FBAR explained: reporting accounts you hold outside the US

What the FBAR is

FinCEN Form 114, the Report of Foreign Bank and Financial Accounts, is an annual report of the financial accounts you hold outside the United States. It goes to the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury, not to the IRS, and you submit it electronically through FinCEN's BSA E-Filing System. It is not attached to your Form 1040, it has its own deadline, and filing your tax return does not file it for you.

Two features make it easy to miss. Nothing is owed with it, so tax software treats it as an afterthought. And the trigger is the balance in your accounts, not whether they earned anything, so a dormant salary account back home can put you in scope on its own.

Your tax return does ask about it. Schedule B, Part III, asks whether you had a financial interest in or signature authority over a foreign account and whether you are required to file FinCEN Form 114. Answer it accurately. A "yes" on Schedule B with no matching FBAR is exactly the kind of mismatch that gets noticed.

Who counts as a "US person"

The filing obligation falls on United States persons: citizens (including minor children), US residents, and US entities and trusts. For anyone here on a visa the word that matters is resident, and FBAR borrows the income-tax definition. You are a US resident for FBAR purposes if you are a resident alien under the Internal Revenue Code, which means you meet either the green card test or the substantial presence test. Your immigration category plays no part in it. If you are not sure where you land, start with the resident vs nonresident guide and run the substantial presence calculator.

• Green card holders are US persons from the day they become permanent residents, wherever in the world they live.
• H-1B and L-1 workers usually become residents for tax purposes in their first full calendar year. If you arrived mid-year your first year may be nonresident or dual-status; from the second year onward you are almost certainly in scope.
• F-1 students are typically exempt from counting days for their first five calendar years, so they are usually nonresidents and outside FBAR until that exemption runs out or they switch to a work visa.

The $10,000 threshold is aggregate, and one day is enough

You must file if the combined maximum values of all your foreign financial accounts exceeded $10,000 at any time during the calendar year. Both halves of that sentence trip people up.

Aggregate means you add every account together. Four accounts holding the equivalent of $3,000 each are $12,000 in aggregate, so you file, and you report all four. At any time means the highest point, not the year-end balance. If you moved $15,000 into a home-country account to cover a family expense and it sat there for two days before being paid out, you crossed the threshold for that year even though the account ended December near zero.

What counts as a foreign financial account

"Foreign" means the account is held at an institution located outside the United States. Where the money came from and what currency it is in do not matter. Accounts that typically have to be reported include:

• Bank deposit accounts of every kind: savings, current or checking, fixed or term deposits, and the special non-resident account types many countries offer their citizens abroad.
• Brokerage and securities accounts, and mutual funds held through a foreign institution.
• Insurance or annuity policies that have a cash value.
• Many retirement, provident and pension accounts held in your own name with a foreign institution. Employer-managed schemes are a gray area, so ask a professional rather than assume either way.
• Accounts at a foreign branch of a US bank. Accounts at a US branch of a foreign bank, on the other hand, are domestic and are not reported.
• Joint accounts, including ones you share with parents or siblings. Each joint owner reports the entire value of the account, not their share.
• Accounts you have signature authority over but no money in, such as a parent's account you can operate for them or an employer account you can sign on.

A child with foreign accounts has their own FBAR obligation; if the child cannot file, a parent or guardian files on their behalf. Physical assets are not accounts: property held directly, gold or cash kept at home, and the contents of a safe deposit box do not go on an FBAR.

Working out the maximum value in dollars

For each account, take a reasonable approximation of the greatest value it held during the calendar year. Periodic statements are acceptable evidence; you do not need a daily ledger. Then convert to US dollars using the Treasury's exchange rate for the last day of the calendar year, published as the Treasury Reporting Rates of Exchange, even if the peak balance happened in March. If Treasury publishes no rate for your currency, use another verifiable rate and record its source.

Use the same year-end rate for the threshold test. An account that looked like $9,500 mid-year can land on either side of $10,000 at the December rate, so do the arithmetic rather than eyeballing it.

Deadline: April 15, with an automatic extension to October 15

The FBAR is a calendar-year report due April 15 of the following year. If you miss April 15 you receive an automatic extension to October 15. There is no form to file and nothing to request; FinCEN simply treats October 15 as the outer date. In practice, then, October 15 is the deadline that matters, but filing alongside your tax return in April keeps the two exercises together and is the habit to build.

You file on the BSA E-Filing site. Individuals use the no-registration option, complete the report, sign it electronically and save the confirmation. If you have a preparer, they can file for you if you sign FinCEN Form 114a authorising them; that form stays in your records and is not submitted.

Then keep your records for five years from the FBAR due date: the name on each account, the account number, the institution's name and address, the type of account and its maximum value for the year. Saved statements and a one-page summary are enough.

Penalties, and how to fix missed years

FBAR penalties are civil and, in serious cases, criminal. The law distinguishes between non-willful violations, where the penalty is a per-violation amount that is capped and adjusted for inflation each year, and willful violations, where the penalty is calculated against the balance of the accounts themselves and can be very large, with the possibility of prosecution on top. Willfulness does not require an intent to cheat; a pattern of ignoring a requirement you should have known about can be treated as willful. Your position is far better if you come forward before anyone asks.

If you missed FBARs but reported all the income from the accounts on your tax returns, the fix is to file the late reports through BSA E-Filing. The form has a drop-down for the reason you are filing late and a box for an explanation. The IRS's own guidance is to file as soon as possible if you have not been contacted about the delinquency and are not under examination.

If interest or other income from those accounts also never made it onto your returns, look at the IRS Streamlined Filing Compliance Procedures. You certify under penalty of perjury that the failure was non-willful, amend several years of returns, and file several years of FBARs. The domestic version carries a penalty calculated as a percentage of your highest foreign balance; the version for people living outside the US has different terms. Do this with a professional who handles offshore compliance regularly. The certification is not something to draft from a template.

Scenarios that catch newcomers

• The salary account you left open. It still counts. If its peak balance combined with anything else abroad exceeded $10,000, you file.
• A joint account with your parents. You report the full balance even if every rupee, peso or yuan in it is theirs.
• Fixed deposits. Each certificate is its own account. A ladder of small deposits adds up quickly in aggregate.
• A home-country retirement or provident fund. Often reportable when it sits in your name at a financial institution. Check the specific scheme.
• Being a signatory for family.Authority to move money in someone else's account is reportable even with no financial interest.
• An account you closed in March. It existed during the year, so it is reported for that year at its peak value.

The FBAR is disclosure, not tax; whether the interest those accounts earn is taxable here is a separate question, and for residents it usually is. The companion report with far higher thresholds is covered in the FATCA and Form 8938 guide.

Other guides on this site

FBAR is one piece of a wider picture. These are the pages most readers of this one need next:

• FATCA and Form 8938 — the second foreign-asset report, filed with your 1040, and how it differs from FBAR.
• Resident vs nonresident alien — the status that decides whether FBAR applies to you at all.
• Green card financial guide — the money checklist for new permanent residents, who are always in scope.