Three questions on Schedule B that every American with a British bank account must answer

Figures relate to tax year 2025 (US)

Near the bottom of Schedule B sit three short questions about foreign accounts and foreign trusts. Most people tick them in seconds. For an American with a British bank account, those ticks carry more weight than any figure on the return.

They are not a tax calculation. They are a sworn statement about what you hold abroad. So this guide covers what each question asks, when you must answer them, and why a wrong tick causes trouble years later.

Key takeaways

• Part III of Schedule B asks about foreign accounts and foreign trusts.
• You must complete it if you have a foreign account, even when your interest income is tiny.
• Answering yes about an account does not by itself mean an FBAR is due.
• The country question needs every country where you hold an account.
• The trust question covers distributions, gifts to a trust and being its creator.
• A wrong tick can later support a finding that a failure to report was willful.

What is Schedule B?

It is the schedule that reports interest and ordinary dividends on your federal return. Parts I and II list the income. Part III asks about foreign accounts and foreign trusts. Most people think of it as an interest form, which is exactly why Part III gets overlooked.

You normally file it when interest or dividends pass $1,500. But Part III has its own trigger. If you hold a foreign account or deal with a foreign trust, you complete it whatever your income.

When do you have to complete Part III?

Whenever you owned, or could sign on, an account outside America at any point in the year. It also applies if you received a distribution from a foreign trust, or created or gave money to one. An American with a British current account therefore files Schedule B every year.

The account does not have to earn interest. A British current account paying nothing still counts. So does a joint account with a spouse, and an account you can sign on for an employer.

Question one: do you have a foreign account?

The first question asks whether you owned, or could sign on, any account outside America at any point in the year. For most Americans in Britain the honest answer is yes. Bank accounts, savings accounts, ISAs held with a British provider and brokerage accounts all count.

A follow-up asks whether you must file an FBAR. That depends on the combined highest balances crossing $10,000. So you can answer yes to holding an account and no to needing an FBAR, if your balances stayed small.

Our guide to FBAR deadlines and penalties covers the threshold and how to calculate it.

Question two: which countries?

The second question asks you to name each country where you hold an account. For most readers that is the United Kingdom. Add any other country where you keep money, such as a savings account left behind in Ireland or a brokerage account in Switzerland.

It sounds trivial, and usually it is. But leaving a country off is an inaccuracy on a signed return, so list them all.

Question three: foreign trusts

The third question asks whether you received a distribution from a foreign trust, or were its grantor or a transferor to it. Many British families use trusts, and an American beneficiary can easily tick no without realizing a payment counted.

School fees paid by a family trust, or a deposit paid on your behalf, are distributions. According to IRS guidance on foreign trust reporting, a yes here usually means Form 3520 is also due. Our guide to UK trust distributions explains that form in detail.

What about pensions and joint accounts?

Both usually count. A British workplace or personal pension can be a foreign financial account for these questions. A joint account with a spouse counts in full for each holder. So the list behind Schedule B often runs longer than people expect.

Advisers debate how some retirement accounts fit the FBAR rules. In practice we list them, because leaving them off creates more risk than including them.

Joint accounts need one more step. Each American holder reports the full balance on their own FBAR, not half.

What if you only held an account for a few days?

It still counts. The question asks about any time during the year, so an account open for a week in January belongs on the list. The same applies to one you closed in February. Short-lived accounts are the easiest ones to forget.

Moving house or changing bank often creates them. A new account opened before the old one closed means two accounts for that year, and both are reportable.

Why does a wrong tick matter so much?

Because you sign the return under penalty of perjury. A no on the foreign account question, when you held a British account, is a false statement on a sworn document. In FBAR penalty cases, courts have treated that tick as evidence that a failure to report was willful.

Willfulness changes everything. The penalty for a non-willful FBAR failure is modest by comparison. A willful one can reach half the account balance for each year.

In our practice this is the question we check first on any return we inherit. A tick in the wrong box can turn a simple catch-up into a much harder conversation.

