Newsflash: Canada is not part of the United States for FBAR (Foreign Bank Account Report) filing purposes. Yes, it is considered a completely foreign country.
Recently, I had two separate US citizen clients, originally from Canada. When asked if they had any FBAR filing requirement for the year, or any foreign bank account: one said no, and the other had an account in Israel.
On a hunch, I asked if they had any Canadian bank account. Sure, they replied. Sure enough, they had to file an FBAR report. One even needed to file Form 3520 for reporting a large gift of over $100,000 from a non-American. They were shocked that Canada is considered a foreign country as far as the US government is concerned! They came very close to being liable for big penalties.
The one who would have filed an FBAR only for his Israeli accounts could have been liable for the maximum penalty of 50% confiscation of the funds in his foreign accounts, and possibly jail time. Filing an FBAR and leaving out a country will be looked at as willful noncompliance, so watch out!
Is your accountant careful to ask about foreign accounts? One of these clients was completely unaware of the requirement to report, and his US-based accountant had never asked him.
My new standard question for those with ties to Canada is: "Did you have any foreign bank accounts, including in Canada"?
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