Yes, a foreign bank account is a foreign financial asset under IRS rules

The IRS treats a foreign bank account as a foreign financial asset if you have a financial interest in it or signature authority over it. This means the money sitting in a bank outside the United States counts as a reportable asset for tax purposes, even if you never withdraw it and even if the account earns no interest.

The definition is broad. It includes checking accounts, savings accounts, money market accounts, and certificates of deposit held at banks, credit unions, or other financial institutions outside the US. It does not matter whether the account is in your name alone, held jointly, or in a trust — if you can access it or control it, the IRS considers it yours for reporting purposes.

The key distinction is between having a financial interest (you own the money) and having signature authority (you can move the money, even if someone else owns it). Either one triggers the reporting requirement. A person with power of attorney over a parent's foreign account, for example, must report that account even though they do not own the funds.

Key Takeaways

  • Foreign bank accounts are foreign financial assets if you have ownership or signature authority, regardless of the account balance or how much it earns.
  • The FBAR (FinCEN Form 114) requires you to report all foreign financial accounts over $10,000 combined, filed by April 15 with an automatic extension to October 15.
  • Form 8938 (FATCA) requires reporting of foreign financial assets over certain thresholds that vary by filing status and whether you live in the US or abroad.
  • Failure to report a foreign bank account can result in civil penalties of up to $10,000 per account per year, or criminal penalties if willful.
  • A foreign bank account used for legitimate business or personal reasons does not avoid reporting — the account type and purpose do not change the requirement.

What counts as a foreign financial asset beyond bank accounts

The IRS definition of foreign financial asset is wider than just bank accounts. It includes stocks, bonds, mutual funds, and exchange-traded funds held through a foreign brokerage. It also covers foreign insurance policies with a cash value component, foreign pension accounts, and foreign real estate investment accounts.

Cryptocurrency held in a foreign wallet or on a foreign exchange counts as a foreign financial asset. Foreign retirement accounts — even if they are the equivalent of a US 401(k) or IRA in another country — are reportable. Some foreign trusts and foreign corporations in which you have an ownership stake also fall under the definition, though the rules for those are more complex and depend on your level of control.

What does not count: real property (land and buildings) located outside the US, foreign currency held in a foreign bank account (the currency itself is not a separate asset from the account), and certain foreign retirement accounts that have specific exemptions under US tax law. Your accountant or tax professional can tell you whether a particular foreign holding qualifies as a reportable asset in your situation.

FBAR reporting: the $10,000 threshold and filing deadline

If you have foreign financial accounts with a combined balance over $10,000 at any point during the calendar year, you must file the FBAR (FinCEN Form 114, officially the Report of Foreign Bank and Financial Accounts). This is a separate filing from your tax return and goes to the Financial Crimes Enforcement Network, not the IRS directly.

The $10,000 threshold is measured on the last day of each calendar year, but also at any point during the year. If your accounts dip below $10,000 in November and then climb back above it in December, you still file. The threshold applies to the combined total of all your foreign accounts — you do not file separately for each account unless one account alone exceeds $10,000.

The FBAR is due by April 15 of the following year, with an automatic extension to October 15 if you request it. You do not need to file Form 4868 (the general tax extension) to get the FBAR extension — you can file the FBAR late as long as you do so by October 15. If you miss October 15, you can still file late, but penalties begin to accrue.

Form 8938 and FATCA: a second reporting requirement with different thresholds

Form 8938 (Statement of Specified Foreign Financial Assets) is a second reporting form that covers foreign financial assets under the Foreign Account Tax Compliance Act (FATCA). It goes on your tax return itself, not as a separate filing. The thresholds for Form 8938 are higher than the FBAR threshold and depend on your filing status and whether you live in the US.

If you are a US citizen or resident alien filing as single and living in the US, you report foreign financial assets on Form 8938 only if they exceed $200,000 on the last day of the year or $300,000 at any point during the year. If you are married filing jointly and living in the US, the thresholds are $400,000 and $600,000. If you live outside the US, the thresholds are higher: $400,000 and $600,000 for single filers, $600,000 and $900,000 for married filing jointly.