A worked example

The figures below are illustrative. Take an example: an American in Bristol holds a current account and a cash ISA, with combined balances peaking at £14,000 in 2025. Interest totals £180.

Interest is well under $1,500, so the income alone would not require Schedule B. But the accounts do. Part III must be completed, with yes on the account question and yes on the FBAR follow-up.

The country is the United Kingdom. There is no trust involvement, so the trust question is no. The FBAR is then filed separately with FinCEN by the deadline.

What if you ticked the wrong box in past years?

Correct it through a proper route rather than quietly. Amending one year in isolation leaves the others inconsistent and draws attention to the change. For most Americans abroad who never knew the rules, a streamlined filing puts every year right together.

The statement in that filing explains why the boxes were wrong. Honest reasons, such as relying on software that defaulted to no, fit comfortably within the program.

Software defaults cause more of these errors than people admit. Many packages pre-fill Part III with no, and a busy filer never scrolls that far down.

How to answer Schedule B Part III correctly

Work from a list, not from memory. The list becomes the backbone of your FBAR and your Form 8938 as well, so building it once saves time everywhere else.

1. List every account outside America you owned, shared or could sign on during the year.
2. Include ISAs, pensions with cash accounts, brokerage accounts and joint accounts.
3. Record each account's highest balance and convert it using the year-end Treasury rate.
4. Answer the account question yes if the list contains anything at all.
5. Answer the FBAR follow-up yes if the combined highest balances exceeded $10,000.
6. Name every country on the list in the country box.
7. Check for any trust payments, gifts to a trust or trusts you created, and answer the trust question.

What about accounts belonging to your children?

An account in your own name for a child counts as yours. An account in the child's name belongs to the child, and an American child may have their own reporting duty. Parents often sign on those accounts too, which can bring signature authority into play.

Junior ISAs and children's savings accounts are common examples. Add them to the family list, then decide whose return each one belongs on.

This catches families out every year. The accounts are small, so nobody thinks of them. Yet the questions ask about any account, whatever its size.

Does Part III link to other forms?

Yes, three of them. A yes on the account question often goes with an FBAR, and above higher thresholds with Form 8938 as well. A yes on the trust question usually brings Form 3520.

Consistency across those forms matters. A return that ticks no while an FBAR shows accounts, or ticks yes with no FBAR when one was due, invites questions.

So complete them from the same list, on the same day, with the same balances. That one habit removes most of the mismatches we see in returns prepared by different people at different times.

Does Part III change if you file jointly?

It covers both spouses on a joint return. If your British spouse elected to be treated as a US resident so you could file jointly, their accounts count too. Most couples in Britain file separately instead, and then Schedule B covers only your own accounts, including joint ones.

Check each account's ownership before ticking. Bank statements show the account holders, and that is the evidence an examiner would look at first.

How long does it take to get right?

Once the list exists, about ten minutes a year. Building it the first time takes longer. Old accounts, a forgotten ISA or a child's savings account in your name all need finding. After that, each year is an update, not a rebuild.

Keep the list with your tax papers. Add accounts as you open them. Mark the date you close any account.

Mistakes and penalties we see on Schedule B

• Skipping Schedule B because interest was under $1,500, despite holding British accounts.
• Ticking no on the account question because the account paid no interest.
• Answering yes on the account question but no on the FBAR follow-up when balances were high.
• Leaving out a second country where an old account still sits.
• Missing trust distributions paid straight to a school or solicitor.
• Accepting a software default of no without reading the question.

The direct penalty for a wrong tick is rarely the issue. The indirect cost is the one to fear, because a false answer can shape how the IRS judges every other failure.

Getting it right costs nothing but attention. Read each question slowly, check the list, and answer honestly every year.

How US UK Tax Accountants helps

We build the account list with you once, then use it for Schedule B, the FBAR and Form 8938 every year. Where earlier returns got the boxes wrong, we fix them properly rather than quietly. If you hold British accounts and file in America, get in touch and we will check your last three returns alongside our FBAR and FATCA work.

Last reviewed 22 September 2026. This article is general information and not personal tax advice. The wording of the questions changes slightly between years, so read the current form before answering.