FBAR, Form 8938 and Double Taxation: Living Abroad on a US Annuity
Written by Hans Goldstein, licensed insurance agent · CA 4273294Short answer: a US annuity from a US insurer is not reportable on FBAR (FinCEN 114) or Form 8938. The foreign bank account you spend from is: FBAR once all your foreign accounts together pass $10,000 at any time in the year. Double tax is avoided because your new country taxes the annuity first and the treaty lets the US credit that tax, so you pay roughly the higher of the two bills (IRS, treaty texts, 2026).
Free guide: Moving abroad on a fixed income
Income rules and taxes by country: Norway, Switzerland, Sweden, Italy, Spain, Malta and more, plus how a lifetime annuity fits.
The paperwork side of living abroad worried my parents almost as much as the tax itself. The good news for anyone planning to live on a US annuity: the income source stays off the foreign-asset forms. Only the local spending account shows up, and you control how big that gets.
FBAR versus Form 8938
| FBAR (FinCEN Form 114) | Form 8938 (FATCA) | |
|---|---|---|
| Who files | US persons: citizens, residents, entities | Specified individuals: citizens and resident aliens |
| Threshold | All foreign accounts together over $10,000 at any time in the year | Living abroad, single: over $200,000 on Dec 31 or $300,000 at any time. Living abroad, joint: $400,000 / $600,000 |
| Where it is filed | FinCEN BSA e-filing, separate from your tax return | Attached to Form 1040 |
| US annuity from a US insurer | Not reportable | Not reportable |
| European bank account receiving the payments | Reportable over the threshold | Reportable over the threshold |
| Foreign-issued annuity or life policy with cash value | Reportable | Reportable |
| Foreign mutual funds | Reportable | Reportable, plus Form 8621 if a PFIC |
Penalties are serious, so file on time. Since Bittner v. United States, 598 U.S. 85 (2023), the non-willful FBAR penalty is counted per report, not per account. Penalty amounts are inflation-adjusted; check the current figures with a tax professional.
Single or married: one FBAR or two, and the Form 8938 thresholds
- FBAR for couples: each US-person spouse normally files. One spouse can file for both only if all of your foreign accounts are jointly owned, the other spouse signs FinCEN Form 114a, and the filing spouse reports the joint accounts on a timely FBAR. Your income tax filing status does not change this.
- Form 8938 abroad: single (or married filing separately) over $200,000 on December 31 or $300,000 at any time; married filing jointly over $400,000 on December 31 or $600,000 at any time.
- A spouse who is not a US citizen: you can choose to treat them as a US resident and file jointly, but then both of you report worldwide income every year until the choice ends. Ask your preparer how that choice affects your reporting.
Example, a couple both 62: the annuity and Social Security are deposited to a US account and they keep about $40,000 in a local account. They file one FBAR (joint account, Form 114a signed) because they are over $10,000, and they are far below the $400,000 joint Form 8938 threshold for people living abroad. The annuity itself is on neither form.
Why the US still taxes you: the saving clause
US treaties say a private annuity paid to a resident of the other country is taxable "only" there. But each of these treaties has a saving clause that lets the US tax its citizens as if the treaty did not exist, and the annuity articles are not among its exceptions. So as a US citizen you file a US return every year, wherever you live.
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Estimates use the September 9, 2026 ImmediateAnnuities.com payout survey (life only) and a 15% cushion. Illustrative, not a quote.
How double tax is removed
- The host country taxes first.
- The source problem. Payments from a US insurer are US-source income, and the foreign tax credit normally only offsets US tax on foreign-source income.
- Treaty re-sourcing fixes it. Most modern treaties deem income the US taxes only because of citizenship to arise in the residence country, to the extent needed to avoid double tax. The US then credits the host tax on Form 1116.
- Net result: roughly the higher of US tax or host-country tax on that income, not the sum.
On Form 1116 a purchased annuity is passive category income. The separate "certain income re-sourced by treaty" category does not apply to income re-sourced by a relief rule that applies only to US citizens living in the treaty country (Form 1116 instructions; IRC §904(d)(6)), which is exactly the rule these annuities use. A treaty-based position may also call for Form 8833; ask your preparer. Where there is no re-sourcing rule (Norway, Greece), the annuity stays US-source, the US gives no credit for the host tax on it, and relief comes from the host country crediting the US tax. One limit: foreign tax credits cannot offset the 3.8% net investment income tax (Toulouse v. Commissioner, 2021; Christensen v. United States, Federal Circuit, August 31, 2026), which only applies above $200,000 single or $250,000 joint modified AGI.
