When filing the FBAR (Foreign Bank Account Report), officially known as FinCEN Form 114, U.S. persons must report the maximum value of each foreign financial account in U.S. dollars. Since many accounts are denominated in local currencies, it’s essential to convert those balances accurately using approved exchange rates. This guide walks you through how to value foreign accounts for FBAR purposes, convert currencies correctly, and avoid common mistakes in the 2025 filing season.
📏 What Value Do You Report on the FBAR?
You are required to report the highest balance of each foreign account during the calendar year—not just the year-end balance.
- Check monthly or daily account statements to identify the peak balance in local currency
- Do not average balances or report only the ending balance
Important: You must convert the highest foreign balance to USD using the correct exchange rate provided by the U.S. Treasury.
🌍 Official Source for Currency Conversion: U.S. Treasury Rates
The U.S. Department of the Treasury publishes official exchange rates each year, known as the Treasury Reporting Rates of Exchange.
- Use the December 31, 2025 exchange rate published by the Treasury for FBAR filing in 2026
- Do not use IRS, bank, or commercial exchange rates unless no Treasury rate exists
- If a currency is not listed, you may use other consistent and reasonable exchange sources (e.g., OANDA or XE) and attach documentation
🧮 How to Convert Foreign Currency to USD
Formula:
Maximum Foreign Account Value (in Local Currency) × Exchange Rate = USD Value
Example:
- You held €20,000 in a European account
- December 31, 2025 U.S. Treasury exchange rate = 1.10 USD per EUR
- FBAR Reported Value = $22,000
Repeat this process for each foreign account using the applicable local currency and exchange rate.
🧾 Reporting on the FBAR Form
When entering values in FinCEN Form 114:
- Round to the nearest whole dollar
- Do not use cents
- If the account is jointly held, report the full value unless you’re eligible to split it
🚫 Common Currency Conversion Mistakes
- Using year-end balance instead of highest balance during the year
- Using commercial or IRS exchange rates instead of Treasury rates
- Failing to convert before comparing against the $10,000 threshold
- Omitting accounts in currencies without a published Treasury rate
- Rounding down instead of rounding to the nearest dollar
🧠 Tips for Accurate FBAR Valuation
- Use monthly or quarterly bank statements to determine peak balances
- Document how you calculated the value for audit defense
- Save a PDF or screenshot of the Treasury exchange rate page used
- If using a third-party exchange rate (where Treasury has none), clearly cite the source
📌 Summary
To stay compliant with FBAR requirements in 2025, it’s essential to accurately convert foreign account balances to U.S. dollars using the U.S. Treasury’s year-end exchange rates. Always report the maximum value held during the year—not just the balance on December 31. Avoiding conversion mistakes can help you steer clear of penalties and ensure accurate foreign account disclosure.
If you’re unsure how to value your foreign assets or have complex accounts across multiple countries, consult a tax professional experienced in international compliance and FBAR reporting.
