FBAR (FinCEN 114) for Canadian Landlords in Ohio

# FBAR (FinCEN 114) Guide for Canadian Landlords with Ohio Rental Property ## What Is the FBAR and Why It Matters The FBAR (Report of Foreign Bank and Financial Accounts), filed on Form FinCEN 114, is a United States Treasury Department reporting requirement that applies to certain US persons who have financial interest in or signature authority over foreign financial accounts. "Foreign" in this context means accounts outside the United States—including Canadian bank and investment accounts. If you're a Canadian landlord who owns rental property in Ohio and maintains Canadian bank accounts, the FBAR requirement likely applies to you. This is separate from—and often more stringent than—US income tax reporting requirements. The threshold for filing is straightforward: if the aggregate value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year, you must file an FBAR with the US Financial Crimes Enforcement Network (FinCEN). ## How FBAR Applies to Canadian Landlords with Ohio Rental Property ### Your US Person Status As a Canadian landlord owning rental property in Ohio, your FBAR filing obligation depends on your US person status: - **US citizen**: You must file an FBAR if you meet the $10,000 threshold, regardless of where you live. - **US green card holder**: Same requirement as a US citizen—you must file. - **Substantial presence test**: If you're not a citizen or green card holder but spent 183 days in the US during the current year (or a weighted average of prior years), you may be treated as a US person for tax purposes and subject to FBAR requirements. - **Canadian citizen without US status**: You generally don't file an FBAR unless you also hold US citizenship or a green card. Owning rental property in Ohio does not automatically make you a US person for FBAR purposes, but if you already qualify as a US person through one of the above categories, the Ohio rental property ownership is irrelevant to your FBAR filing obligation—your Canadian accounts are what trigger it. ### Financial Accounts Subject to FBAR The FBAR requires reporting of financial accounts, which include: - **Canadian bank accounts** (chequing, savings, money market) - **Canadian investment accounts** (RRSP, TFSA, non-registered brokerage accounts) - **Canadian credit union accounts** - **Canadian mutual fund and ETF accounts** held directly The $10,000 threshold is calculated on an aggregate basis. If you have a Canadian chequing account with $6,000, an RRSP with $8,000, and a TFSA with $5,000, your combined total is $19,000—exceeding the $10,000 threshold—and an FBAR must be filed. Notably, the FBAR is filed separately from—and in addition to—your Form 1040 US federal income tax return and any required Ohio state income tax return. ## Who Must File the FBAR You must file an FBAR if: 1. **You are a US person** (citizen, green card holder, or meet the substantial presence test), AND 2. **You have financial interest in or signature authority over a foreign financial account**, AND 3. **The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year**. Financial interest includes: - Direct ownership of an account - Indirect ownership through a corporation, partnership, or trust you control - Authority to control an account (even if you don't own it) ## Step-by-Step: How to Complete Your FBAR ### Step 1: Gather Account Information Collect the following information for each Canadian financial account: - Account holder name (yours or the entity name) - Financial institution name and address in Canada - Account type (savings, chequing, investment, etc.) - Account number - Maximum account value during the calendar year (not the ending balance—the highest balance at any point) - Opening and closing dates (if the account was closed during the year) ### Step 2: Access FinCEN's Electronic Filing System The FBAR is filed electronically through FinCEN's Bank Secrecy Act (BSA) E-Filing System. You do not file it with the Canada Revenue Agency (CRA) or alongside your Canadian T1 return. Go to **bsaefiling.fincen.gov** to create an account and file your FBAR. ### Step 3: Complete Form FinCEN 114 The electronic form requires: - **Part 1**: Your identifying information, US address, and reporting year - **Part 2**: Detailed information about each foreign financial account (institution details, account type, maximum balance, ownership percentage) - **Part 3**: Declaration and certification The form auto-calculates aggregate foreign account balances. FinCEN's system will confirm when the total exceeds the $10,000 reporting threshold. ### Step 4: Determine Your Filing Status Indicate whether you are filing: - As an individual - As a fiduciary - As a non-US person on behalf of a US person Most Canadian landlords file as individuals. ### Step 5: Submit and Receive Confirmation After submitting, FinCEN's system provides an immediate electronic confirmation with a filing receipt. Retain this receipt for your records. ## Ohio-Specific Considerations for Rental Income Reporting While the FBAR itself does not distinguish between states, your Ohio rental income has separate reporting requirements that intersect with your overall US tax position: ### Ohio State Income Tax (Form IT-1040NR) Ohio imposes a state income tax of **3.99%** on rental income. As a non-resident owning rental property in Ohio, you must file an Ohio non-resident state return (Form IT-1040NR) to report rental income and claim deductions. This is independent of the FBAR filing. Your Ohio rental income includes: - Gross rent collected - Less: mortgage interest, property taxes (Ohio's average effective rate is 1.59%), repairs, utilities, management fees, depreciation, and insurance ### Property Tax Implications Ohio's average effective property tax rate of 1.59% means your annual property tax bill is substantial and fully deductible on both your US federal return and Ohio state return. ### Coordination with FBAR and Canadian Reporting When you file your Canadian T1 return with the CRA, you must report worldwide income, including your Ohio rental income converted to CAD. The FBAR requirement does not change this—it only requires disclosure of the Canadian financial accounts themselves, not the source of funds in those accounts. The Canada-US Tax Treaty (Article XXVI) provides a foreign tax credit mechanism. You can claim a credit for US taxes paid on Ohio rental income on your Canadian return, reducing double taxation. ### Schedule A (Form IT-1040NR) for Rental Properties Complete Schedule A to report Ohio rental property details, income, and expenses. Attach to your Ohio non-resident return. ## Common Mistakes Canadian Landlords Make 1. **Confusing FBAR with FATCA (Form 8938)**: The FBAR and Form 8938 (Statement of Specified Foreign Assets) are different filings with different thresholds and timelines. You may need to file both. 2. **Using Ending Balance Instead of Maximum Balance**: The FBAR requires the maximum account value at any point during the year, not the December 31 closing balance. Many filers mistakenly use year-end figures, leading to underreporting. 3. **Not Reporting Joint Accounts**: If your spouse is a US person and you hold a joint Canadian account, both spouses may need to file separate FBARs reporting the full account value (not split). 4. **Forgetting the Aggregation Rule**: Each financial account is listed separately, but the $10,000 threshold is aggregated across all accounts. A single account under $10,000 does not exempt you if your total exceeds the threshold. 5. **Missing the Deadline or Extension**: The FBAR deadline is April 15, with an automatic extension to October 15 (no extension forms are needed—the automatic extension exists). However, some landlords mistake this for the standard June 15 Canadian filing deadline and miss both dates. 6. **Not Updating When Account Status Changes**: If you close a Canadian account mid-year, it must still be reported for the period it was open. ## Key Deadlines | Deadline | Event | |----------|-------| | April 15 | FBAR due date (FinCEN 114) | | October 15 | Automatic extended due date (no request needed) | | June 15 | Canadian T1 return due date (note: different from FBAR) | | June 15 | Ohio IT-1040NR payment due | | October 15 | Ohio IT-1040NR filing deadline (with extension request) | ## Key Takeaways for Ohio