Can I send money from my U.S. bank account to my foreign bank account? or vice versa?

I get this question a lot from clients who want to transfer money between their bank accounts, especially once the amount they need to transfer exceeds USD $10,000. I think a lot of people know that transferring money in or our of an account in the U.S. over $10,000 is a reportable transaction, but what many people seem to misunderstand is that this is reported automatically by the bank. This is not a report the account holder is required to submit. Further, transferring money from one of your accounts to another is not a taxable event. You are basically money from the right pocket to the left pocket, no change in economics there and you don't need to report it to anyone just because a foreign account is involved.

What could be a taxable transaction is when the money is being transferred from your account to someone else's account, either another individual or an entity, whether foreign or domestic. In this case, there could be a tax impact and there may be reporting. A transfer of money is generally characterized as a loan, gift, investment, or some type of business transaction (like the purchase of goods or services).

Transfers to/from individuals will generally be loans or gifts, with loans not being taxable or subject to reporting. If it is a gift then under U.S. gift tax rules it is reportable and may be taxable if it exceeds the annual limitation ($14,000 in 2015). We discussed gifts from foreign persons in a previous post so we won't go over it in detail again here, but generally those are only reportable in excess of USD $100,000.

Transfers to/from an entity are a little more complicated, especially if the entity is foreign. One important item to note is that an entity cannot receive or give a gift, so the transaction will be characterized as one of the other three types. We'll save this discussion for another post.

So, yes you can transfer money to or from your U.S. account to or from your foreign account and it will not be taxable or reportable, under current rules, regardless of the amount.

FATCA Update - Revised reporting for Form 8938

Relief for small business in filing Form 3115