American Citizens Abroad (ACA), which lobbies on behalf of US expats, has teamed up with the State Department Federal Credit Union (SDFCU) to offer banking services to US expats.
Since the Foreign Account Tax Compliance Act (FATCA) began compelling foreign banks to report their American account holders or face significant penalties if they trade in the US (which nearly all do), the extra paperwork that the reporting entails has led many foreign banks to refuse to provide services to US citizens.
This has left tens of thousands of Americans living abroad in a very difficult situation, unable to open a bank account, having existing bank accounts closed, or unable to obtain credit or a mortgage.
At last though, a solution is at hand.
What is it and who’s it for?
Whereas previously SDFCU accounts were only available to US diplomatic staff working abroad, the new ACA/SDFCU account is available to all US citizens living abroad. A credit union is a not-for-profit organization which provides financial services to its members. SDFCU has over 67,000 members around the world, and lots of experience dealing with account holders in a multitude of countries.
You don’t need a home or address in the US to open an account, and you can reside either full time or part time abroad.
How does it work?
he ACA/SDFCU account functions exactly like a bank account. You can get a chip enabled debit card, a credit card, a checking account, a savings account, loans, and use online and mobile banking, so the full range of services that banks offer.
It’s a US dollar account, so you can also use it to easily pay bills, expenses, or people in the US.
Member deposits and savings – technically “shares” – are insured by the National Credit Union Insurance Fund, similarly to the way bank deposits are insured by the Federal Deposit Insurance Corporation. This Fund is backed by the U.S. Government. SDFCU, and, like other federally chartered credit unions in the US, it is regulated and supervised by the National Credit Union Administration, an independent federal agency.
Another advantage of an ACA/SDFCU account for American expats is that as it’s a US account, you don’t have to declare it in an FBAR report (FinCEN form 114) or Form 8938 (Statement of Foreign Financial Assets, attached to your regular Form 1040).
How do I get one?
The requirements to open an ACA/SDFCU account are like those for a normal bank account. You will need:
– Photo ID (ideally your US passport)
– Proof of address (not necessarily in the US)
– A signed Form W-9 showing that you are a US taxpayer
– A credit card or bank account and routing number to fund your new account initially
– You also have to be a member of ACA. Membership costs $70 a year, or $55 if you’re over 65 years old, or you can pay a one-off $600 lifetime membership fee. You can find more info on ACA membership here.
“We are very grateful to SDFCU for their collaboration in this initiative. Their professionalism and grasp of the issues facing Americans outside the US has made this partnership possible.” – Anne Hornung-Soukup, ACA Executive Committee Member
You then apply for an account online on the SDFCU website here, and click on ‘overseas applicant’ in the bottom left.
We at Bright!Tax believe that the new ACA/SDFCU account is potentially a great solution for US expats struggling with foreign banks as a result of FATCA.