Joint Bank Accounts in Hong Kong and FBAR: Reporting Responsibilities for Each US Account Holder

The 2025 US Treasury Fiscal Year 2025 Revenue Proposals, released in March 2024, included a provision to codify the IRS’s long-standing position that each holder of a joint foreign financial account is jointly and severally liable for the entire balance for FBAR purposes. This proposal, combined with the IRS’s continued expansion of its Global High Wealth Industry group and the increasing data-sharing capabilities under the US-Hong Kong Tax Information Exchange Agreement (TIEA, effective 2016), has created a new compliance landscape for US persons with joint accounts in Hong Kong. For a US citizen or Green Card holder residing in Hong Kong, the question is no longer whether to report a joint account, but precisely how each account holder’s reporting obligation is calculated, especially when the other joint holder is a non-US person. The stakes are high: the maximum civil penalty for a non-willful FBAR violation is now USD 16,553 per violation (adjusted for inflation in 2024), while willful violations can reach the greater of USD 165,536 or 50% of the account balance per violation. Understanding the specific reporting obligations for each US person on a joint Hong Kong bank account is not optional—it is a direct function of the Bank Secrecy Act (BSA) and the Internal Revenue Code (IRC).

The FBAR Obligation: Joint Accounts and the “Financial Interest” Test

The core of the FBAR (FinCEN Form 114) reporting obligation for a joint account holder hinges on whether the US person has a “financial interest” in the account. Under the BSA regulations at 31 CFR § 1010.350, a US person has a financial interest in a bank, securities, or other financial account in a foreign country if the account is held jointly with another person. For a Hong Kong joint account, this is almost always the case, irrespective of the other holder’s nationality or residency.

The “Joint Account Holder” Definition Under 31 CFR § 1010.350

The regulation is unambiguous: a US person has a financial interest in a foreign financial account for which the US person is the owner of record or has signature or other authority. For a joint account opened at a Hong Kong bank (e.g., HSBC, Standard Chartered, Bank of China Hong Kong), each named account holder is an owner of record. The IRS’s Financial Crimes Enforcement Network (FinCEN) has consistently held that each joint account holder must report the account on their own FBAR. This is not a “per account” filing—it is a “per person” filing. If Mr. A (US citizen) and Mrs. B (Hong Kong permanent resident, non-US person) hold a joint account at DBS Bank Hong Kong with a balance of HKD 5,000,000 (approximately USD 640,000), Mr. A must file an FBAR reporting the entire HKD 5,000,000 (converted to USD) as his maximum value. Mrs. B, as a non-US person, has no FBAR obligation.

The “Maximum Value” Calculation for Joint Accounts

The FBAR requires reporting the maximum account value during the calendar year. For a joint account, the US person reports the entire maximum value, not their share. This is a critical distinction from US domestic reporting (e.g., Form 1099-INT, which might be issued per taxpayer identification number). The IRS’s FBAR Reference Guide (2024) explicitly states: “For a joint account, the maximum value is the entire value of the account, not just the account holder’s share.” This means that if the account balance fluctuates between HKD 1,000,000 and HKD 10,000,000 during the year, the US person must report HKD 10,000,000 (converted to USD at the year-end exchange rate, or the rate on the date of the maximum value, per FinCEN guidance). A common error is to report only the US person’s beneficial share—say, 50%—which is incorrect and can trigger an IRS examination.

The “Signature or Other Authority” Trap for Non-Owner Joint Holders

A separate but related issue arises when a US person is a joint holder solely for convenience (e.g., a parent added to an adult child’s account for emergency access). Under 31 CFR § 1010.350(f)(2), a US person with signature or other authority over a foreign financial account must also file an FBAR, unless the account is held by a financial institution or is otherwise exempt. In Hong Kong, where many families maintain joint accounts for ease of inheritance or medical emergencies, the US person who never deposits or withdraws funds but is listed as a joint holder still has a reporting obligation. The IRS has not provided a “de minimis” exception for signature authority over a joint account. The only exception is for an officer or employee of a publicly traded company with signature authority over a corporate account, which does not apply to personal joint accounts.

FATCA Form 8938: A Separate, Parallel Reporting Regime

While the FBAR is an anti-money-laundering tool under the BSA, FATCA (Foreign Account Tax Compliance Act) reporting via Form 8938 is a tax-compliance tool under IRC § 6038D. The two forms have different thresholds, different definitions of “financial account,” and different penalty regimes. For a US person in Hong Kong holding a joint account, both forms may be required, but the reporting rules differ significantly.

Specified Foreign Financial Assets (SFFA) and Joint Accounts

Under IRC § 6038D, a “specified foreign financial asset” includes any financial account maintained by a foreign financial institution (e.g., a Hong Kong bank). For a joint account, the IRS has issued guidance in the Form 8938 instructions that each US person who is an owner of record must report the account if their “interest” in the account exceeds the applicable threshold. The threshold for a US citizen living in Hong Kong (a “specified individual” who files a joint return) is USD 400,000 in total specified foreign financial assets on the last day of the tax year, or USD 600,000 at any time during the year. For a single filer, the thresholds are USD 200,000 and USD 300,000, respectively.

