U.S. taxpayers with foreign financial interests must navigate a complex web of reporting requirements to stay compliant with the law. One of the most important—and often overlooked—obligations is the FBAR, formally known as FinCEN Form 114. This report is not filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. Failure to file an FBAR can result in steep penalties, even if the foreign account earned little or no income.
In this detailed blog, we’ll break down what the FBAR is, who must file it, how to report it, and what risks exist for noncompliance. Whether you’re an expat, dual citizen, or simply hold foreign accounts, this guide will help you understand your obligations and avoid costly errors.
What Is the FBAR?
FBAR stands for Foreign Bank Account Report. U.S. persons with foreign financial accounts exceeding a certain threshold must file FinCEN Form 114 annually to disclose those accounts. The goal is to prevent tax evasion and increase financial transparency related to offshore assets.
The FBAR is part of the Bank Secrecy Act (BSA), which requires certain reports to be made to prevent money laundering and illicit financial activities. While the FBAR is not a tax form and does not generate a tax liability directly, failing to file it can still trigger severe penalties.
Who Needs to File FinCEN Form 114?
You must file an FBAR if all the following apply:
- You are a U.S. person (including U.S. citizens, resident aliens, corporations, partnerships, LLCs, and trusts).
- You had a financial interest in or signature authority over at least one foreign financial account.
- The aggregate value of all foreign accounts exceeded $10,000 at any time during the calendar year.
This $10,000 threshold is not per account—it’s the total across all foreign accounts. Even if one account had $7,000 and another had $4,000 at the same time, you’d meet the filing requirement.
What Counts as a Foreign Financial Account?
The term “foreign financial account” is broad. It includes more than just bank accounts:
- Checking or savings accounts in foreign banks
- Foreign investment accounts
- Foreign pension and retirement accounts (in some cases)
- Accounts in mutual funds or pooled investment vehicles
- Foreign life insurance policies with cash value
Accounts held in foreign branches of U.S. banks typically don’t count. However, accounts held in a foreign institution—even if denominated in U.S. dollars—do count.
What Information Must Be Reported?
FinCEN Form 114 requires the following details for each reportable account:
- Account number
- Name and address of the financial institution
- Maximum value of the account during the year (converted to USD)
- Type of account (bank, securities, other)
- Whether you have financial interest or signature authority
You do not have to include the account’s current balance or provide detailed income information on the FBAR.
How to File the FBAR (FinCEN Form 114)
Unlike IRS forms, the FBAR is not filed with your federal tax return. It must be submitted electronically through the BSA E-Filing System managed by FinCEN.
Steps to File:
- Go to the FinCEN BSA E-Filing Portal.
- Choose the “No Registration FBAR” option for individuals filing on their own behalf.
- Download the PDF FBAR form or use the online version.
- Fill out the required fields for each account.
- Submit the completed form electronically via the portal.
The FBAR is not accepted by mail and must be filed online unless a special exemption is granted.
FBAR Filing Deadline
The FBAR is due on April 15 of each year, covering accounts held during the prior calendar year. However, FinCEN provides an automatic extension to October 15, so you don’t need to request it separately.
What Are the Penalties for Not Filing the FBAR?
Failure to file the FBAR can result in substantial civil and criminal penalties, depending on whether the noncompliance was willful or non-willful.
Non-Willful Penalty:
- Up to $10,000 per violation (per account, per year)
Willful Penalty:
- The greater of $100,000 or 50% of the account balance at the time of violation
- Potential criminal charges, including fines and prison time
In practice, the IRS and FinCEN may mitigate penalties for taxpayers who voluntarily disclose unreported accounts before being contacted by the government.
Differences Between FBAR and FATCA (Form 8938)
The FBAR often gets confused with IRS Form 8938, which is part of the Foreign Account Tax Compliance Act (FATCA). While there’s some overlap, they are separate reporting requirements:
| Criteria | FBAR (FinCEN Form 114) | FATCA (Form 8938) |
|---|---|---|
| Filed With | FinCEN (BSA e-filing portal) | IRS (Attached to Form 1040) |
| Threshold | $10,000 aggregate across all accounts | $50,000+ (varies by filing status and residency) |
| Account Types | Bank, securities, insurance, retirement | Bank accounts + other foreign assets (stocks, bonds, trusts) |
| Penalties | Severe civil and criminal penalties | IRS accuracy penalties and potential audits |
If you’re required to file both, make sure to do so. Filing one does not satisfy the requirement for the other.
What If You Missed an FBAR Filing?
If you’ve previously failed to file an FBAR, the IRS offers procedures to come into compliance:
- Delinquent FBAR Submission Procedures: For non-willful non-filers who reported all income on their tax returns.
- Streamlined Filing Compliance Procedures: For taxpayers residing in or outside the U.S. with non-willful noncompliance.
- Voluntary Disclosure Program: For taxpayers with potential willful violations wishing to avoid prosecution.
Timely correction can significantly reduce penalties and eliminate criminal exposure.
Best Practices for FBAR Compliance
- Keep detailed records of all foreign accounts, including monthly statements.
- Track exchange rates using the U.S. Treasury’s year-end rates.
- Consult a tax advisor with experience in international compliance.
- Do not wait until the last minute—file early, especially if you need help calculating account values or determining eligibility.
Conclusion: Stay Informed and Compliant
FinCEN Form 114 is a critical requirement for any U.S. taxpayer with foreign financial accounts. Even if no income is earned, failure to report qualifying accounts can result in serious penalties. Understanding the thresholds, account definitions, deadlines, and filing methods will help you stay compliant and avoid unnecessary risk.
If you’re unsure whether you need to file an FBAR—or need help correcting prior-year errors—it’s best to consult a qualified international tax advisor immediately. In an era of global financial transparency, proactive compliance is your best defense.
