (including cryptocurrencies) in a foreign exchange and the total value of those assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the year, you may have a filing obligation. Here is a comparison of the filing requirements for FBAR and FATCA.

How CoinTracker Can Help You with Foreign Tax Filing

Cryptocurrencies can be highly volatile so it is extremely difficult to manually track the highest USD fair market value in ever foreign exchange in any given year for every coin in a taxpayer’s portfolio. Luckily, CoinTracker automatically calculates the maximum value and end of year value of each of your foreign cryptocurrency accounts under the “Foreign Accounts” section of the Tax Page (with a Trader or higher tax plan). You can use this information to complete FinCEN Form 114 (FBAR) and FATCA.

CoinTracker’s Foreign Exchange Report
CoinTracker’s Foreign Exchange Report

Questions or comments? Reach out to us @cointracker_io


Disclaimer: this article is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.