FATCA and Foreign Bank Account Information
January 17, 2023 | ExpatTaxGuide | 3 minute read
Expat Tax Guide | Everything you need to know about filing taxes abroad in 2022
Verified by IRS Enrolled Agents and CPAs
Your Foreign Bank Account and FATCA in 2022
Every foreign bank account you open as an American abroad means you are connected to the FATCA law. This law allows the US Department of Treasury to access your bank account to ensure no illegal activity. Then if you have over $10,000 total from all of your foreign bank accounts at any one time during the year, you’ll need to fill out an FBAR.
Your Foreign Bank Account and FATCA
FATCA stands for the Foreign Account Tax Compliance Act. This federal law requires foreign financial institutions, like banks, to report back the data of US account holders, while also requiring US citizens to disclose this information themselves. It’s a means to prevent illegal money laundering abroad.
Every foreign bank that allows a US American to open an account must be able to comply with the FATCA laws. This means it is possible to get rejected by a foreign bank because you are a US citizen, and the bank does not want to be involved.
If the bank allows you, as an expat, access to a foreign bank account, you must fill out and sign lots of paperwork. Some papers give the US Department of Treasury access to peek into your bank account. It is a standard procedure we US expats must get used to.
Under FATCA, Form 8938 is required to be filled out if the total value of all your specified foreign financial assets in which you have an interest is more than the appropriate reporting threshold. The threshold starts at $200,000 for US taxpayers living abroad who file as single or separately from their spouse. The filing thresholds double if you are filing with your spouse.
According to the IRS, taxpayers living abroad must file Form 8938 if you file an income tax return and…
- Are married and filing a joint income tax return with the total value of specified foreign financial assets being more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year. These thresholds also apply if only one spouse resides abroad. Married individuals who file a joint income tax return for the tax year will file a single Form 8938 that reports all of the specified foreign financial assets in which either spouse has an interest.
- OR you are not a married person filing a joint income tax return and the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year. –Source.
For more information on which forms you need to fill out for the FATCA, please read this post.
The FBAR and Its Importance
The FBAR stands for the Foreign Bank Account Report. It’s a form that US Americans abroad are required to fill out if you have a bank (or any other financial) account established overseas. This is a pure information form and you shouldn’t be taxed on your foreign bank accounts. The FBAR is purely informational for the US tax authorities and is operated by the Financial Crimes Enforcement Network (FinCEN), which is part of the US Department of Treasury.
How do you determine whether you need to file an FBAR or not?
As long as you have a foreign bank account as an American abroad, you need to check your bank statements. An FBAR is required every year if you have over $10,000 total from all your foreign financial accounts at any one time during the year. This means if you had $10,001 for one day, you still need to file an FBAR. Submit the FBAR via the BSA E filing system or better yet – through the MyExpatTaxes software!
The FBAR is due on April 15th every year to coincide with the tax date for Americans both inland and overseas. However, if you missed out on the filing date, there is no reason to stress. The FBAR has an automatic extension for expats to file until October 15th of that tax year.
Completing the FBAR
To file successfully, you’ll need to Form 114, the Report of Foreign Bank and Financial Accounts. The FBAR is already included in the MyExpatTaxes flat fee of 149€ per year with your federal tax return. Don’t need to file a US Tax return? Then file your FBAR directly with MyExpatFBAR for just 49€!
The FBAR can be a daunting form, which is why we want to make it easier for you and encourage you to sign up through our app and file electronically. Our support team can assist you every step of the way.
Tax Guide Topics
Search Tax Guide
FATCA and Foreign Bank Account Information
Your Foreign Bank Account and FATCA in 2022 Every foreign bank account you open as an American abroad means you have a connection to the FATCA law. This law allows…Read More ...
Expat Tax Benefits
Avoid Double Taxation from these Expat Tax Benefits Double taxation happens when your income taxes are paid twice on the same source of income. For example, you could be working…Read More ...
Retiree Support for Americans Abroad
Retired or Planning to Retire in 2023? If you are planning to retire, you need to know that Americans, both in the US and abroad can gain retiree support benefits…Read More ...
Self-Employment Taxes for US Expats in 2023 If you work for yourself and are in control of the services you perform, then you are self-employed, and the income you receive…Read More ...
Renouncing US Citizenship
Renouncing US citizenship is possible as an American abroad, though not recommended. You’ll need to be tax compliant for five years, sign an oath, pay a large exit fee, and…Read More ...
Save Even More Money with US Taxes
If you have a family, you can save money with US taxes through the child tax credit and foreign housing exclusion. The child tax credit allows you to get refundable…Read More ...