Copyright 2013 John T. Reed

Many are avoiding foreign financial accounts because they fear that having to report them to the U.S. government will somehow result in the confiscation of their savings. I think that is kooky, but for the purposes of this article, I will humor them.

Some may avoid foreign financial accounts because they do not want to fill out the two annual forms: Form TD F 90-22.5 (you send to the Department of the Treasury before June 30 each year) and Form 8938 (which is part of your normal IRS 1040 income tax form due on April 15th each year). I don’t care for it either.

What’s worse is that there are possible severe penalties for making honest mistakes on the forms—even though these are not tax returns! They are just sort of 1099s on yourself that you fill out. And they are not even 1099s because those are about income, which is taxed. These forms are about principal, which is not taxed.

Are there ways to avoid being obligated to fill out these forms?

Less than $10,000

One way is to simply keep your foreign financial accounts small enough that you do not cross the threshold that forces you to have to file the forms.

That threshold is $10,000. If the total of all your foreign financial accounts is less than $10,000 worldwide, you are not required to file either Form TD F 90-22.5 or Form 8938.

The disadvantage of that is that you would not be able to protect much money from USD hyperinflation through the use of a liquid assets, foreign currency. You would be forced to rely on hard assets which are less liquid. Lack of liquid assets can cause great financial losses. And it is very hard to buy a bag of groceries or fill up your car with hard assets.

Less than $100,000

If you keep them between $10,000 and $100,000 worldwide, you have to fill out Form TD F 90-22.5, but not Form 8938.

The disadvantage of that is that you would not be able to protect more than $100,000 from USD hyperinflation through the use of liquid foreign money.

Safe deposit box

If your foreign money is in the form of cash in a safe deposit box in a foreign bank, you do not need to report it at all—regardless of the amount. See my web article on that at Also see

Of course, there are a couple of disadvantages:

1. Cash loses purchasing power if the currency in question suffers from inflation while it is there.

2. Depending on how far your home is away from the foreign safe deposit box, visiting the safe deposit box to put money into it or take them out will incur travel costs.

3. If the cash is not the local currency of the country where the safe deposit box is—like the Swiss francs I have in a Canadian safe deposit box—you have to buy them from a foreign currency dealer and such cash costs more to acquire and spend or convert back to local currency than the same currency in the form of a bank deposit.


On the other hand, foreign cash can have advantages, too. As it happens, my Swiss francs in the Canadian safe deposit box have been in the form of cash during a time when the Swiss franc has experienced deflation. During deflation, the purchasing power of cash goes up, not down.

Similarly, at present, Switzerland has been trying to make its currency worth fewer euros and part of that has been to charge depositors to Swiss bank accounts negative interest. I have to pay my annual safe deposit box rent. But not negative interest.

Generally, you cannot get a safe deposit box unless you also have an account at the bank. I have one in the U.S. where I have no accounts, but where we used to have accounts. When we stopped having accounts, they did not make us stop having the box, but they might do that if there were a shortage of safe deposit boxes in that branch. So maybe you could open an account with less than $10,000 in Canada or somewhere to get the safe deposit box, then either keep the account below $10,000 to keep the box and still avoid reporting, or maybe even terminate the account and keep the box without the account by sort of being grandfathered in.

Cost to visit

The cost to visit can be near zero if the box is in Canada and you live in the U.S. on the Canadian border. In theory, the same could be true of Mexico, but I tend to regard Mexico as simply not an alternative—because of high crime—especially when you are going to be walking around with cash.

With bank accounts, you can put money all over the world via wires or mail or Fedex and you can withdraw it the same way or with ATM cards.

Foreign cash other than the local currency

With a safe deposit box containing cash, you can buy foreign currencies other than the local currency in Canada to diversify the contents of the box, but as I said above, there will be a higher cost to acquire non-local foreign cash and there will be a higher cost to get rid of it or spend it as well. There are no such costs to having Canadian currency in a Canadian safe deposit box. But Canada is not Switzerland so if you have Swiss francs there you will probably pay extra both acquiring them and spending them.

Of course, I could go to Canada, take out my Swiss francs and fly to Switzerland to spend them. I can carry any amount—setting aside robbery risk. The $10,000 amount is only the threshold at which you must declare that you have the cash when you cross the border. But there is no $10,000 limit on how much you can have, just on how much you can have without mentioning it to the border guards.

Border crossings now frequently have currency-sniffing dogs, so nhey would likely find your cash even if it wer eless than $10,000. And the fact that you do not have to declare les than $10,000 does not mean the border guys cannot ask you how much cash you have on you. Last time I returned from Canada, the U.S. border guy asked me how much cash I had on me. About $150 was the answer. Apparently he was just fishing.

One of my readers went across the border with something like $45,000, did not declare it and got caught. Nothing happened, but they are allowed to confiscate it! Why not declare it or make five separate trips if you can’t stand to declare it for some reason.

Are there any other countries where you could have safe deposit boxes and local currencies? Sure. There are over 200 countries in the world. But you have to travel to them to use a safe deposit box and there is no place in America that is close to a lot of countries. What spot in the U.S. puts you close to the maximum number of foreign countries? I guess the U.S. Virgin Islands or Puerto Rico.

One problem in that part of the world is many of the foreign Caribbean islands use the U.S. dollar as their official currency. Now, once we get USD hyperinflation, those countries will immediately switch to other official currencies, whereas the U.S. will outlaw the use of any non-U.S. dollar currency by residents within America. So USD hyperinflation will end overnight in the foreign countries that use the USD as their official currency, although that one day will be enough to wipe out much of the purchasing power of the USD-denominated assets of the people in those countries and all people around the world who own USD cash or USD-denominated assets

If you live in a foreign country instead of the U.S., there are some places where there are multiple countries in a relatively small space. One is between Mexico and Colombia in Central America—although a couple of those countries use te USD as their official currency, too. Another is Denmark-Holland although 17 European countries use the same euro currency (Britain, Denmark, Sweden, and Norway have their own currencies). Switzerland reportedly has great trains service everywhere. And it borders France, Italy, Germany, Austria, Liechtenstein. Unfortunately, they only use two currencies: the Swiss franc in Switzerland and Liechtenstein and the euro in the others.

There are a lot of countries squeezed into the Balkans, but they are rather squirrelly places to be walking around with a lot of cash. And the two most attractive countries in the area—Greece and Italy—use the euro.

So a safe deposit box is a cumbersome, expensive—because of travel costs—but if you have the time and the money to travel to the various box locations, or you are already regularly going there for business or to visit relatives, incremental distance and cost are not issues to you.

John T. Reed