Last Updated: January 08, 2021
Foreign tax filing requirements are one of the most often overlooked compliance items when preparing your crypto tax returns. Foreign crypto disclosure forms (Form 114 & Form 8938) are very important 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 with them.
Do I Have to Report Crypto on FBAR (Form 114)?
The Financial Crimes Enforcement Network (FinCEN) is United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat financial crimes. They have a form called FBAR (aka FinCEN Form 114) for American taxpayers who have a financial interest in foreign financial accounts.
On November 13, 2019, Carole House (from FinCEN) confirmed at AICPA in Washington DC that FBAR is not required for cryptocurrency held in overseas exchanges like binance.com.
However, the FinCEN Notice 2020-2 issued on January 2021, states that the agency is intending to subject cryptocurrencies held in overseas locations to the Foreign Bank and Financial Accounts Reporting (FBAR) regime.
FATCA (IRS Form 8938) & Crypto Taxes
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 ($100,000 if married filing jointly) on the last day of the tax year or $75,000 ($150,000 if married filing jointly) at any time during the year, you may have a filing obligation.
For example, at any time during 2020, even if for five minutes, you had cryptocurrency worth $75,000 in Binance.com, you may have a FATCA filing obligation. This can also be spread across multiple accounts (e.g. $5,00 in USDT on Binance.com, $5,000 in BTC on Binance.com, $5,000 on Bitfinex and $60,000 in JPY in a Japanese Bank). Since the aggregate value of all foreign accounts (crypto and fiat) are more than $75,000, all four accounts will be subject to the FATCA filing requirement.
The IRS has not issued clear guidance on whether or not FATCA is required for cryptocurrency. Therefore, if you fall into the thresholds, the conservative approach is to simply file (it is informational only — no extra taxes are due).
How CoinTracker Can Help You with Foreign Crypto 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 Premium or higher tax plan). You can use this information to complete IRS Form 8938.
Addresses of Foreign Cryptocurrency Exchanges
To make your life easier on the FATCA form, we have tabulated the addresses of common foreign exchanges to the best of our ability:
Bibox Group Holdings Limited
Vistra Corporate Services Centre
Wickhams Cay II, Road Town, Tortola
British Virgin Islands
Binance Markets Limited
3 Beeston Place
London, England, SW1W 0JJ
1308 Bank of America Tower, 13/F
12 Harcourt Road, Central
Capital City, 2nd Floor
Independence Avenue P.O. Box 1008
5 New Street Square
London EC4A 3TW
BTC Markets: https://www.btcmarkets.net
179 Queen Street
Suite 3, Level 8
One Canada Square
Canary Wharf, London
114 William Street
Cryptopia (Closed as of May 15, 2019): https://www.cryptopia.co.nz
P.O. Box 31119
Grand Pavilion, Hibiscus Way
802 West Bay Road
Grand Cayman KY1-1205
Hit Solution Limited
Unit 19, 7/F
One Midtown No.11
Hoi Shing Road,
Tsuen Wan, New Territories
Huobi Global (not Huobi.com): https://www.hbg.com
Asia Square Tower 1
8 Marina View
Central Business District, 018961
20 Science Park Road
Liqui (shut down on January 28, 2019): https://liqui.io
Unit 10-02, Level 10
Menara Binjai No.2
Jalan Binjai, 50450
Kuala Lumpur, Malaysia
Poloniex: https://poloniex.com (shut down US operations in 2019)
Polo Digital Assets, Ltd.
F20, 1st Floor, Eden Plaza
Eden Island, Republic of Seychelles
QuadrigaCX (shut down on January 28, 2019): https://quadrigacx.com
46-1881 Steeles Avenue
West Toronto, ON M3H0A1
Note: most cryptocurrency exchanges don't provide an 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.
If you have any questions or comments about crypto taxes let us know on Twitter @CoinTracker.
CoinTracker integrates with 300+ cryptocurrency exchanges, 3,000+ blockchains, and makes bitcoin tax calculations and portfolio tracking simple.
Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.