A foreign bank account is a foreign financial asset, and the U.S. government tracks it

Yes. A foreign bank account — a checking, savings, or deposit account held at a bank outside the United States — is classified as a foreign financial asset by U.S. tax law. This matters because the IRS and the U.S. Treasury Department require U.S. citizens, permanent residents, and certain other people to report these accounts under specific rules, even if you do not owe U.S. tax on the money inside them.

The key point: owning the account itself triggers reporting duties. You do not have to earn income from the account, withdraw money, or move funds across borders. straightforward holding an account abroad at any point during the year can create a filing requirement.

The rules exist because the U.S. taxes its citizens on worldwide income and wants visibility into assets held outside U.S. borders. Understanding which accounts must be reported, to whom, and by when protects you from penalties that can be steep.

Key Takeaways

  • A foreign bank account is a foreign financial asset under U.S. law, and you must report it if you meet the threshold requirements, regardless of whether you earned income from it.
  • The FBAR (FinCEN Form 114) requires U.S. persons to report foreign financial accounts with a combined balance over $10,000 at any point during the calendar year.
  • The FATCA form (Form 8938) requires reporting of foreign financial assets on your tax return if you exceed certain thresholds, which vary based on filing status and whether you live in the U.S.
  • Failure to report a foreign bank account can result in civil penalties of $10,000 or more per violation, and criminal penalties in cases of willful non-disclosure.
  • You may report the same account on both the FBAR and Form 8938 — the forms serve different purposes and are filed with different agencies.

The FBAR: The primary reporting form for foreign bank accounts

The FBAR (Financial Crimes Enforcement Network Form 114, also called the Report of Foreign Bank and Financial Accounts) is the main form you use to report foreign bank accounts to the U.S. Treasury Department. You file it if you are a U.S. person — a citizen, permanent resident, or resident alien — and you have a financial interest in or signature authority over a foreign financial account.

The threshold is straightforward: if the combined balance of all your foreign financial accounts exceeds $10,000 at any point during the calendar year, you must file. "Any point" means even if the balance dips below $10,000 later. If your account hit $10,001 on June 15 and dropped to $8,000 by December 31, you still file.

You file the FBAR with FinCEN (Financial Crimes Enforcement Network), not the IRS, by April 15 of the following year. The important date can be extended to October 15 if you request an extension, but the extension is automatic — you do not need to ask for it separately.

The FBAR asks for the account number, the name and address of the foreign bank, the account type, and the highest balance during the year. You do not report the account on your tax return itself; the FBAR is a separate filing.

FATCA Form 8938: Reporting foreign assets on your tax return

FATCA (Foreign Account Tax Compliance Act) requires you to report certain foreign financial assets on your federal tax return using Form 8938. Unlike the FBAR, Form 8938 is filed with the IRS as part of your tax return, not separately.

The thresholds for Form 8938 are higher than the FBAR threshold and depend on your filing status and whether you live in the U.S. If you are single and live in the U.S., you report if your foreign financial assets exceed $200,000 on the last day of the tax year or $300,000 at any point during the year. If you are married filing jointly and live in the U.S., the thresholds are $400,000 and $600,000. If you live abroad, the thresholds are higher still.

A foreign bank account counts toward these thresholds. So does a foreign investment account, foreign retirement account, foreign insurance policy with a cash value, and certain other assets. The form asks for the maximum value of each asset during the year and the value on the last day of the year.

You attach Form 8938 to your tax return. If you do not file a tax return because your income is below the filing threshold, you do not file Form 8938 either — but you may still have to file the FBAR if your foreign accounts exceed $10,000.

When you file both the FBAR and Form 8938

Many people file both forms in the same year. This is normal and expected. The forms serve different purposes: the FBAR goes to the Treasury Department to track financial accounts, and Form 8938 goes to the IRS to report assets on your tax return. They use different thresholds and ask for different information.

You report the same account on both forms if you meet the threshold for each. There is no penalty for reporting the same account twice — the agencies expect this overlap. The FBAR threshold ($10,000) is lower than the Form 8938 threshold for most filers, so you may file an FBAR but not Form 8938 if your accounts are between $10,000 and your Form 8938 threshold.

