FBAR and other foreign tax reporting requirements for offshore bank accounts

Form FBAR: One of the offshore bank account reporting requirements for US citizens; you don’t want to mess around with this.

Reporting from: Bangkok, Thailand

With the deadline for extended tax returns coming up in the United States, I wanted to answer a question I get a lot.

“What do I have to declare, or what forms do I have to fill out with my offshore bank account?”

If you’re just reading this now in October, the key filing for this year is already late – regardless of when you actually file your tax return. There are several reporting requirements for offshore accounts that you need to be aware of if you’re a “US person”.

Many people mistakenly believe that offshore bank accounts are about secrecy and hiding money. Those days are over, and with the IRS cracking the whip and even lying to its citizens, now is not the time to play hide-and-seek with your money.

Following the rules is the new name of the game, not because you agree with them, but because you’re very likely to end up in very hot water if you don’t. If you don’t like US tax law, the only way to escape it is to renounce your citizenship.

FBAR instructions can get a little tricky, so if you have offshore accounts, here’s what you need to know:

You’re required to file an FBAR form (IRS Form TD F 90-22.1) each year by June 30th. There is a $10,000 minimum that triggers the reporting requirement, but that amount is in the aggregate.

That means if you hold foreign bank accounts with TOTAL balances of $10,000 or more, you must file. If you have one bank account with $9,999 in it, you don’t have to file. But if you have two offshore bank accounts with $5,001 each, you do have to file.

You didn’t think the IRS was going to let people spread their money across lots of small accounts to dodge reporting requirements, did you?

Completing an FBAR filing is required not only if you own an offshore bank account, but also if you have signature authority or a beneficial interest in one. Even employees with signature over, but no financial interest in, an offshore account must file an FBAR form by June 30th each year.


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People will often pepper me with questions about how they can potentially avoid filing an FBAR to report their foreign account. Don’t worry; the government has all the exits sealed.

Yes, individuals and corporations both need to file.

Yes, people who hold non-bank financial accounts, like brokerage accounts, must file.

Non-citizen US residents – such as those with a green card – must file, including on any bank accounts they maintain in their home country for normal everyday use.

I have a Chinese friend who lives in the US and never knew about the FBAR reporting requirement. When I told him about it, he brushed it off.

After all, China is his home country, and it only makes sense for him to have an account there, right?


The US government has taken the position that anyone holding money outside of The Land of the Free is guilty of being a tax cheat and must be watched.

Filing an FBAR isn’t about reporting potentially abusive offshore accounts; it’s about reporting ANY offshore bank account. The definition of “offshore” means anything outside of the hallowed borders of The Land of the Free.

That means if my Chinese friend were to get a green card – or US citizenship, his Chinese bank accounts would be reportable even when he moves back to China. “Offshore” means offshore to the government, not to where you’re living.

Keep in mind that the threshold for filing an FBAR is based on the highest value of the account at ANY point during the calendar year you are reporting.

So if your $9,999 bank account earned $1 or more in interest, causing your balance to reach $10,000 even just for one day, you must file. The same goes if you make a large deposit and immediately withdraw the money or wire it somewhere else.

As of this year, you can only file an FBAR electronically, so make sure you know how to do so in order to file on time.

US persons with $50,000 or more in offshore financial accounts may also need to file a Form 8938, called the Statement of Specified Foreign Financial Assets. The rules for this filing are a bit trickier, but the IRS uses this form to determine any gains or losses you incur in a foreign account. You may also need to check a box on your actual tax return.

And because this is the government we’re talking about, Form 8938 is due along with your tax return, not on June 30th with your FBAR.

Keep in mind that I’m not a tax professional, and if you have offshore accounts, you may well need to consult one. Members of The Nomad Society get access to my rolodex of offshore experts as well as access to videos and reports to help you prepare your taxes and meet IRS reporting requirements.

On top of those reporting requirements, however, are an entirely different set of requirements you are likely more familiar with: taxes.

Just because your offshore bank account isn’t reportable under FBAR doesn’t mean interest earned isn’t taxable as income.

Depending on where your account is held, there may be some form of tax treaty to wash out some of the taxes you pay (that is, if you’re banking in a country that taxes interest).

However, interest earned in excess of $10 per account, per calendar year, is taxable as income, and must be reported as such even the account doesn’t have to be. One benefit of banking offshore is the potential for higher interest rates, but don’t think that Uncle Sam isn’t going to wet his beak on that 7% APY you’re earning.

Knowing the reporting requirements and remaining compliant with US tax laws is an important part of banking offshore. It’s not that difficult once you get the hang of it, but you do need to make sure your tax lawyer or accountant knows what he or she is doing.

The FBAR penalties for non-compliance are huge – in some cases 50% of the entire account value, without limit – so it’s in your best interest to take the time to play by the rules now.

And laws like FATCA are making it easier for them to catch you.

Like a woman scorned, the US government doesn’t take kindly to those who ignore its edicts.

Learn how to crack the code and legally pay zero tax while traveling the world.

Watch our Nomad Capitalist Crash Course.

Andrew Henderson

Andrew Henderson is the world's most sought-after consultant on legal offshore tax reduction, investment immigration, and global citizenship. He works exclusively with six- and seven-figure entrepreneurs and investors who want to "go where they're treated best". He has been researching and actually doing this stuff personally since 2007.
Andrew Henderson
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