Opening a Bank Account Abroad: What US Expats Need to Know

A local bank account is one of the first things you'll need when moving abroad. You'll use it to receive your salary, pay rent, cover everyday expenses and build a financial life in your new country.

But if you're a US citizen or otherwise considered a US person for tax purposes, there's another thing to consider: a foreign bank account can come with US tax reporting obligations.

A little planning upfront can save you a lot of paperwork and unexpected surprises later.

Here are four things to take care of when you arrive:

1. Open a local bank account. Once you have proof of address and identification, open a current account. Many employers require local banking details to pay your salary.
2. Keep your home-country account open. It can help with existing subscriptions, outstanding payments, tax refunds and maintaining access to your previous banking relationships. Be aware that some US banks and brokers restrict or close accounts for customers with a foreign address, so check your provider's policy before you move. See which US custodians restrict non-resident accounts.
3. Choose how you'll move money. Compare multi-currency services and international transfer providers before making large transfers. Bank wires aren't always the cheapest option.
4. Keep a record of every account. Note the bank, country, currency, opening date and balance. This will make future tax reporting much easier.

If you're a US person, opening a bank account abroad may trigger additional tax documentation.

Under FATCA (the Foreign Account Tax Compliance Act), foreign financial institutions identify and report certain US account holders. You may be asked to complete a W-9 or provide other information confirming your US tax status.

This is standard practice, but it's important to understand your own reporting responsibilities too.

Depending on your circumstances, you may need to report:

• Foreign bank accounts: FBAR (FinCEN Form 114) may be required if the combined value of your foreign financial accounts exceeds $10,000 at any point during the year.
• Foreign financial assets: FATCA Form 8938 may apply if your specified foreign financial assets exceed the relevant reporting thresholds.
• Foreign income: Interest, dividends and other income from overseas accounts generally need to be considered on your US tax return.

These are separate reporting requirements, and having a bank report your account under FATCA doesn't replace your own filing obligations.

Don't wait until tax season to figure out where your money is.

Keep a running list of your bank accounts, investment accounts and other foreign financial assets. Update it whenever you open or close an account, and record balances throughout the year.

Having everything in one place makes it easier to prepare your tax returns, avoid missed reporting obligations and give your tax adviser a complete picture of your finances.

Aequify connects your accounts in every country into one view, with the balances your FBAR and Form 8938 need ready when you file. See how Aequify works.

The bottom line: Opening a bank account abroad should make your life easier, not create a compliance headache. Get organised from day one, and you'll be in a much better position to manage your finances across borders.

Advising clients in this situation? See how Aequify works for advice firms.

This article provides general information and is not tax or legal advice. US tax reporting requirements depend on your individual circumstances. Consult a qualified cross-border tax professional for advice.