The Report of Foreign Bank and Financial Accounts (FBAR), officially known as FinCEN Form 114, is an annual filing requirement for U.S. persons who have a financial interest in or signature authority over foreign financial accounts that, in aggregate, exceed $10,000 at any time during the calendar year. Filing the FBAR on time and accurately is critical to avoid significant penalties and maintain compliance with U.S. Treasury requirements.
Who Must File FBAR?
U.S. persons—defined as citizens, residents, corporations, partnerships, limited liability companies, trusts, and estates—must file FinCEN Form 114 if they meet the reporting threshold. This includes accounts held directly, indirectly, or by signature authority, such as:
- Foreign bank accounts (checking, savings, deposit).
- Foreign securities or brokerage accounts.
- Foreign mutual funds and similar pooled funds.
- Foreign-held annuities or insurance policies with a cash value.
Filing Threshold and Account Aggregation
The $10,000 threshold applies to the combined maximum values of all applicable foreign accounts. If at any point during the calendar year the total value exceeds $10,000, the FBAR must be filed—even if the aggregate balance falls below $10,000 by year-end.
Note that U.S. persons must aggregate accounts across all foreign financial institutions. Partial ownership through entities such as partnerships may also trigger filing obligations if the underlying accounts exceed the threshold.
Annual Report Deadline
The FBAR is due April 15 following the calendar year being reported. For example, the FBAR covering accounts held during the 2024 calendar year is due by April 15, 2025. This filing deadline coincides with the individual U.S. tax return due date (Form 1040).
However, FinCEN provides an automatic extension of six months, making the extended deadline October 15. No separate request is necessary to obtain this extension—it applies automatically to all FBAR filers.
Automatic Extension Rules
Unlike many tax forms that require a formal extension request, FBAR filers receive the six‑month extension automatically. Key points include:
- No Form 4868 or separate FinCEN form is required to obtain the October 15 extension.
- Filing on or before October 15 avoids late-filing penalties even if the April 15 date is missed.
- Extensions only apply to the filing date; FBAR filers must still report the maximum account values as of December 31 of the reporting year (or the maximum balance during the year).
How to File FBAR
FinCEN Form 114 must be filed electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System. Paper submissions are not accepted. The e‑filing process involves:
- Registering for a BSA E-Filing System account if you do not already have one.
- Completing the online version of Form 114, including account holder information, maximum account values, and institution details.
- Reviewing the form for accuracy and submitting prior to the deadline (April 15 or October 15, if extended).
Penalties for Late or Non‑Filing
Failure to file FBAR, or filing an inaccurate form, carries significant penalties:
- Non‑willful Violations: Up to $12,921 per violation (adjusted for inflation each year).
- Willful Violations: Greater of $129,210 or 50% of the account balance at the time of the violation.
“Non‑willful” refers to inadvertent failures, whereas “willful” implies deliberate disregard of the FBAR requirements. Penalty assessments can be per account and per year, leading to substantial cumulative liabilities.
Late Filing Relief Programs
For taxpayers who have not previously filed required FBARs, the IRS offers relief through programs such as:
- Delinquent FBAR Submission Procedures: For filers who missed FBAR deadlines but are otherwise compliant with tax obligations.
- Streamlined Filing Compliance Procedures: For non‑resident and resident individuals with undisclosed foreign account holdings, offering reduced penalties if eligibility criteria are met.
Eligibility requirements and program details vary, so it is advisable to consult a qualified tax professional before proceeding.
Best Practices for Compliance
- Maintain Accurate Records: Track all foreign accounts and monitor balances throughout the year.
- Calendar Reminders: Set reminders for the April 15 and October 15 deadlines.
- Use Professional Software: Consider FBAR-preparation tools or engage a knowledgeable tax advisor.
- Stay Informed: Review FinCEN and IRS guidance annually for any regulatory updates.
Conclusion
FinCEN Form 114 (FBAR) is a critical compliance obligation for U.S. persons with foreign financial accounts. Understanding the annual filing deadline, the automatic six‑month extension, and the steep penalties for non‑compliance is essential. By implementing robust record‑keeping practices, leveraging electronic filing tools, and seeking professional guidance when necessary, filers can ensure they meet all FBAR requirements and protect themselves from costly penalties.
