Are foreign bank accounts illegal for American citizens?

It’s amazing the rumors that abound about the IRS.  You will not get in trouble for merely having a foreign bank account, so long as you report it properly on your tax return.  Many people and businesses have such accounts in this global economy.  The trouble arises when you earn income overseas, place it in that account and then do not report the income as an American citizen.  There are two forms (FinCEN Form 114 – FBAR and Form 8938) used to report foreign accounts, each applying to different people or companies.  You must include the proper form for you with your return denoting the foreign account and any activity that goes through it.  Many people do try to hide money from the IRS by placing it in foreign accounts, which is illegal and can result in federal prison incarceration.  The IRS is continuing to pressure and even sue foreign financial institutions to learn the names of American depositors in their banks, so all people hiding money in foreign accounts should be forewarned!