The “Pro Rata Share” Reporting for Form 8938

Crucially, for Form 8938, the IRS allows—and in some cases requires—the reporting of the account’s maximum value based on the US person’s pro rata share of the account. The Form 8938 instructions (2024) state: “If you have a joint interest in a specified foreign financial asset, you must report your interest in the asset. Your interest is generally your pro rata share of the asset based on your ownership interest under local law.” In Hong Kong, where joint accounts are often held as “joint tenants with right of survivorship” (JTWROS), local law generally presumes a 50/50 ownership interest unless a contrary agreement exists. Therefore, for Form 8938, Mr. A would report 50% of the HKD 5,000,000 joint account (i.e., HKD 2,500,000, or approximately USD 320,000), not the entire balance. This is a direct contradiction to the FBAR reporting rule.

The Interaction Between FBAR and Form 8938 Penalties

The two regimes have separate penalty structures. A failure to file Form 8938 carries a penalty of USD 10,000 per failure, with an additional USD 50,000 penalty if the failure continues for 90 days after IRS notice (IRC § 6038D(d)). The FBAR penalty, as noted, can be far higher. The IRS does not allow a “credit” for filing one form against the other. A US person who correctly files Form 8938 with a pro rata share but fails to file the FBAR with the full balance is still subject to FBAR penalties. Conversely, a person who files the FBAR with the full balance but omits the joint account from Form 8938 (because the pro rata share falls below the threshold) is still subject to Form 8938 penalties. The only safe approach is to file both forms, each according to its own rules.

The US-Hong Kong TIEA and Information Sharing: What the IRS Already Knows

The US-Hong Kong Tax Information Exchange Agreement (TIEA), signed in 2014 and effective in 2016, provides the IRS with a robust mechanism to request account information from Hong Kong financial institutions. For a US person with a joint account in Hong Kong, this means the IRS can, and does, obtain account details—including balances, transaction history, and the identity of all joint holders—without the consent of the account holder.

TIEA Article 5: Exchange of Information Upon Request

Under Article 5 of the US-Hong Kong TIEA, the competent authority of Hong Kong (the Inland Revenue Department, or IRD) must provide information upon request that is “foreseeably relevant” to the administration or enforcement of US tax laws. This includes information on all persons holding an interest in a financial account. The IRS has used this authority to conduct “John Doe” summonses and targeted examinations of US persons with accounts at specific Hong Kong banks. In 2023, the IRS’s Large Business & International (LB&I) division specifically cited Hong Kong as a jurisdiction of focus for its Global High Wealth industry group, which targets individuals with assets over USD 10 million.

The Data-Sharing Gap: What the IRS Does Not Automatically Receive

Unlike the Foreign Account Tax Compliance Act (FATCA) intergovernmental agreements (IGAs) with many other jurisdictions, Hong Kong does not have a FATCA IGA. Hong Kong financial institutions do not automatically report account information to the IRS under FATCA. Instead, Hong Kong has a “Model 2” IGA, which requires Hong Kong financial institutions to report information to the IRD, which then transmits it to the IRS upon request. This means there is no automatic, bulk data exchange. However, the IRS can, and does, make targeted requests. For a joint account holder who is not in compliance, the risk is not automatic detection but rather detection triggered by a specific audit or by information obtained from another source (e.g., a whistleblower, a foreign bank’s compliance review, or a related party’s examination).

The Practical Risk for Hong Kong Joint Account Holders

The practical reality for a US person in Hong Kong is that the IRS can obtain joint account information with relative ease if it decides to investigate. A joint account with a non-US person (e.g., a Hong Kong spouse or business partner) does not shield the US person from reporting. In fact, it may increase scrutiny, as the IRS may view the arrangement as a potential vehicle for unreported income or gifts. The IRS’s 2024-2025 Priority Guidance Plan includes a project on “guidance regarding the reporting of foreign financial assets,” suggesting that further clarity—and potentially stricter rules—is on the horizon.

Actionable Takeaways

1. File the FBAR with the full account value: For any joint Hong Kong bank account where you are a named holder, report the entire maximum value of the account on FinCEN Form 114, regardless of your beneficial share.
2. File Form 8938 with your pro rata share: Separately, report your pro rata share of the same joint account on Form 8938, using the 50/50 presumption under Hong Kong JTWROS law unless a contrary agreement exists.
3. Do not rely on the “signature authority” exception: Even if you never use the joint account, your status as a joint holder creates a reporting obligation for both FBAR and Form 8938.
4. Maintain separate records of the non-US joint holder’s identity and contributions: In the event of an IRS examination, documentation showing the non-US holder’s independent contributions can support the pro rata share calculation for Form 8938.
5. Review the account annually for the “maximum value” spike: A single large deposit or transfer that creates a temporary high balance can set the FBAR reporting value for the entire year; monitor the account and plan transactions to avoid unintended spikes.

本文不構成稅務建議。涉及個人稅務情況請諮詢持牌會計師或稅務師。 This does not constitute tax advice. Consult a licensed CPA or tax advisor for your specific situation.