Can I Keep My US Bank Account If I Move Abroad?
Moving abroad? Understand the nuances of keeping your US bank accounts, from bank policies to your financial responsibilities and practical management.
US citizens and green card holders moving abroad often wonder if they can keep their US bank accounts. This involves understanding bank policies and regulatory considerations.
Factors Affecting Account Retention
US banks set their own terms for account holders’ residency, and policies vary significantly. Many institutions may close accounts if the primary address changes to a foreign one, while others allow it under specific conditions. This is largely influenced by their regulatory obligations.
Financial institutions are subject to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. These require banks to verify customer identity and residency, mandating a physical US address for account holders. This makes it challenging for those without a permanent US residence, as a foreign address or P.O. box typically does not satisfy these requirements.
The Foreign Account Tax Compliance Act (FATCA) also impacts banks’ decisions for US persons living abroad. FATCA requires foreign financial institutions to report US account holder information to the IRS. This increased compliance burden and associated costs have led some US banks to re-evaluate maintaining accounts for US citizens overseas, sometimes resulting in account closures or restrictions.
Individual Tax and Reporting Responsibilities
US citizens and green card holders must file US income tax returns annually, reporting worldwide income from all sources, regardless of where they live. Exclusions and credits can reduce potential double taxation, but the filing requirement persists.
Individuals with foreign financial accounts must report them to the US Treasury Department if certain thresholds are met. The Report of Foreign Bank and Financial Accounts (FBAR), FinCEN Form 114, is required if foreign financial accounts exceeded $10,000 in aggregate value at any time during the calendar year. This applies to foreign accounts, including those in a foreign branch of a US bank. The FBAR is submitted electronically to the Financial Crimes Enforcement Network (FinCEN) and is separate from the annual income tax return.
The Foreign Account Tax Compliance Act (FATCA) introduces another reporting requirement for US taxpayers: Form 8938, Statement of Specified Foreign Financial Assets. This form is filed with the annual tax return, requiring reporting of certain foreign financial assets if their aggregate value exceeds specific thresholds. For US persons living abroad, the thresholds are generally higher than for those residing in the US; for single filers, this could be over $200,000 on the last day of the tax year or $300,000 at any point during the year. For married individuals filing jointly, these thresholds are higher, potentially reaching $400,000 at year-end or $600,000 at any point. While US bank accounts are not considered foreign financial assets for Form 8938, it is a reporting requirement for US persons abroad with other qualifying foreign assets.
Managing US Accounts from Abroad
A reliable US mailing address is often necessary for individuals keeping US bank accounts while living abroad. Banks typically send correspondence, statements, and debit/credit cards to a US address, as many do not mail internationally. Using a trusted family member’s address or a mail forwarding service can help meet this requirement.
Online banking and mobile application access are important for managing accounts from overseas. These tools enable monitoring transactions, paying bills, and managing funds remotely. Understand the bank’s policies regarding international ATM withdrawals and debit/credit card usage, as foreign transaction fees and currency conversion charges can apply.
Transferring money between US and foreign accounts can be done through various methods, such as wire transfers or third-party services. Traditional wire transfers from US banks typically involve fees ranging from $25 to $50 for outgoing transfers, and can take several business days to complete. Alternative services like Wise, Xoom, Western Union, or MoneyGram offer different fee structures, exchange rates, and transfer speeds, often allowing transfers directly to bank accounts or for cash pickup in minutes.
Maintain open communication with the bank. Informing the bank of extended stays abroad or international travel plans can help prevent account freezes due to unusual activity, as financial institutions monitor for security concerns.