Report of Foreign Bank and Financial Accounts (FBAR)

While living in the U.S., operating an Indian bank account is common for NRIs. One more thing that is so common among NRIs is not knowing about FBAR reporting. Holding an Indian bank or investment account is common among NRIs living in the U.S. If you are a U.S. person for FBAR purposes and you have a financial interest in, or signature or other authority over, reportable foreign financial accounts whose aggregate value exceeds $10,000 at any time during the calendar year, you generally must file FinCEN Form 114 (FBAR), subject to applicable exceptions. This can apply to U.S. citizens, green card holders, resident aliens, and certain U.S. entities. Failing to file a required FBAR can result in civil or criminal penalties, depending on the circumstances, including whether the violation was non-willful or willful. Penalties are not automatically imposed at the maximum amount in every case. However, you can also catch up on your missed FBAR filings, provided it was non-willful.

Want to know more about FBAR filings, their requirements, and how you can avoid penalties by catching up on your missed filings? This blog provides you with complete information about it. So read on and resolve all your queries.

What Is FBAR (FinCEN Form 114)?

FBAR, or the Report of Foreign Bank and Financial Accounts, is an annual U.S. reporting requirement for U.S. persons who have a financial interest in or signature or other authority over reportable foreign financial accounts and whose aggregate account value exceeds $10,000 at any time during the calendar year. FBAR reporting is done using FinCEN Form 114. Here, FinCEN is the Financial Crimes Enforcement Network, a bureau of the US Treasury Department. This is why FBAR has its own filing system, different from your U.S. tax return. 

Additionally, the FBAR reporting requirement is stated under the Bank Secrecy Act. It is a U.S. law that focuses on foreign financial transparency. So, in simple words, FBAR does not tax your foreign financial accounts; it simply tells the U.S. government about them. Further, income generated from your foreign accounts is handled separately on your U.S. tax return. 

This was all about FBAR. Moving ahead, let's know who is considered a U.S. person for FBAR purposes. 

Who Is Considered a U.S. Person for FBAR Purposes?

This is the most-asked question by every NRI living in the U.S. You are considered a U.S. person for FBAR purposes if you are:

• U.S. citizen
• Green card holder
• A U.S. formed entity (domestic corporation, LLC, partnership, trust, or estate)
• For FBAR purposes, U.S. persons generally include U.S. citizens, U.S. resident aliens, and certain U.S.-formed entities, trusts, and estates. For individuals, U.S. residency for FBAR purposes is determined under the applicable U.S. residency rules. Certain U.S.-formed entities, trusts and estates can also have FBAR obligations.

If you fulfill any of the conditions, you are considered a U.S. person for FBAR purposes. 

So this was all about who is considered a U.S. person for FBAR purposes. Moving further, let's know what the $10,000 FBAR reporting threshold is. 

What Is the $10,000 FBAR Reporting Threshold?

The $10,000 FBAR reporting threshold is based on the aggregate value of your reportable foreign financial accounts at any time during the calendar year. Considering this, if it exceeds the threshold, it is mandatory for you to file an FBAR if you are a U.S. person. As mentioned, it is an aggregate account balance, not a per-account foreign account threshold.

This simple detail matters a lot to U.S. taxpayers. This is because U.S. persons holding foreign financial accounts generally assume that the $10,000 threshold applies separately to each account, which further leads to missed FBAR filings. Confused? Let's understand it with an example.

For example, suppose a U.S. person has an NRE account, an NRO account and another Indian financial account that is reportable for FBAR purposes. If the aggregate maximum value of the reportable accounts exceeds $10,000, the FBAR filing threshold is met, subject to applicable exceptions. 

For example, suppose a U.S. person has an NRE account and an NRO account. If the maximum value of the NRE account during the year is $6,500 and the maximum value of the NRO account is $5,800, the aggregate maximum value is $12,300. Because this exceeds $10,000, the FBAR filing threshold is met, even if the two accounts reached their maximum values on different dates. The reportable accounts should be reported subject to applicable FBAR rules and exceptions.

This was all about the $10,000 FBAR reporting threshold. Moving forward, let's look at which foreign financial accounts are reportable on FBAR. 

Which Foreign Financial Accounts Are Reportable on FBAR?