A foreign bank account can trigger both the FBAR and Form 8938 requirements. You might file the FBAR because your accounts exceed $10,000, and also file Form 8938 because they exceed the FATCA threshold. There is no double-penalty for reporting the same account on both forms — the IRS expects this overlap and treats it as correct filing.

Penalties for not reporting a foreign bank account

The civil penalty for failing to file an FBAR is up to $10,000 per account per year if the failure is not willful. If the IRS determines the failure was willful — meaning you knew about the requirement and chose not to comply — the penalty can be the greater of $100,000 or 50 percent of the account balance at the time of the violation. These penalties stack by year, so missing the FBAR for three years on one account can result in $30,000 in non-willful penalties.

Form 8938 penalties are separate. The penalty for not filing Form 8938 is $10,000 for each failure to report a specified foreign financial asset, plus an additional $10,000 for each 30-day period the failure continues after the IRS notifies you. If the failure is willful, the penalty is at least $20,000.

Criminal penalties exist for willful violations. Willful failure to file an FBAR can result in fines up to $250,000 and up to five years in prison. Criminal prosecution is less common than civil penalties, but it does happen, particularly when the IRS finds evidence of deliberate concealment or structuring (deliberately keeping accounts below $10,000 to avoid reporting).

Reporting a foreign bank account if you live outside the US

If you are a US citizen or green card holder living abroad, you still report foreign bank accounts using the same FBAR and Form 8938 rules. The location of your residence does not change the requirement — US tax law follows citizenship, not residency. A US citizen with a bank account in their country of residence must report it.

The Form 8938 thresholds are higher for people living outside the US, as noted above. You may also be able to claim the Foreign Earned Income Exclusion (Form 2555) or the Foreign Tax Credit (Form 1118) to reduce your US tax liability on foreign income, but these do not eliminate the reporting requirement for the accounts themselves.

Some countries have tax treaties with the US that affect how foreign income is taxed, but treaties do not override the FBAR or Form 8938 filing requirements. You must still report the account to the IRS, even if you have already paid tax on the income to your country of residence.

What to do if you have a foreign bank account and have not reported it

If you have a foreign bank account that should have been reported but was not, you have options depending on how long the account has been unreported and whether the IRS has already contacted you. The safest route is to file the missing FBARs and Forms 8938 as soon as possible, along with amended tax returns if necessary.

The IRS has a voluntary disclosure practice that allows you to file back years of returns and reports without facing criminal prosecution, though civil penalties may still apply. To use this route, you must file all missing returns and reports, pay back taxes plus interest, and pay a penalty. The penalty is typically 20 percent of the highest balance in the unreported accounts during the lookback period, though it can be lower in some cases.

If the IRS has already sent you a notice or started an examination, voluntary disclosure may no longer be an option — you should consult a tax professional or attorney before taking any action. The rules around disclosure are complex and the consequences of getting them wrong are serious.

Frequently Asked Questions

Do I have to report a foreign bank account if it has no money in it?

No. The FBAR threshold is $10,000 combined across all accounts, so an empty account does not trigger the requirement. However, if you have other foreign accounts that together exceed $10,000, you must report all of them, including the empty one.

What if my spouse has a foreign bank account but I do not?

If you are married filing jointly, you must report your spouse's foreign accounts on the FBAR and Form 8938 as if they were your own. The accounts are treated as marital assets for reporting purposes. If you file separately, your spouse reports their own accounts.

Does a foreign bank account count toward the FBAR limit if it is in a trust?

Yes, if you are the trustee or have signature authority over the trust account. If you are a beneficiary but have no control over the account, you do not report it. The person with control — usually the trustee — reports it.

Can I report a foreign bank account after the FBAR deadline has passed?

Yes, you can file late. However, penalties begin to accrue after October 15. Filing as soon as you realize the account should have been reported limits the penalty period and shows the IRS you are attempting to comply.

Is a foreign savings account different from a foreign checking account for reporting purposes?

No. Both are foreign financial accounts and both must be reported if the combined balance exceeds $10,000. The type of account does not matter — only the fact that it is held outside the US and exceeds the threshold.