Expat brokerage account: 2026 guide for US citizens living abroad on taxable accounts and foreign tax credit rules

US citizens abroad can invest through US or foreign brokerage accounts, but the tax reporting rules do not stop at the US border. For the 2025 calendar year, a US person's foreign financial accounts, including foreign brokerage accounts, can trigger FBAR if their aggregate value exceeds $10,000 at any time.

Form 8938 can also apply when specified foreign financial assets exceed the applicable threshold, such as more than $200,000 on December 31, 2025, or more than $300,000 at any time in 2025 for a single filer living abroad

This guide explains brokerage accounts for US citizens living abroad, including account closures, FBAR brokerage account rules, Form 8938, capital gains, foreign tax credit claims, PFIC traps, and nonresident alien brokerage account rules.

What is an expat brokerage account? Quick answer

An expat brokerage account is a taxable investment account used by a US person abroad to hold stocks, ETFs, mutual funds, bonds, or cash. For 2025, foreign brokerage accounts above $10,000 can trigger FBAR, and specified foreign assets above $200,000 can trigger Form 8938 for a single filer living abroad. US citizens and resident aliens abroad generally file under the same worldwide-income rules as US-based taxpayers. See TFX's guide to citizenship-based taxation for the core rule, and review the IRS filing requirements for US citizens and residents abroad. (IRS)

US citizens abroad generally report taxable brokerage income on Form 1040. A foreign brokerage account is separately reportable on FBAR, Form 8938, or both only when the applicable foreign-account or foreign-asset thresholds are met.

• FBAR threshold: foreign financial accounts exceed $10,000 in aggregate at any point in 2025.
• Form 8938 threshold: $200,000 on the last day of 2025 or $300,000 at any point in 2025 for a single filer living abroad.
• Tax rule: US citizens and resident aliens abroad report worldwide income on Form 1040 unless a specific exception applies.

The following 5 account types are covered by most expat brokerage account reporting reviews:

• US taxable brokerage account held with a US broker.
• Foreign stock brokerage account held outside the United States.
• Overseas brokerage account holding ETFs, shares, bonds, or cash.
• Foreign retirement-linked investment account, depending on treaty and account structure.
• Custodial or joint foreign financial accounts where the US person has ownership or signature authority.

A brokerage account for US expats is not automatically a foreign account. A US account with a US broker is usually not an FBAR account, but income from the account still appears on Form 1040, Schedule B, Schedule D, Form 8949, and possibly Form 1116.

Can US expats keep their brokerage accounts when moving abroad?

US expats can sometimes keep a US brokerage account after moving abroad, but the answer depends on the broker, the destination country, and the account type. A moving abroad brokerage account review should happen before the address change because some firms restrict trading, close accounts, or block new mutual fund purchases once a foreign address is added.

Can I keep my brokerage account if I move abroad? Yes, in some cases, but you must confirm the broker's foreign-address policy in writing before you relocate. Fidelity's published policy says it does not open accounts for new customers residing outside the United States and restricts services for customers who later move abroad, including a mutual fund purchase restriction that began on August 1, 2014.

Brokerage account closure risk is driven by several compliance pressures, including FATCA reporting costs, anti-money-laundering and know-your-customer rules, country-specific securities regulations, and European investor-protection regimes such as MiFID II and PRIIPs. Public broker policies show that foreign-address restrictions differ by firm: Fidelity restricts mutual fund purchases for customers living outside the United States, Vanguard generally requires US citizenship or lawful permanent residence plus a US mailing address for new US retail accounts, and Schwab International and Interactive Brokers apply country-by-country eligibility rules. TD Ameritrade should now be treated as part of Charles Schwab, since Schwab announced completion of the final Ameritrade client conversion in 2024. (Creative Planning)

US expat tax obligations continue even if the brokerage account stays in the United States. Review TFX's investment options for American expatriates before choosing between a US expat brokerage account, a foreign account, or a managed cross-border investment arrangement.

