Closed a UK account during the year: is it still on the FBAR?

Does a closed UK account still go on the FBAR

Yes, for the year in which it closed. The FBAR reports every foreign account in which you had a financial interest, or over which you had signature authority, at any time during the calendar year. Closing the account ends the duty for later years. It does not remove the account from the year it was open.

The test has two stages. First, the highest value of each foreign account is found and the figures are added together. If the total exceeds $10,000, a report on FinCEN Form 114 is due. Second, once that line is crossed, every foreign account is listed, including the closed one and any account that held very little. A closed account can therefore be the reason a report is due at all, or simply one more line on a report that was due anyway.

The report itself has no box for a closing date. For each account it asks for the maximum value, the type of account, the account number and the institution's name and address. An account that closed in February and one that stayed open all year are entered in exactly the same way. The IRS FBAR guidance (opens the official IRS page in a new tab) applies the same any-time-in-the-year wording.

What happens on the FBAR when you switch current accounts

A full switch normally closes the old account and opens a new one, often at a different bank. For the year of the switch, both are foreign accounts you held, so both are listed if the aggregate threshold is met. Each is reported at its own highest value, and the money that moved across counts in each.

Double counting is built into the method. FinCEN asks for the maximum value of each account separately, and those peaks are added together whether or not they fell on the same day. A salary account that peaked just before the switch, and a new account that peaked a few weeks later with largely the same money, can together push the total over the threshold although you never held that much at once. Our post on maximum value and the exchange rate explains the arithmetic.

A switch within the same bank can still produce a new account. If the sort code and account number change, treat it as a second account for that year. If the bank simply moves you to a different product and keeps the same number, it is usually one account. The account number on the closing and opening statements is the most reliable guide.

Is an ISA transfer one account or two on the FBAR

Usually two. Under the ISA transfer rules (opens the official GOV.UK page in a new tab), you ask the new provider to arrange the move and the money passes between institutions without you withdrawing it. The old ISA is an account at one institution and the new ISA is an account at another, so each is listed for the year of transfer at its own highest value.

The UK treats the transfer as a continuation of the same tax wrapper, which is why it feels like one account. The FBAR does not look at the wrapper. It looks at the financial account, the institution that maintains it and its account number. A partial transfer leaves the old ISA open with a smaller balance, so it is listed both in that year and in later years for as long as it stays open.

Stocks and shares ISAs raise a separate question. The FBAR records the account, but the funds inside it can carry their own US reporting, as our post on why a stocks and shares ISA worries the IRS explains. A transfer between providers may involve selling and buying funds, which matters for that analysis even though it does not change the FBAR treatment.

• The old provider's closing statement showing the final balance and transfer date
• The new provider's confirmation of the amount received
• The highest balance in each account during the calendar year
• Whether any funds were sold and repurchased during the transfer
• Account numbers and institution addresses for both providers

How are a matured bond and a newly opened account reported

A fixed-term bond is a deposit account, and when it matures it is reported for that year at its highest value before the money was paid out. Where the proceeds go to another account, or roll into a new bond with a new account number, that destination is a separate account and is listed at its own maximum value.

Banks handle maturity in different ways. Some pay the proceeds into a nominated current account, some move them into an instant access account they open for you, and some roll them into a fresh fixed term. Each route can leave you with one more account in the year than you expected. The maturity letter usually says which applies and gives the new account number, so keep it with your statements.

Accounts opened during the year work the same way in reverse. An account opened in November is reported for that year at its highest value in the weeks it existed. Every value, whether from a closed account or a new one, is converted at the Treasury rate for 31 December of the year being reported, as the FinCEN instructions require.

Take a US citizen employed as a teacher in Bristol. During one year she switches her current account to another bank, transfers her cash ISA to a new provider, and a fixed-term bond matures into an instant access account at the same bank. Her list for that year runs to six accounts, not three. If the six maximum values together exceed the threshold, all six go on her FBAR. The following year, only the three still open are listed.

How does Form 8938 treat an account closed during the year

Form 8938 also reaches assets held at any time during the tax year. The Form 8938 instructions (opens the official IRS page in a new tab) ask for each asset's maximum value during the year, and the form has boxes to indicate that an account was opened or closed during the tax year. An account closed in spring is still reported if the form is required.

Form 8938 has two threshold limbs: a year-end value and a value at any time in the year. An account closed before 31 December holds nothing on the last day of the year, so it adds nothing to the year-end figure. It does count towards the any-time figure. For a person living abroad and not filing jointly, the form is needed when specified foreign financial assets exceed $200,000 at year end or $300,000 at any time, and for joint filers abroad above $400,000 at year end or $600,000 at any time.

The instructions include an example of a person who sold their only foreign asset during the year and held none at year end. They still had to file, because the asset exceeded the any-time limb while it was held. The same reasoning applies to a closed account. Foreign currency is converted at the rate for the last day of the tax year even for an asset disposed of earlier, which matches the FBAR.

Form 8938 is filed with the tax return on Form 1040, not with FinCEN, and the IRS page Do I need to file Form 8938 (opens the official IRS page in a new tab) confirms it is not required in a year when no income tax return is required. The initial penalty for failing to file a required Form 8938 is $10,000. The IRS comparison of Form 8938 and FBAR requirements (opens the official IRS page in a new tab) sets the two reports side by side.

What records should you keep when you close an account

Keep the final statement showing the closing balance and the date, plus enough earlier statements to show the highest balance in the year. FinCEN requires records of each account's name, number, institution, type and maximum value to be kept for five years from the FBAR due date, or from the filing date if later.

Closing an account usually ends online access, and older statements can then be slow or costly to obtain. The simplest habit is to download the full year's statements before asking the bank to close the account, and to save the closing letter or confirmation alongside them. Where a switch or transfer moved the balance, keep the confirmation from the receiving institution too, so the two ends of the transfer can be matched.

In the following year the closed account drops off the report. If your remaining foreign accounts stay below the threshold for the whole year, no FBAR is due for that year, and there is nothing to send FinCEN to mark the account as closed. If you already missed an earlier year, our post on late FBARs explains the routes, and our IRS streamlined filing service handles cases with unreported income.

Our foreign income and FBAR reporting service builds a schedule of every account held in the year, open or closed, which then supports both the FBAR, due 15 April, extended automatically to 15 October, and Form 8938 prepared with our individual tax return service. For joint accounts, see our post on joint accounts with a non-US spouse. The wider rules are in our guide to FBAR and FATCA for UK residents.

• The final statement, showing the closing balance and closure date
• Statements covering the highest balance during the calendar year
• The closure confirmation, maturity letter or transfer confirmation
• The account number and the institution's full postal address
• A copy of the filed FBAR and the schedule behind each figure