What Is the FBAR and Who Needs to File It?

If you are a U.S. taxpayer living abroad or holding foreign financial accounts, you may have heard of something called the FBAR. But what exactly is it, and do you need to file it?

Let’s take a closer look.

What Is the FBAR?

The FBAR, short for Foreign Bank Account Report, is a required filing for U.S. persons who have a financial interest in or signature authority over foreign accounts that exceeded 10,000 U.S. dollars at any time during the calendar year.

Officially known as FinCEN Form 114, the FBAR is not submitted to the IRS. Instead, it is filed electronically with the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury.

Who Must File the FBAR?

You are required to file the FBAR if the following apply to you:

• You are a U.S. citizen, Green Card holder, or U.S. resident, even if you live outside the United States

• You have foreign financial accounts, including bank accounts, investment accounts, mutual funds, or retirement accounts

• The combined value of these accounts exceeded 10,000 U.S. dollars at any point during the year

Some examples of foreign accounts that must be reported include:

• Canadian bank or brokerage accounts

• Registered retirement accounts such as RRSPs

• Foreign currency wallets or online financial platforms

• Accounts you can control through power of attorney

When Is the FBAR Due?

The FBAR is due on April 15 each year. However, there is an automatic extension until October 15. No request is necessary to benefit from the extension.

What Are the Penalties for Not Filing?

Failure to file the FBAR can result in significant penalties:

• For unintentional violations, the penalty can be up to 10,000 U.S. dollars per violation

• For willful violations, the penalty can be the greater of 100,000 U.S. dollars or 50 percent of the account balance

Even an honest mistake can lead to costly consequences. It is important to be aware of your obligations and to comply with them fully.

How Do You File?

The FBAR is filed electronically using the BSA E-Filing System on FinCEN's website. It is a separate filing from your U.S. tax return, but many taxpayers complete both around the same time.

If you are unsure whether you need to file or need help completing the form, it is best to consult a tax advisor with experience in international reporting.

Final Thoughts

The FBAR is an essential but often overlooked obligation for U.S. persons with foreign financial interests. With proper guidance, filing can be straightforward and stress-free.

At Nordfiscus, we help individuals, entrepreneurs, and expatriates navigate cross-border tax reporting, including the FBAR. If you have questions or need support, do not hesitate to contact us.