The following 4 brokerage paths still appear most relevant for US expats in 2026, subject to country approval and account-specific review:

1. Charles Schwab International – markets brokerage services for US expatriates and supports US dollar investment accounts for eligible foreign-resident clients.
2. Interactive Brokers – operates through multiple regulated affiliates and accepts clients from many countries, subject to local restrictions.
3. Vanguard – generally requires US citizenship or lawful permanent residence plus a US mailing address for new US retail accounts.
4. Local foreign broker – may be available abroad, but a US person must check FATCA acceptance, FBAR, Form 8938, and PFIC exposure before opening the account.

Which US brokerages still accept expat clients in 2026?

US broker access in 2026 is country-specific, not universal. Charles Schwab International and Interactive Brokers are the strongest starting points for many US citizens abroad, while Vanguard's US retail account-opening page says a new account generally requires US citizenship or lawful permanent residence and a US mailing address. (Schwab Brokerage)

A best brokerage account for US citizens living abroad should be judged on 3 questions: whether the firm accepts the client's country of residence, whether it allows purchases after the move, and whether it issues US tax reporting forms such as Form 1099. Before choosing, read TFX's guide to selecting an investment advisor as an expat with offshore investments.

The practical decision rule is simple: choose a broker that accepts your country of residence and confirms trading permissions before you move, not after your account is restricted.

 

FBAR reporting requirements for expat brokerage accounts

A US person generally must file FBAR when the aggregate value of all reportable foreign financial accounts, including foreign brokerage accounts, exceeded $10,000 at any time in 2025. The $10,000 test is aggregate across foreign financial accounts, not per account. (FinCEN.gov)

A foreign brokerage account reporting review starts with account location. A US-held taxable brokerage account is usually not reported on FBAR, but a foreign brokerage account, foreign bank account, foreign securities account, or certain foreign retirement accounts can count as foreign financial accounts.

The following 4 FBAR filing requirements apply to a foreign brokerage account:

• Who must file: A US citizen, green card holder, resident alien, domestic entity, estate, or trust with ownership or signature authority over reportable foreign financial accounts.
• Threshold: Aggregate foreign financial account value exceeded $10,000 at any point in 2025.
• Filing method: FinCEN Form 114 must be filed electronically through the BSA E-Filing System.
• Account distinction: A US brokerage account is usually not FBAR-reportable, but a foreign brokerage account can be reportable even when it holds US stocks.

US taxpayers with Swiss, European, Asian, or other offshore accounts should also read TFX's coverage of why Swiss bank accounts for US citizens are no longer secret and how more foreign banks disclose American accounts.

For filing help, see TFX's detailed FBAR guide or the official BSA E-Filing portal for FinCEN Form 114.

Form 8938 (FATCA) reporting for foreign brokerage accounts

US expats must file Form 8938 with Form 1040 if specified foreign financial assets exceed $200,000 on the last day of 2025 or $300,000 at any point during 2025 for a single filer living abroad. Married filing jointly abroad uses higher thresholds of $400,000 year-end or $600,000 at any point. (IRS)

Form 8938 is part of FATCA compliance and is separate from FBAR. A foreign brokerage account can appear on both forms when the taxpayer meets both thresholds. Review TFX's comparison of FBAR vs. Form 8938 before filing because duplicate-looking reporting is common.

The following 4 differences matter most for American expat financial reporting:

1. Where it is filed: FBAR is filed with FinCEN through BSA E-Filing; Form 8938 is filed with the IRS as part of Form 1040.
2. Threshold: FBAR starts at $10,000 aggregate foreign financial accounts; Form 8938 starts at $200,000/$300,000 for a single filer living abroad.
3. Assets covered: Form 8938 can cover foreign brokerage accounts, foreign shares not held in an account, foreign partnership interests, and other specified foreign financial assets.
4. Duplicate reporting: Filing FBAR does not replace Form 8938 when both filing rules apply.

