FATCA and Foreign Bank Account Information

April 12, 2023 | | 3 minute read
Expat Tax Guide | Everything you need to know about filing taxes abroad in 2024

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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 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

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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 face rejection from a foreign bank because you are a US citizen, and the bank does not want to associate with the FATCA Law.

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 familiarize ourselves with because it won’t be going away.

Form 8938

Under FATCA, Form 8938 requires you to be fill 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: IRS

Read more information about which forms you’ll need to fill out for the FATCA.

The FBAR and Its Importance

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The FBAR stands for the Foreign Bank Account Report. It’s a form that US Americans abroad must 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 a requirement 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 fee with your federal tax return. Don’t need to file a US Tax return? Then file your FBAR directly with MyExpatFBAR!

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. 

Written by Martina Misar-Tummeltshammer

April 12, 2023 | | 3 minute read

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