If you own or have an interest in foreign bank accounts, you must report them to the government every year that their combined balance exceeds $10,000. Not filing a Report of Foreign Bank and Financial Accounts (FBAR) can put you at risk of extremely high penalties, but an international tax attorney can help you meet your requirements, minimize penalties, and stay in compliance.
Key takeaways
- FBAR (foreign bank account reports) are required when combined account balances exceed $10,000 during the tax year.
- All U.S. persons must file if they meet the FBAR threshold for the year.
- File online through the Financial Crimes Enforcement Network (FinCEN) by April 15th or the extended October 15th deadline.
- Failure to file can lead to penalties for non-willful or willful violations.
- Catch up on missed filings through the streamlined disclosure procedures.
What Is FBAR Filing?
An FBAR is a report of your foreign bank accounts, required if the total value of your foreign accounts was $10,000 at any point during the previous tax year. Taxpayers must e-file FinCEN Form 114 with the Financial Crimes Enforcement Network annually, and if they don't, they'll incur penalties from the IRS.
Who Needs to File an FBAR?
The Bank Secrecy Act (BSA) requires all U.S. persons to file an FBAR if they meet the filing threshold. That includes U.S. citizens living abroad and U.S. residents, whether they're citizens or not. The law applies to U.S. persons with interests or signatory authority on foreign accounts, including deposit accounts, stocks held by foreign banks, foreign mutual funds, accounts at foreign branches of U.S. banks, foreign annuity contracts, and foreign life insurance.
How to File FinCEN Form 114
If your account balances trigger an FBAR reporting requirement for the year, you will note that on your income tax return, and then you will file the FBAR Form 114 electronically with the FinCEN BSA e-filing system.
The form requires your name, address, SSN/ITIN, and all of the same information for any joint owners of your foreign accounts. Also, be ready to list each type of account you have, the name of the financial institution, the account number, and the maximum balance during the calendar year.
Convert all balances into U.S. dollars using the U.S. Treasury foreign exchange rate as of the end of the calendar year for which you are filing.
Accounts Exempt From FBAR Filing Requirements
Per the IRS, certain financial accounts do not need to be reported on an FBAR. These accounts include those that are:
- Correspondent or Nostro accounts
- Owned by a government entity
- Owned by an international financial institution
- Maintained on a U.S. military banking facility
- In a domestic IRA that you are an owner or beneficiary of
- In a domestic retirement plan that you are a participant or beneficiary of
- Part of a trust that you are the beneficiary of – but the trust must file an FBAR
You do not need to file the FBAR if your foreign accounts are already reported on a consolidated FBAR.
Reporting Jointly Owned Foreign Accounts on Your FBAR
If you own any accounts jointly with another person or multiple people, both parties must report the account on their FBAR. They must indicate how many joint owners there are (or provide an estimate) and identify information for other principal joint owners. The only exception is if you own all of your accounts jointly with your spouse. Then, you don't have to file an FBAR as long as they report all the accounts correctly on their report.
Rules for Foreign Accounts With Multiple Signatories
If you have any element of control over an account in a financial institution, you likely still have to report it on your FBAR. Even if you can't withdraw money on your own because a transaction requires multiple signatories, you are still considered to have some control over the account and must include it on your FBAR.
When Is the FBAR Deadline?
The due date is April 15, but there is an automatic extension to October 15 if you do not meet that initial deadline. Those affected by a natural disaster can request further extensions, and certain employees or officers with no financial interest in their accounts may request additional extensions.
Additional Reporting Requirements for Foreign Assets
If you file an FBAR, you may also need to file additional reports related to foreign assets, including:
- IRS Form 8938: Required if you own over a certain value of foreign assets, including interests in foreign companies, interests in foreign estates, and foreign interest annuities with cash surrender value. It has much higher filing thresholds than the FBAR
- IRS Form 8865: Required if you're a U.S. person with a sufficient ownership or financial interest in a foreign partnership.
- IRS Form 5471: Required for U.S. citizens and residents who are officers or directors of foreign corporations and meet one of the required categories of filers.
Generally, you do not have to file Forms 8938 or 5471 if you don't have an income tax filing requirement for the year in question. Note, this rule does not apply to Form 8865 or the FBAR, which must be filed whether or not you file a tax return.
FBAR Audits
With any IRS tax return, there is always the possibility of an audit. Because of this, individuals who file an FBAR are expected to maintain documentation proving the accuracy of their FBAR filings. Keep the following information for each foreign account for a minimum of seven years to be prepared in case of a FinCEN audit:
- The name listed on the account
- The account number
- Name and address of the bank or financial institution
- The type of account
- The maximum value of the account during the calendar year
FBAR Penalties
There are financial penalties for failing to file FBAR reports or filing them late. The penalties depend on whether the IRS believes that the failure to file was willful or non-willful:
- Non-willful FBAR penalties: $10,000 per year, indexed to inflation, so $16,536 for 2026.
- Willful FBAR penalties: the greater of $100,000 per year or 50% of the account balance, indexed to inflation, so $165,353 for 2026.
In February of 2023, the Supreme Court ruled that non-willful penalties should be based on each report, not each account. Prior to this, the IRS could fine U.S. persons for each unreported account. Willful penalties are based on the account balance, meaning they can still be assessed per account per year.
Most FBAR violations are non-willful, meaning the person in question did not know, or could not reasonably have been expected to know, that they had to file an FBAR. Willful violations occur when an individual knows or should know that they are required to file an FBAR.
In some situations, FBAR violations may even result in criminal charges.
