Closing a Foreign Bank Account? What US Expats Must Report
Closing a Foreign Bank Account? What US Expats Must Report
Closing a foreign bank account may seem like simplifying your finances. But for US expats, account closure comes with reporting obligations that many people don't anticipate.
FBAR Still Applies for the Year You Close
Even if you close a foreign bank account mid-year, you may still need to file an FBAR for that year if the account balance exceeded $10,000 at any point during the year — including before the account was closed.
FBAR is based on the highest balance during the calendar year, not just the year-end balance.
What Happens to the Funds
Where the money goes when you close the account matters:
If funds transfer to another foreign account, that account now has the reporting obligation
If funds transfer to a US account, the foreign reporting obligation ends for future years
If funds are held in cash or converted, the reporting stops but the transfer year still requires FBAR
Income Generated in the Closed Account
Interest, dividends, or other income earned in the account before closure must still be reported on your US tax return for that year, converted to USD at the correct IRS exchange rate.
FATCA Form 8938 Considerations
If the account was reportable under FATCA as well, closing it doesn't eliminate the requirement to disclose it on Form 8938 for the year in which it was still open.
Documenting the Closure
Keep documentation of the account closure, including:
Closure confirmation from the bank
Final account statements showing balance history
Records of where funds were transferred
Common Mistakes
Assuming a closed account doesn't need to be reported for that tax year
Not tracking the year's highest balance before closure
Failing to report income earned in the account before it was closed
Exemplary helps US expats handle account closures correctly and ensure all final reporting obligations are properly addressed.
