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Connect on LinkedInA foreign financial account is a financial account maintained by a financial institution located outside the United States. For U.S. expats, this can include foreign bank accounts, brokerage accounts, securities accounts, mutual funds, pension accounts, and certain cash-value insurance or annuity contracts.
Why it matters for U.S. expats
Foreign financial accounts can trigger U.S. reporting even when the account is ordinary in the country where the expat lives. If reportable accounts exceed the FBAR threshold, FinCEN Form 114 may be required; if specified foreign financial assets exceed the Form 8938 threshold, FATCA reporting may also apply. Income from the account, such as interest, dividends, capital gains, or foreign tax paid, still needs separate treatment on the U.S. tax return.
Common questions
1. What counts as a foreign financial account?
A foreign financial account can include a bank account, brokerage account, securities account, mutual fund, pension account, or certain foreign insurance or annuity contract with cash value.
2. Is a foreign bank account a foreign financial account?
Yes. Checking, savings, deposit, and similar accounts held at a financial institution outside the United States are foreign financial accounts.
3. Is a foreign brokerage account a foreign financial account?
Yes. A brokerage or securities account held with a financial institution outside the United States is a foreign financial account.
4. Are foreign pensions treated as foreign financial accounts?
They can be. Some foreign pension accounts may need to be reviewed for FBAR, Form 8938, income tax, treaty, trust, or PFIC reporting.
5. Is foreign real estate a foreign financial account?
No. Foreign real estate held directly is not a foreign financial account. If real estate is held through a foreign entity or account, separate reporting rules may apply.
6. Is foreign currency held in cash a foreign financial account?
No. Foreign currency held directly is not a foreign financial account. A foreign bank account holding that currency may be reportable.
7. Does a foreign financial account need to earn income to be reported?
No. A foreign financial account can be reportable for FBAR or Form 8938 even if it earns no income during the year.
8. When does a foreign financial account trigger FBAR filing?
FBAR is required when a U.S. person has financial interest in or signature authority over foreign financial accounts and the aggregate value of those accounts exceeds $10,000 at any point during the calendar year.
9. When does a foreign financial account trigger Form 8938?
Form 8938 is required when a taxpayer has specified foreign financial assets above the FATCA reporting threshold that applies to their filing status and whether they live in the United States or abroad.
10. Is an account at a foreign branch of a U.S. bank reportable?
For FBAR, yes. A financial account held at a foreign branch of a U.S. financial institution can be reportable. For Form 8938, the rules are different, so the account should be reviewed under both systems.
11. Is an account at a U.S. branch of a foreign bank reportable?
No. An account held at a U.S. branch of a foreign financial institution is not treated as a foreign financial account for FBAR or Form 8938.
12. What records should U.S. expats keep for foreign financial accounts?
Keep account statements, account numbers, institution names and addresses, account types, maximum yearly values, income statements, foreign tax records, ownership details, signature authority records, and exchange-rate calculations.
Related forms
- FinCEN Form 114: FBAR reporting
- Form 8938: FATCA reporting for U.S. expats
- Form 1040: U.S. Individual Income Tax Return
- Schedule B: Interest and Ordinary Dividends
When to get help
Professional guidance is important when:
- You have foreign bank, brokerage, pension, investment, or insurance accounts.
- Your foreign accounts exceeded $10,000 in aggregate during the year.
- You are unsure whether an account is foreign, financial, or reportable.
- You have signature authority over an employer’s, company’s, or family member’s foreign account.
- You hold foreign mutual funds, ETFs, or other possible PFICs inside an account.
- You missed FBAR, Form 8938, or account income reporting in prior years.
- You need to calculate maximum account values in U.S. dollars.
Bright!Tax can review your foreign financial accounts, identify whether FBAR or FATCA reporting applies, and make sure account income is reported correctly on your U.S. return. Get started with Bright!Tax.
Related Bright!Tax guides
Official sources
- IRS: Comparison of Form 8938 and FBAR requirements
- IRS: Report of Foreign Bank and Financial Accounts
- FinCEN: Report Foreign Bank and Financial Accounts
- IRS: Instructions for Form 8938
Reviewed by
Katelynn Minott, CPA & CEO
Last reviewed
July 2026