The annuity article in each treaty
| Country | Annuity article | Who taxes first | Re-sourcing for US citizens (relief article) |
|---|---|---|---|
| Norway | Art. 18(2) | Norway under the treaty; the US taxes citizens under the saving clause (Art. 22(3)) | No re-sourcing rule (source follows domestic law, Art. 24(10)); Norway credits US tax on US-source income (Art. 23(2)(b) and Norwegian credit rules); confirm with an adviser |
| Sweden | Art. 19(1) | Sweden | Yes, Art. 23(3) |
| Denmark | Art. 18(3) | Denmark | Yes, Art. 23(2) |
| Spain | Art. 20(2) | Spain | Yes, Art. 24(3) |
| Italy | Art. 18(2) | Italy | Yes, Art. 23(4)(b) |
| Germany | Art. 18(2) | Germany | Yes, Art. 23(5) (as amended by the 2006 Protocol) |
| Switzerland | Art. 18(2) | Switzerland | Yes, Art. 23(3) |
| United Kingdom | Art. 17(4) | UK | Yes, Art. 24(6) |
| Malta | Art. 17(3) | Malta | Yes, Art. 23(4) |
| Greece | Art. XI(2) | Greece | No re-sourcing; Greece credits US tax on US-source income up to the Greek tax (Art. XIV(3)), and AADE decision A.1192/2026 applies that credit within the 7% regime |
Withholding follows your address, not your bank
Under IRC §3405(e)(13) and Treasury regulation §31.3405(e)-1 (T.D. 10008, which applies to payments from January 1, 2026), a US citizen whose residence address on file with the insurer is outside the US cannot opt out of federal income tax withholding, even if the payments go to a US bank account. Only the taxable part of each payment is withheld on, and the withholding is a prepayment credited on your US return, not an extra tax. Before 2026 many people avoided withholding by using a US bank account; the final regulations closed that. A US account is still worth keeping: deposits land there, you convert currency when you choose, and your foreign account balance, and your FBAR and Form 8938 exposure, stays small.
Your new country may see the annuity as foreign
From the host country’s side, a US annuity is a foreign contract. Spain (Modelo 720), France (forms 3916 and 3916-bis) and Italy (the RW section) have their own reporting for foreign assets, and the thresholds and rules change. Ask a local adviser what applies to your contract. Norway is the one place where "foreign" works in your favor: a US-issued annuity is outside Norwegian wealth tax.
If you are planning a move and want to see how much lifetime income you would need for the permit, run your numbers with the calculator on this page.
Frequently asked questions
Related reading
- Moving abroad on a fixed income: hub
- How European countries tax a US annuity
- Why a US annuity is tax-favored: the exclusion ratio
- Countries with a wealth tax and whether an annuity helps
- US taxes while living in Norway
Sources
- IRS: Comparison of Form 8938 and FBAR requirements
- 26 U.S.C. section 3405: withholding, (e)(13)
- T.D. 10008: final regulations under section 3405(e)(13), applicable January 1, 2026
- 31 CFR 1010.350: FBAR, foreign accounts incl. foreign cash-value insurance and annuity policies
- IRS Instructions for Form 1116: passive income and income re-sourced by treaty
- 26 U.S.C. section 904(d)(6): items re-sourced under treaties
- US-Denmark income tax treaty (1999)
- US-Germany 2006 Protocol (new Article 23)
- US-Malta income tax treaty (Treasury)
- Christensen v. United States, Fed. Cir. (August 31, 2026)
- US-Norway income tax treaty
- US-Spain income tax treaty
- US-Italy income tax treaty
- US-Germany income tax treaty
- US-Switzerland income tax treaty
- US-Greece income tax treaty
- US-Sweden treaty technical explanation
- US-UK income tax treaty (Treasury)
- IRS: Report of Foreign Bank and Financial Accounts (FBAR), spouses and Form 114a
- IRS: Nonresident spouse (choice to file jointly)
Goldstein & Co. LLC dba Goldstein Insurance Services · Hans Goldstein, licensed insurance agent, CA lic. #4273294 · NPN 20602398 · 213-414-2808 · hans@hansgoldstein.com
Education, not tax, legal or immigration advice. Rules, thresholds and exchange rates change; confirm with the consulate or immigration authority and a local tax adviser before you act, and get answers in writing. Hans Goldstein is a licensed insurance agent (CA 4273294) and can only offer annuities to residents of states where he is licensed. Annuity payments are guaranteed by the issuing insurer’s claims-paying ability, not by any government. Payout figures are illustrations from a published survey, not quotes. Immediate annuities are generally irrevocable.