In today’s interconnected world, financial complexities continue to grow for expatriates, individuals considering relocating abroad, and foreign nationals residing in the United States. Each year brings more stringent oversight, broader tax exposure, and evolving reporting obligations. In 2025, the global financial landscape feels smaller than ever—yet the challenges are greater.

Global Financial Reporting Is No Longer Optional for U.S. Taxpayers
U.S. citizens and residents must report their worldwide income and assets, regardless of where they live. Two key tools in this compliance framework—FBAR (FinCEN Form 114) and IRS Form 8938—emerged from the Foreign Account Tax Compliance Act (FATCA), a sweeping initiative aimed at curbing offshore tax evasion.

With the majority of countries now participating in FATCA agreements, foreign financial institutions (FFIs), including crypto exchanges and even national tax agencies, are supplying the IRS with data on account balances and transactions linked to U.S. citizens and entities. These disclosures are reshaping the financial reality for anyone with ties to the U.S. tax system.

Living Abroad? You’re Still on the IRS Radar
Relocating overseas doesn’t release U.S. citizens from their obligation to file tax returns. In fact, those with foreign bank accounts or financial assets that exceed a combined total of $10,000 at any point in the year must submit an FBAR annually—even if the balance hits that threshold for just a single day.

Additionally, Form 8938 (Statement of Specified Foreign Financial Assets) must be filed by U.S. expats whose qualifying assets exceed $200,000 at the end of the year or $300,000 at any time during the year. For married couples filing jointly, those limits double.
For individuals residing in the U.S. but holding foreign assets, the reporting thresholds are lower: $50,000 at year-end or $75,000 at any point in the year (again, doubled for joint filers).

Opening a Foreign Bank Account? It’s Not Easy
One of the unexpected hurdles for many expats is opening a bank account abroad. The application process has become increasingly rigorous, often requiring extensive personal and financial information—some compare it to applying for a mortgage in the U.S. This can be a time-consuming and frustrating process for those unprepared for the level of scrutiny.

Modern IRS Tech Closes the Distance
Despite domestic staffing cuts, the IRS now uses advanced technology, including AI-driven systems, to analyze the global data it receives. This makes it easier than ever for the agency to identify discrepancies between reported income and offshore account activity. Anyone hoping to avoid IRS oversight by leaving the country should be aware that even renouncing U.S. citizenship is a serious and complex process, with its own tax implications.

U.S. Tax Law Also Impacts Foreign Nationals in the U.S.
Many foreign nationals working or living in the U.S. have inherited properties or hold overseas financial accounts. Whether these assets generate income or not, individuals considered U.S. taxpayers or residents must report them on their tax returns and FBAR forms.

Failure to disclose can result in significant penalties. Non-willful violations carry a minimum fine of $10,000 per FBAR, while willful violations can trigger fines of up to 50% of the highest account value per year—or $100,000 per violation, whichever is greater. In extreme cases, criminal charges and imprisonment may follow.

Understanding the Risks Before You Move
The financial and legal challenges tied to expatriation or overseas living are extensive. From stringent banking procedures to intricate tax obligations, expats and potential movers must understand the full scope of their responsibilities. The IRS has the tools to identify non-compliance, and consequences can be severe.

As more Americans consider life abroad, it’s critical to evaluate these realities and consult with experienced professionals. Whether you’re planning a long-term relocation or simply maintaining foreign ties, being proactive is the best strategy to avoid costly surprises.

Please do not hesitate to contact us, US Tax Consultants, for more information or just book a free consultation with any of our Tax preparer.