Here is a practical FBAR filing example. A U.S. citizen living in Germany keeps two accounts at a local bank. Her checking account peaked at $6,000 in June; her savings account hit $5,000 in November. Neither account alone crossed $10,000, but their combined high balances add up to $11,000. That total triggers the reporting requirement, so she must file FinCEN Form 114, the Report of Foreign Bank and Financial Accounts, electronically through the Treasury Department’s BSA E-Filing System.1Financial Crimes Enforcement Network. Report Foreign Bank and Financial Accounts The form does not go to the IRS with her tax return.
Who Has to File
The FBAR applies to any “United States person” with foreign financial accounts. That covers citizens, resident aliens, and any corporation, partnership, LLC, or trust formed under U.S. or state law.2eCFR. 31 CFR 1010.350 – Reports of Foreign Financial Accounts Green card holders are covered. So is anyone who meets the substantial presence test for tax residency. The obligation follows the person, not the account, which is why a U.S. citizen who has lived abroad for decades still files when their foreign balances cross the line.
Two kinds of connections to an account can put you on the hook. One is a financial interest: you own the account or hold legal title. The other is signature authority: you can direct how money moves in and out of someone else’s account, common for corporate officers or employees who manage a company’s overseas accounts. Both count.3Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
How the $10,000 Threshold Actually Works
The threshold is aggregate, not per-account. You take the highest balance each of your foreign accounts reached at any point during the calendar year, in U.S. dollars, and add those peaks together. If the sum is more than $10,000, you file, and every account gets reported, including the one with $50 sitting in it.1Financial Crimes Enforcement Network. Report Foreign Bank and Financial Accounts
Back to the example. The German checking account’s high was $6,000. The savings account’s high was $5,000. Total: $11,000. Filing is required. Now add one more wrinkle: suppose she also has signature authority over a corporate account at the same bank, with a $2,000 balance. That account is not her money, but she can move funds in and out, so it counts toward the aggregate and it gets listed on her FBAR too.3Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
What Goes on the Form for Each Account
For every reportable account, the FBAR asks for the maximum value during the year, the account number, and the name and address of the foreign institution. In the example, she enters $6,000 for the checking account, $5,000 for the savings account, and $2,000 for the corporate signature-authority account, with the bank’s details and the account numbers for each.
Values are reported in U.S. dollars. If an account is denominated in a foreign currency, convert the peak balance using the Treasury Reporting Rates of Exchange for the last day of the calendar year.4FinCEN.gov. Reporting Maximum Account Value So a euro balance that hit its high in June still gets converted at the December 31 rate for reporting purposes.
Filing Through BSA E-Filing
You cannot mail an FBAR. It has to be filed electronically through FinCEN’s BSA E-Filing System.5FinCEN.gov. How Do I File the FBAR? You can either complete the online form directly on the site or upload a filled-in PDF. Submission requires a PIN-based electronic signature.
After you submit, the system displays a confirmation with a Tracking ID. Save it. That number is your proof of timely filing, and you will need it if you ever have to submit an amended FBAR.
Deadline and the Automatic Extension
The FBAR is due April 15 following the calendar year you are reporting. If you miss April 15, you get an automatic extension to October 15. No form to file, no request to send.6Financial Crimes Enforcement Network. Due Date for FBARs Further extensions past October 15 are only available in limited circumstances, such as when FinCEN issues relief for a natural disaster.
When One FBAR Can Cover Both Spouses
Married couples do not always need to file two FBARs. One spouse can skip filing if all three of the following are true: every foreign account the non-filing spouse would have to report is jointly owned with the filing spouse; the filing spouse submits a timely FBAR reporting those joint accounts with an electronic signature; and both spouses complete and sign FinCEN Form 114a, the Record of Authorization to Electronically File FBARs.7FinCEN.gov. Filing for Spouse Form 114a stays in your records. You do not send it to FinCEN.
Miss any of those three conditions, and both spouses file their own FBARs. In that case, each spouse reports the full value of any jointly held account on their own filing, not half.7FinCEN.gov. Filing for Spouse
What Doesn’t Count
A couple of common assumptions are wrong, and it helps to know the boundaries.
A foreign account holding only virtual currency is not currently a reportable account for FBAR purposes.8Financial Crimes Enforcement Network. Notice – Virtual Currency Reporting on the FBAR If your account on a foreign crypto exchange also holds a fiat cash balance, though, that fiat portion can pull the account into reporting. Self-custodied crypto wallets are generally not treated as foreign financial accounts. FinCEN has signaled it may extend FBAR rules to virtual currency later, so this is worth rechecking each year.
If you own or are a beneficiary of an IRA that holds foreign accounts, or you participate in a retirement plan that does, you personally do not report those accounts on your FBAR. The same is true for accounts held by a trust when a U.S. person already files an FBAR covering them.3Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR) The reporting still happens; it just falls on someone else.
What Skipping the FBAR Can Cost
Penalties break into two categories, and the gap between them is enormous.
A non-willful violation, meaning you did not know about the requirement or made an honest mistake, carries a maximum civil penalty of $10,000 per violation as written in the statute, adjusted for inflation each year.9Office of the Law Revision Counsel. 31 USC 5321 – Civil Penalties For penalties assessed after January 15, 2024, the inflation-adjusted cap was $16,117.10Internal Revenue Service. 4.26.16 Report of Foreign Bank and Financial Accounts (FBAR) – Section: 4.26.16.5.4 Penalty for Non-willful FBAR Violations The figure moves each year. No penalty applies at all if the failure was due to reasonable cause and the account balances were properly reported.
A willful violation is a different order of magnitude. If the government concludes you knew about the requirement and chose to ignore it, the civil penalty is the greater of $100,000 (inflation adjusted) or 50 percent of the account balance at the time of the violation.9Office of the Law Revision Counsel. 31 USC 5321 – Civil Penalties On a $500,000 account, that is a $250,000 hit. Criminal charges are also possible: a willful FBAR violation can bring a fine of up to $250,000 and up to five years in prison, or up to $500,000 and ten years when the violation is tied to a broader pattern of illegal activity.11Office of the Law Revision Counsel. 31 USC 5322 – Criminal Penalties
If You’re Already Behind
Doing nothing is the worst option. Two IRS programs exist for late filers, and which one fits depends on whether you also underreported income.
Delinquent FBAR Submission Procedures
If you reported all the income from your foreign accounts on your tax returns and simply never filed the FBAR itself, use the delinquent FBAR submission procedures. You cannot be under IRS examination or criminal investigation, and the IRS cannot have already contacted you about the missing FBARs. You file the late FBARs through BSA E-Filing, pick a reason for filing late on the cover page, and include a written explanation. The IRS will not impose a penalty if you meet the conditions.12Internal Revenue Service. Delinquent FBAR Submission Procedures
Streamlined Domestic Offshore Procedures
If you also left income off your tax returns, the fix is more involved. The streamlined domestic offshore procedures let U.S.-based taxpayers file amended returns for the three most recent tax years and delinquent FBARs for the six most recent years. There is a 5 percent penalty on the highest aggregate year-end balance of the unreported foreign financial assets across the covered period.13Internal Revenue Service. U.S. Taxpayers Residing in the United States Eligibility requires that your failures were non-willful, meaning negligence, inadvertence, or a good-faith misunderstanding of the law. Five percent is not painless, but it is a fraction of what a willful penalty finding would produce.