Compliance Tips and Best Practices
Staying on top of your FBAR filing requirements is fairly simple once you have a good system in place. Keep these tips in mind:
- Keep a running list of all of your foreign financial accounts.
- Make a note of the highest balance each account had throughout the year to track your filing requirements.
- File the FBAR by the April 15th or October 15th extended deadline if required.
- Keep a digital or physical copy of your account statements and FBAR for at least 6 or 7 years.
When you are handling foreign bank accounts and assets or otherwise navigating complex financial reporting needs, it’s also recommended that you work with an international tax attorney who can help you stay compliant and avoid unnecessary fines and penalties.
How to Catch Up on Unfiled FBARs
To catch up on late FBARs, taxpayers may do the following:
- File them late. If you're not under audit or exam and you don't have any income to report, you can simply file the late FBARs. The IRS previously waived penalties in this situation under its delinquent submission procedures, but that procedure was quietly shut down and removed from the agency's website in 2026. Consider checking with a tax attorney first to assess your penalty risk and next steps forward.
- Use the streamlined filing option. Also available to taxpayers who aren't under audit or examination, the streamlined FBAR late filing option lets you amend tax returns to report income from the foreign accounts, file the late FBAR, and minimize penalties.
- Talk with an attorney for the best approach in your situation. Whether it's applying for reasonable cause penalty relief, doing a "quiet disclosure," or taking a completely different approach, an experienced tax attorney can point you in the right direction.
For a comprehensive overview, check out our full guide on FBAR penalties and catching up on unfiled FBARs.
Legal Considerations and Challenges
Failing to file an FBAR can lead to penalties, audits, and even criminal investigations for those who intentionally evade filing requirements or do so, with increased criminal penalties if another crime was committed such as fraud, money laundering, or other illegal activities. The IRS has ramped up its focus on foreign bank accounts and assets, which means that those who have skated under the radar for years may be running out of time.
A number of court cases have either changed FBAR requirements or highlighted the importance of timely filing. For example, the Supreme Court case U.S. v Bittner affected limits on non-willful penalties. While the IRS sought penalties for every undisclosed account, the Supreme Court sided with the taxpayer and determined that penalties should be on a per-report basis, not a per-account basis.
Another important case is U.S. v. Xiao, in which the defendant got caught up in a case alleging wire fraud, making false statements, and failure to disclose foreign bank accounts. While some of the more serious charges were dropped, the court did not grant Xiao’s request to drop the failure to report a foreign bank account conviction. In a 2023 case against Paul Manafort, the IRS sought penalties for undisclosed foreign accounts. He ultimately agreed to pay over $3 million in penalties.
FBAR Resources and Assistance
Much of the information that taxpayers need can be found on the FBAR page of the IRS website or the BSA E-Filing System. The IRS provides in-depth information on filing requirements and the potential penalties you may face for failing to file. The BSA E-Filing system walks you through signing up for e-filing and providing the necessary information.
FBAR filing requirements may seem overwhelming, especially if you’ve never filed before. With the right tax team, you can stay compliant with FBAR requirements and all other requirements set by the IRS. To get help now, schedule a case review with our team right away.
FAQ: FBAR Reporting Rules and Requirements
What is the FBAR statute of limitations?
The IRS has a 6 year statute of limitations to assert FBAR penalties. The 6 year statute of limitations runs from the FBAR due date.
Does filing an FBAR trigger an audit?
No, filing an FBAR does not increase your audit risk according to the IRS, and even late filings shouldn't increase the risk.
Who needs to declare foreign bank accounts?
All U.S. persons, meaning anyone who pays tax on U.S.-source income, with account balances over the FBAR reporting threshold, including U.S. citizens living abroad and in the United States and foreign residents of the United States.
What's the difference between FBAR and FATCA?
The Foreign Account Tax Compliance Act (FATCA) requires taxpayers to report specified foreign assets with Form 8938, and it has different rules and thresholds than the FBAR. FATCA also requires foreign banks to send the United States reports on accounts owned by U.S. taxpayers, making it easier for the IRS to enforce FBAR requirements.
How do currency fluctuations affect FBAR reporting thresholds?
FBAR reporting thresholds are based on the U.S. Treasury's exchange rate on the last day of the year. Fluctuations can mean that a balance that wasn't over the reporting threshold at the time it occurred may be over the threshold when you apply the exchange rate at the end of the year. Similarly, balances over the threshold may actually be under when you apply the end-of-year exchange rate.
Are retirement accounts in foreign countries reportable on FBAR?
Yes, foreign retirement accounts are FBAR reportable. However, foreign accounts held in qualified domestic IRAs are not FBAR reportable.
What should I do if I discover an unreported account after the deadline?
If you find an unreported account but you have already submitted your FBAR for the year, you can amend your FBAR. The form has a box where you can indicate the reason for the amendment. You can also pursue one of the streamlined filing compliance procedures.
Get Help From International Tax Attorneys at Wiggam Law
To get help with FBAR or other foreign tax issues, contact us at Wiggam Law today. Our experienced IRS tax attorneys can help you get back into good standing with the IRS and help ensure you remain compliant with your tax obligations. Call us at 404-609-1300 to schedule a case review, or complete our online form today.
Judson Mallory
Partner
Judson is a partner at Wiggam Law in Atlanta, Georgia. Judson represents individuals and businesses in a wide array of IRS and state tax matters. He has significant experience handling IRS tax settlements, tax compliance, appeals representation, offshore foreign bank reporting compliance, syndicated conservation easement issues, audit representation from responding to IRS audit letters through to IRS audit reconsiderations if necessary, innocent spouse relief, IRS levy and IRS garnishment releases, penalty waivers/abatements, and lien releases/withdrawals.
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