Foreign Bank Account Regulations Part II
FATCA requires Financial Institutions to report directly to the IRS certain information about financial accounts held by US Taxpayers/ foreign entities in which US Taxpayers have substantial interest.
[Blog Post Updated May 4th, 2025]
The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010. 1Not only does FATCA require US Taxpayers to report financial assets in foreign countries, it also requires Financial Institutions to report directly to the IRS certain information about financial accounts held by US Taxpayers or foreign entities in which US Taxpayers have substantial interest.Â
Let's first look at what most of us may encounter, the TD F 90-22.1, FinCEN Form 114, the Report of Foreign Bank and Financial accounts also known as FBAR. Â
Who must file?
If you are a US Taxpayer, that is if you are a citizen or a resident alien andÂ
You had an interest in or signature authority over foreign financial accounts which had
An aggregate value exceeding $10,000Â at any time during the calendar year.
The Form is due on or before the April 15th of the year immediately following the calendar year you are reporting for.Â
What is a Financial Account?
It includes but is not limited to-securities, demand, checking, deposit, time deposit or other account maintained by a financial institution.
It also includes commodity futures or options account;
An Insurance Policy with Cash Value or Annuity Policy with Cash Value;
Shares in a Mutual Fund or similar pooled fund.Â
What is a Foreign Bank Account?
A financial account located in a foreign bank located outside the United States.
Example 1: An account maintained with a US Bank Branch physically located OUTSIDE the US is a foreign bank account.
Example 2: An account maintained with a Foreign Bank Branch physically located within the US is NOT a Foreign Bank account.Â
Clear, so far? Okay then, moving on...there are like always, exceptions to this.
The intricate details of which will depend on the kind of financial account you have with the foreign bank, but the major one that I get asked about all the time are JOINT ACCOUNTS OWNED BY SPOUSES.Â
The spouse of an individual who files an FBAR is not required to file IF AND ONLY IF THE FOLLOWING CONDITIONS ARE MET:
All financial accounts are jointly owned;
ONE of the spouses is reporting them on a timely filed FBAR;
BOTH spouses sign the FBAR on Item 44;
If the spouses have individual accounts to which the paradigms listed in the beginning apply, each of them has to file a SEPARATE FBAR.Â
Closing a foreign bank account you have with the above limits will not absolve you from your filing requirement in the year the account was closed.Â
There is an automatic extension in time available to file the FBAR and that is until October 15th of that year. 2
Do not file this form with your federal tax return.
The FinCEN Form 114 MUST be ELECTRONICALLY FILED on the FINCEN Website. 3