Expat Tax Filing Without Foreign Accounts

If you have no foreign financial accounts, you skip some of the most penalty-heavy reporting requirements. However, confirm that your definition of 'foreign account' matches the IRS definition, which is broader than you might expect.

No FBAR or FATCA filing needed. Without foreign financial accounts, you skip FinCEN Form 114 (FBAR) and likely Form 8938 (FATCA). This removes the most penalty-heavy reporting obligations from your filing and reduces CPA fees.

Check for accounts you might not think of. The IRS definition of "financial account" is broader than a bank account. It includes foreign pension plans funded by your employer, life insurance policies with cash value held by a foreign company, signatory authority on an employer's foreign account (even if it is not your money), and securities accounts held with a foreign broker.

Your filing is still not simple. Even without foreign accounts, you must report worldwide income, potentially claim FEIE or Foreign Tax Credit, and file a standard US return. If you are paid in foreign currency, your CPA must convert income using the appropriate exchange rate for each transaction or use the annual average rate.

Keeping it simple going forward. If you plan to open foreign accounts in the future, consult your CPA first. Structuring investments through US-domiciled brokerage accounts while living abroad avoids FBAR, FATCA, and PFIC complications entirely.

The pitfall: Answering "no" when you actually have signatory authority on a foreign account or participate in a foreign employer pension plan. Both count as reportable foreign financial accounts under FBAR rules.