Tax
FBAR (FinCEN Form 114)
The annual report a U.S. person files with FinCEN when their foreign financial accounts together exceeded $10,000 at any point in the year. Filed separately from the tax return, with penalties that apply even when no tax is owed.
The FBAR is a Bank Secrecy Act filing, not an IRS tax form. Any U.S. person (citizen, green card holder, or someone who meets the substantial presence test) who had a financial interest in, or signature authority over, foreign financial accounts whose combined maximum balances exceeded $10,000 at any time during the calendar year must file it electronically through FinCEN's BSA E-Filing system. The due date is April 15 with an automatic extension to October 15; no extension request is needed.
The $10,000 test is aggregate and uses each account's peak balance. Three accounts that each briefly held $4,000 trigger the filing. Accounts that count include savings and checking accounts, fixed deposits, brokerage and demat accounts, foreign mutual funds held directly, foreign pension and provident fund accounts in many cases, and insurance policies with cash value. For NRIs that means NRE, NRO, and FCNR accounts, PPF, and often EPF. Joint accounts with parents abroad count in full, and signature authority over a parent's or an employer's account can create a filing even with no ownership.
Penalties are the reason the form matters. For a non-willful failure the inflation-adjusted penalty is over $16,000 per late report (the Supreme Court held in Bittner v. United States, 2023, that it applies per report, not per account). Willful failures carry the greater of roughly $165,000 or 50% of the account balance. Where the failure was non-willful, the delinquent FBAR submission procedures (income already reported) or the Streamlined Filing Compliance Procedures (income not reported) fix prior years at far lower cost.
Form 8938 is the IRS counterpart with higher thresholds and a broader asset definition; most people who file Form 8938 also file an FBAR, but the reverse is not true. Rubric Financial prepares both as part of a cross-border tax engagement and reconciles the account list between them.
Common pitfalls
- Skipping the FBAR because each account is small; the test is on the combined peak balance across all accounts
- Forgetting accounts you only have signature authority over, such as a parent's account or an employer account abroad
- Treating tax-free-at-home accounts (NRE, PPF, ISA, TFSA) as exempt from reporting; they are reportable and the interest is U.S.-taxable
- Filing the FBAR with the tax return; it goes to FinCEN separately, and attaching it to Form 1040 does not count as filing
Related service
See the related serviceRelated guides
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Federal, state, and local returns prepared and reviewed by a licensed CPA, with the planning done before year-end rather than after it.