Living and working abroad often comes with a sense of flexibility that is hard to replicate anywhere else. Digital nomads can choose where they live, how they work, and which opportunities to pursue, often across multiple countries in a single year. What tends to surprise many people, though, is how little that mobility changes their obligations to the US tax system. Even when you no longer live in the United States, certain reporting requirements continue to follow you.
Two of the most commonly misunderstood rules are FBAR and FATCA. These requirements are not about taxing your foreign accounts directly, but about reporting them. Failing to understand the difference can lead to missed filings, unnecessary anxiety, and in some cases, significant penalties. With a bit of clarity and the right systems in place, they become far more manageable.
This article explains the requirements of FBAR and FATCA for US digital nomads, what types of accounts and assets are involved, and how to approach compliance in a way that fits a location-independent lifestyle.
Why Living Abroad Does Not End US Reporting Requirements
The United States taxes based on citizenship and residency status rather than physical location. This means that US citizens and green card holders are generally required to file a US tax return every year, even if they have lived abroad for the entire year and earn most or all of their income outside the country.
That obligation extends beyond income reporting. When you open bank accounts, investment accounts, or other financial accounts overseas, the US government expects visibility into those accounts under certain conditions. For digital nomads, this often happens quickly. Opening a local bank account to receive client payments, pay rent, or manage day-to-day expenses can trigger reporting requirements, even if the account balance feels modest.
Understanding this framework early helps avoid the assumption that foreign accounts only matter once they become large or complex. In reality, the rules focus on access and aggregate value, not intent or sophistication.
What FBAR Is And How It Applies To Digital Nomads
FBAR stands for Foreign Bank Account Report. It is filed using FinCEN Form 114 and is separate from your US tax return. The purpose of FBAR is to report foreign financial accounts over which you have ownership or control.
You are required to file an FBAR if you are a US person and the combined maximum value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year. This threshold is often misunderstood. It is not per account, and it does not depend on how long the balance stayed high. A temporary increase caused by receiving a large payment or transferring funds between accounts can be enough to trigger the requirement.
For digital nomads who move between countries or maintain multiple accounts for practical reasons, this is one of the most common areas of accidental non-compliance.
What Counts As A Foreign Account Under FBAR
FBAR applies to more than traditional checking and savings accounts. Foreign brokerage accounts, investment accounts, certain foreign retirement accounts, and some insurance products with cash value may all be reportable. Joint accounts also count, even if the other account holder is not a US person.
In practice, this means that accounts opened for everyday convenience often qualify. Local bank accounts, regional fintech platforms, and international savings accounts are all worth reviewing carefully. The determining factor is where the account is legally held, not where you access it from or which currency it uses.
Because FBAR focuses on maximum balances during the year, accurate record keeping becomes especially important. Bank statements, year-end summaries, and transaction histories help ensure values are reported correctly.
How FBAR Is Filed And Why Timing Matters
FBAR is filed electronically through the Treasury Department’s BSA E-Filing System. It is not submitted to the IRS and does not accompany your tax return. While the standard due date aligns with April 15, there is an automatic extension to October 15, which gives many digital nomads additional breathing room.
Failing to file an FBAR can carry serious consequences, even when no tax is owed on the account itself. For non-willful violations, which are common among digital nomads who were unaware of the rule, penalties can be assessed at up to $10,000 per year. Willful violations are treated far more harshly, with potential penalties equal to the greater of $100,000 or 50% of the highest account balance for each year the FBAR was not filed. While these numbers can sound intimidating, the IRS does distinguish between honest mistakes and intentional non-compliance, and taxpayers who correct missed filings proactively often have options to reduce or avoid penalties altogether.
This is why it is generally better to file when in doubt rather than assume an account does not qualify. Filing accurately and on time removes a major source of risk.
Understanding FATCA And How It Differs From FBAR
FATCA, or the Foreign Account Tax Compliance Act, is reported on IRS Form 8938 and is filed as part of your annual tax return. While it overlaps with FBAR, it has a different purpose and different thresholds.
FATCA focuses on specified foreign financial assets rather than just accounts. It is designed to capture a broader picture of foreign holdings and is closely tied to your income tax reporting. Because of this, FATCA often becomes relevant later, once assets grow or investment structures become more complex.
FATCA Thresholds & Assets For Taxpayers Living Abroad
For taxpayers who qualify as living abroad, FATCA thresholds are significantly higher than FBAR thresholds. Single filers generally must report if their foreign assets exceed $200,000 at the end of the year, or $300,000 at any point during the year. Married taxpayers filing jointly face higher limits.
Many digital nomads never reach these thresholds early on, which can create confusion when FBAR is required but FATCA is not. Understanding that these are separate rules with separate triggers helps clarify why one filing may apply without the other.
FATCA includes foreign bank and investment accounts, but it can also extend to foreign stocks held outside US brokerages, ownership interests in foreign entities, and certain foreign retirement arrangements. Because it is filed with your tax return, FATCA often intersects with other international reporting requirements.
This is particularly relevant for content creators and founders who build businesses across borders or invest internationally. As structures evolve, so do reporting obligations.
How FBAR And FATCA Work Together In Practice
FBAR and FATCA often overlap, but they are not substitutes for one another. Some accounts and assets may need to be reported on both forms, while others may only appear on one. For many digital nomads, FBAR is the first reporting obligation they encounter, with FATCA becoming relevant later as savings and investments grow.
The safest approach is to review both requirements each year rather than assume last year’s filing pattern still applies. Income, balances, and account types can change quickly in a nomadic lifestyle.
Where Business Activity Adds Complexity
Digital nomads who operate businesses, receive income through foreign platforms, or hold interests in overseas entities often face additional reporting beyond FBAR and FATCA. This can include ownership disclosures and other international forms that tie into the broader tax picture.
Because these rules interact, professional guidance becomes especially valuable as businesses grow and structures become more layered.
Bringing It All Together
FBAR and FATCA are more about transparency rather than punishment. Once you understand how they apply to your situation, compliance becomes a matter of process.
At Bizbud, we help digital nomads, content creators, and international founders understand their reporting obligations and build systems that grow with them.
If you are unsure whether FBAR or FATCA applies to you, or if your international setup has evolved over time, our team can help you get clarity and stay compliant before small issues turn into costly ones.