Foreign financial accounts that hold small positions still count once the filing threshold is met. The IRS Form 8938 Q&A says a reportable foreign account remains a specified foreign financial asset even when it contains assets issued by US persons. (IRS)

FBAR vs Form 8938: Side-by-side comparison for expat brokerage accounts

FBAR and Form 8938 often apply to the same overseas brokerage account, but the thresholds, filing destinations, and penalties are different. For 2025, the lowest trigger is usually FBAR at $10,000 aggregate foreign-account value, while Form 8938 starts at $200,000 on the last day of 2025 or more than $300,000 at any time in 2025. (IRS)

 

A single US expat abroad with a foreign brokerage account above $250,000 on December 31, 2025, would generally meet both the FBAR and Form 8938 thresholds for 2025; if $250,000 was only a midyear peak, Form 8938 depends on whether total specified foreign financial assets exceeded $300,000 at any time.

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Tax implications of expat brokerage accounts: Capital gains and dividends

US expats report taxable brokerage income on Form 1040 even when the broker, stock exchange, or fund is outside the United States. For 2025, long-term capital gains generally use 0%, 15%, or 20% rates, while short-term gains are taxed at ordinary income rates up to 37%. (IRS)

International stocks taxed in a brokerage account reporting usually starts with 3 categories: dividends, capital gains, and foreign tax withheld. Qualified dividends and long-term capital gains may receive lower US rates, while ordinary dividends and short-term gains usually follow ordinary tax brackets.

For 2025, a single filer's 0% long-term capital gains bracket generally ends at $48,350 of taxable income, and the 20% bracket begins above $533,400. Net Investment Income Tax may add 3.8% when modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married filing jointly. Read TFX's guide to Net Investment Income Tax for US expats for the extra layer. (IRS)

Based on our client scenario at TFX: a US citizen living in Spain sells foreign shares in 2025 for a $12,000 long-term gain and receives $4,000 in dividends. The gain is reported on Form 8949 and Schedule D, and the dividends are reported on Schedule B even if the Spanish broker does not issue Form 1099.

Foreign earned income exclusion rules do not apply to dividends or capital gains. The foreign earned income exclusion only applies to foreign earned income, not passive brokerage income.

Foreign tax credit for expats with overseas brokerage accounts

The foreign tax credit can reduce US tax on foreign-source dividends, foreign-source interest, and certain foreign capital gains when a foreign country taxes the same income. The credit is usually claimed on Form 1116 and is limited to the US tax on the same category of foreign-source income. (IRS)

For 2025 returns filed in 2026, foreign tax credit reporting for taxable brokerage income centers on Form 1116, not Form 2555. Foreign tax credit claims are usually more relevant than FEIE for overseas investment taxation because dividends, interest, and capital gains are not earned income.

Based on our client scenario at TFX: a US citizen in France receives $50,000 in foreign dividends and has $15,000 of French tax withheld. The Form 1116 passive-category limit determines how much of that $15,000 can offset US tax on the same dividend income; any excess may be carried back 1 year or forward 10 years if the normal carryover rules apply.

 

US expats choosing between credits and exclusions should read TFX's guide to the Foreign Tax Credit vs. the Foreign Earned Income Exclusion. That decision affects double taxation avoidance, but it does not remove FBAR or Form 8938 filing duties.

FBAR penalties for unreported expat brokerage accounts

FBAR penalties for unreported foreign brokerage accounts depend on willfulness, account value, timing, and IRS findings. For penalties assessed on or after January 17, 2025, the inflation-adjusted maximum for a non-willful violation is $16,536, and the adjusted fixed amount for certain willful violations is $165,353, with the separate 50% account-balance rule still relevant under the statute. (eCFR)

A taxpayer who missed foreign brokerage account reporting should not file random late forms without reviewing the facts. The IRS Streamlined Filing Compliance Procedures, when available, typically require 3 years of amended or late tax returns and 6 years of FBARs for non-willful taxpayers abroad.

For penalties assessed on or after January 17, 2025, the adjusted maximum non-willful FBAR penalty is $16,536 per violation, while willful cases can be much higher.