If you file Form 8938, you do not need to repeat all the details on the FBAR. Each form asks for what it needs. The key is not to miss either important date: the FBAR is due April 15 (extendable to October 15), and Form 8938 is due when you file your tax return (April 15 or later if you request an extension).

What "financial interest" and "signature authority" mean

You must report a foreign bank account if you have a financial interest in it or signature authority over it. Financial interest means you own the account, have a legal claim to the funds, or have the right to direct how the money is used. If the account is in your name, you have financial interest. If it is a joint account, you have financial interest even if someone else also owns it.

Signature authority means you can control the account — you can sign checks, authorize transfers, or withdraw money — even if you do not own it. If you are a trustee of a foreign trust with a bank account, or a power of attorney for a parent's foreign account, you have signature authority and must report it.

You do not have to report an account if someone else owns it and you have neither financial interest nor signature authority. For example, if your spouse has a foreign account in only their name and you cannot access it, you do not report it on your own FBAR (though your spouse must report it on theirs).

Penalties for not reporting a foreign bank account

The penalties for failing to file an FBAR or Form 8938 are substantial. If you do not file an FBAR when required, the civil penalty is $10,000 per violation. If the failure is willful — meaning you knew you were required to file and chose not to — the penalty can be the greater of $100,000 or 50 percent of the account balance at the time of the violation.

Form 8938 penalties are $10,000 for a failure to report, plus $10,000 for each month the failure continues (up to a maximum of $50,000). If the failure is willful, the penalty is $20,000 or 40 percent of the underpaid tax, whichever is greater.

These penalties explore per account and per year. If you have two foreign accounts and did not file the FBAR for three years, the penalties can accumulate quickly. Criminal penalties — fines and imprisonment — are possible in cases of willful evasion or fraud, though they are less common.

The IRS and FinCEN have also created a Streamlined Filing Compliance Procedures program that allows people who failed to report foreign accounts in prior years to catch up with reduced or eliminated penalties, provided the failure was not willful. If you have missed years, consulting a tax professional about this program may save you significant money.

Types of accounts and assets that count as foreign financial assets

A foreign bank account includes a checking account, savings account, money market account, or certificate of deposit (CD) held at a bank outside the U.S. It also includes accounts at credit unions, building societies, and other institutions that function like banks in their home country.

Beyond bank accounts, foreign financial assets include brokerage accounts (stocks and bonds held abroad), foreign retirement accounts (such as a UK ISA or Canadian RRSP), foreign insurance policies with a cash surrender value, and foreign mutual funds. Some accounts held in the U.S. but denominated in foreign currency also count.

Accounts do not have to be in your name alone. Joint accounts, accounts where you are a beneficiary, accounts you control as a power of attorney, and accounts held in trust all count if you have financial interest or signature authority.

Frequently Asked Questions

Do I have to report a foreign bank account if I do not earn any income from it?

Yes. The FBAR and Form 8938 require you to report the account based on its existence and balance, not on whether you earned interest or other income. A dormant account or one that earns no interest still must be reported if it exceeds the threshold.

What if I inherited a foreign bank account from a family member?

If you inherited the account and now own it, you have financial interest and must report it. If you are the executor or trustee managing the account on behalf of an estate or trust, you have signature authority and must report it. The reporting requirement begins in the year you gain control or ownership.

Can I report a foreign bank account on the FBAR if I also report it on my tax return?

Yes. The FBAR and Form 8938 are separate filings with different purposes and thresholds. You report the same account on both if you meet the threshold for each. There is no penalty for reporting it twice.

What happens if I close a foreign bank account during the year?

You still file the FBAR if the account balance exceeded $10,000 at any point during the year, even if you closed it before year-end. Report the highest balance the account reached during the year.

Do I need to report a foreign bank account if I am not a U.S. citizen?

If you are a permanent resident (green card holder) or a resident alien for tax purposes, you must report foreign accounts the same way a citizen does. If you are a non-resident alien, the rules differ — consult a tax professional familiar with your visa status and country of residence.