 

 

TFX explains related penalty rules in its guide to FATCA penalties for non-compliance.

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Can non-US citizens open a US brokerage account?

A non-US citizen can open a US brokerage account in some cases, but approval depends on tax residency, identification documents, broker policy, and country of residence. A resident alien is usually treated differently from a nonresident alien, and a Form W-8BEN is normally required for foreign beneficial owners of US-source income. (IRS)

A US brokerage account for foreigners usually requires the applicant to state whether they are a US tax resident. If the person is a green card holder or meets the substantial presence test, US resident tax rules can apply even without US citizenship.

The following 5 steps apply to a brokerage account for non-US resident applicants:

1. Confirm the broker accepts applicants from the applicant's country of residence.
2. Provide identity documents, such as a passport and foreign address proof.
3. Apply for an ITIN with Form W-7 if the broker or tax filing requires one.
4. Submit Form W-8BEN to certify foreign status and claim treaty withholding if eligible.
5. Check the investor's country-of-residence rules for whether US-source brokerage income must be reported locally.

Read TFX's resident and nonresident alien tax rules guide before treating a foreign investor as a nonresident alien.

Withholding tax on US brokerage accounts for non-resident aliens

A nonresident alien with US brokerage income usually faces 30% US withholding on US-source dividends unless a treaty reduces the rate. Certain portfolio interest and bank-deposit interest can be nontaxable for nonresident aliens, and many capital gains are not taxed unless a specific rule applies. (IRS)

A US brokerage account for nonresidents can still be useful, but the tax result depends on asset type. US dividends, US bond interest, US mutual fund distributions, and US real estate-linked assets can have different withholding or reporting rules.

The following 4 withholding rules matter most:

• Dividends: US-source dividends are generally subject to 30% withholding unless a treaty rate applies.
• W-8BEN: The broker uses Form W-8BEN to document foreign status and treaty eligibility.
• Interest: Certain portfolio interest and deposit interest may be exempt for nonresident aliens.
• Capital gains: Nonresident aliens are generally not taxed on many US securities gains unless they are present in the United States for 183 days or more in the relevant tax year, the gain is effectively connected income, or a special rule applies.

A nonresident investor should also review TFX's guide on whether nonresidents pay US capital gains tax. That question is separate from US estate tax exposure, which can be a major issue for non-US investors holding US situs assets.

Do not rely on the old $50,000 FATCA threshold as an expat shortcut. For a single filer living abroad, the Form 8938 threshold is generally $200,000 year-end or $300,000 at any point, while $50,000 is relevant to a different individual reporting threshold for certain US-resident taxpayers. (IRS)

A US citizen living abroad brokerage account review should also check FATCA and CRS documentation. Read TFX's guide to FATCA and CRS reporting requirements and TFX's explanation of accounts that may be exempt from FATCA reporting.

European product rules create a second problem. EU brokers may restrict US-domiciled ETF access for EU retail investors because of PRIIPs-style product disclosure rules, while US taxpayers should be cautious with non-US funds because many foreign mutual funds and ETFs can be PFICs.

Expat retirement accounts and brokerage accounts: key differences

A taxable brokerage account is not the same as an IRA, 401(k), pension, or foreign retirement plan. For 2025, the IRA contribution limit is $7,000, or $8,000 for taxpayers age 50 or older, but a taxable brokerage account has no annual contribution limit. (IRS)

Expat retirement accounts often receive special US or treaty treatment, while taxable accounts generate dividends, interest, and capital gains each year. Foreign Earned Income Exclusion (FEIE) income generally does not count as compensation for IRA contribution purposes. If all of your compensation is excluded under the FEIE, you generally cannot use that excluded income to support an IRA contribution.

The following 4 differences should be reviewed before investing abroad:

• Tax timing: A taxable brokerage account can create annual taxable income; retirement accounts may defer income depending on account type and treaty.
• Contribution rules: IRAs have annual limits; taxable brokerage accounts generally do not.
• Reporting forms: Foreign retirement accounts may require FBAR, Form 8938, Form 3520, Form 8621, or treaty analysis depending on structure.
• Investment selection: Foreign pension funds and local mutual funds can create PFIC reporting even inside an account.

 

For account-specific issues, review TFX's guide to US tax implications for Americans abroad with US retirement accounts.

Passive foreign investment companies: the hidden trap in foreign brokerage accounts

A foreign mutual fund or ETF in a foreign stock brokerage account can be a Passive Foreign Investment Company, or PFIC, if it meets the 75% passive-income test or 50% passive-asset test. PFIC ownership can trigger Form 8621 and punitive tax calculations. (IRS)

PFIC rules are one of the biggest risks in cross-border investment for US persons abroad. A local fund that looks ordinary in the UK, France, Germany, Canada, or Australia can create expensive US reporting even if it produced only a small dividend.

The following 5 PFIC warning signs should be checked before buying a foreign fund:

• The fund is organized outside the United States.
• It holds mostly securities, cash, bonds, or other passive assets.
• It distributes dividends or reinvests income automatically.
• It is an ETF, mutual fund, SICAV, OEIC, unit trust, or similar pooled fund.
• The broker is foreign and does not issue US tax reports.

Based on our client scenario at TFX: a US citizen in the UK buys $20,000 of non-US ETFs through a local brokerage account in 2025. Even if the fund value falls by year-end, the taxpayer may still need Form 8621 analysis because PFIC status depends on the fund's income and assets, not the investor's profit.

Foreign mutual funds can trigger PFIC reporting. See what your filing requires.

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State tax obligations for expats with brokerage accounts

US state tax can still apply after a move abroad if the taxpayer remains domiciled in a state or receives state-source income. California residents are taxed on all income regardless of source; New York residency can depend on domicile or statutory-resident rules, and Virginia says living abroad does not automatically end Virginia domiciliary residency. (State of California Franchise Tax Board)

California can be especially costly because it does not follow the federal foreign earned income exclusion for state purposes and taxes residents on worldwide income. Brokerage gains and dividends may remain taxable by the state if the taxpayer keeps California residency.

The following 4 state-risk signals should be reviewed before selling appreciated investments:

• You kept a California, New York, Virginia, or similar domicile after moving abroad.
• You kept a home, driver's license, voter registration, or close financial ties in the old state.
• Your brokerage still uses a state mailing address.
• You sold appreciated securities before cutting state residency ties.

 

Read TFX's guide to resident and nonresident citizens and noncitizens before assuming that moving abroad ends state filing.

Best practices for managing a brokerage account as a US expat in 2026

The best expat portfolio management process starts with tax reporting, not product selection. For the 2025 tax year, the key records are highest foreign account value for FBAR, year-end and peak foreign asset values for Form 8938, realized gains, dividends, and foreign tax paid. (FinCEN.gov)

The most expensive mistake is often opening a foreign mutual fund or ETF position that triggers Form 8621 before checking PFIC status. US citizen overseas investments should be reviewed across tax, reporting, and account-access rules before the first trade.

The following 7 best practices help reduce IRS offshore compliance risk:

1. Notify your US broker before changing to a foreign address.
2. Keep written confirmation of trading permissions and account restrictions.
3. Track the highest value of every foreign financial account for FBAR.
4. Track year-end and peak foreign asset values for Form 8938.
5. Avoid foreign mutual funds and ETFs until PFIC status is reviewed.
6. Keep foreign tax withheld records for Form 1116 and foreign tax credit claims.
7. Review state residency before selling large appreciated positions.

A US person abroad with foreign accounts should also keep exchange-rate support. Use a consistent, defensible exchange rate source.

For FBAR, convert the maximum 2025 value of each non-USD foreign account using the Treasury Financial Management Service/Fiscal Service rate for the last day of the calendar year; if no Treasury rate is available, use another verifiable exchange rate and keep the source.

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Having foreign brokerage accounts as a US expat can attract the IRS.

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