The foreign financial accounts that are reportable under FBAR are as follows:

• Foreign Bank Accounts: These include standard savings, fixed deposit, and checking accounts held outside the country. It is the most common category of bank accounts and also covers Indian bank accounts. 
• Brokerage and Investment Accounts: A foreign brokerage account holding bonds, mutual funds, or stocks is generally reported in the same way as a foreign bank account.
• Other foreign financial accounts may also be reportable, depending on their classification. Signature or other authority over a foreign financial account can create an FBAR obligation even without a financial interest, although specific exceptions apply. Certain retirement accounts and other exempt accounts may not need to be reported.

These are the foreign financial accounts that must be reported on FBAR. Now, moving ahead, let's discuss whether NRE, NRO, FCNR, and PPF accounts are reportable on FBAR.

Are NRE, NRO, FCNR, and PPF Accounts Reportable on FBAR?

NRE, NRO and FCNR accounts can generally be reportable on the FBAR when held by a U.S. person and the aggregate value of reportable foreign financial accounts exceeds $10,000 during the calendar year. PPF and other Indian investment or savings products should be reviewed separately to determine whether they qualify as reportable financial accounts or fall within an applicable exception. 

This section provides a brief overview. For detailed guidance on how each account type is treated for FBAR purposes, see our dedicated guide on NRE, NRO, FCNR and PPF accounts. 

Moving further, let's know how to calculate the maximum account value for FBAR.

How to Calculate the Maximum Account Value for FBAR?

To calculate the maximum account value for FBAR purposes, determine the highest value of each reportable foreign account during the calendar year. Convert each maximum value into U.S. dollars using the U.S. Treasury exchange rate for the last day of the calendar year, and aggregate the converted maximum values to determine whether the $10,000 FBAR threshold is exceeded. The accounts do not need to reach their maximum values on the same date. Additionally, it is not necessary for all your foreign account balances to reach their highest on the same day. 

For example, suppose Mr. A’s NRE account reached a maximum value of $6,500 in February and his NRO account reached a maximum value of $5,800 in September. The maximum value of each account is determined separately and aggregated for the FBAR threshold test. Because the aggregate maximum value is $12,300, which exceeds $10,000, Mr. A generally has an FBAR filing obligation, subject to applicable rules and exceptions. 

Further, the concept of maximum account value calculation for FBAR includes reviewing the bank statements of all your foreign accounts, determining the highest balance in local currency, and then converting it to dollars as of December 31. Here, it was just an overview of how to calculate the maximum account value on FBAR. To know more about it in detail along with examples, read our guide, "Maximum Account Value for FBAR."

Now, moving ahead, let's know how to file FBAR (FinCEN Form 114). 

How to File FBAR (FinCEN Form 114)?

Here is how you can file FBAR (FinCEN Form 114):

• Step 1: Collect All Your Information
• For each foreign bank account, you need:
• Bank name along with complete address
• Account number
• Type of account (FD, savings, securities, etc.)
• Maximum account balance during the year (in dollars)
• For Yourself
• Date of Birth
• Social Security Number (SSN) or ITIN
• Your present U.S. address
• Step 2: Access the BSA E-Filing System
• Visit the official FinCEN BSA e-filing system website. Under the "No Registration Filer" option, select "FinCEN Form 114 Individually." 
• Step 3: Fill Out the FinCEN Form 114
• Part 1- Your Information
• Name as mentioned on SSN, date of birth
• Filer Type: Individual
• Your current U.S. Address
• Part 2: Account Information (Repeated for each of your accounts)
• Foreign account type (bank, investment, securities, other)
• Name of your financial institution
• Institution address 
• Account number
• Maximum account value in USD
• Ownership type (signature authority, individual)
• Step 4: Submit and Save Confirmation
• After submitting the FBAR, retain the electronic filing confirmation and BSA Identifier for your records. These documents provide evidence of the filing and can help you document when the FBAR was submitted, but they do not make a late filing timely.
• Step 5: Keep Records
• Maintain the records for at least five years:
• Bank statements showing maximum foreign account balance
• Copy of filed FBAR
• Calculation of currency conversion
• BSA confirmation number.

This is how you can file the FBAR FinCEN Form 114. Moving further, let's know about the FBAR filing deadline and automatic extension. 

FBAR Filing Deadline and Automatic Extension

The FBAR filing deadline is April 15, which comes with an automatic extension to October 15. Considering this, you do not need to fill out any form to request an extension. For tax year 2025, the original due date is April 15, 2026, and the automatic extension is October 15, 2026. 

Further, many U.S. taxpayers assume that filing a tax return in the U.S. automatically extends their FBAR obligations. So, as mentioned earlier, this is not true: FBAR filing and a U.S. tax return are two different things.

This was all about the FBAR filing deadline and automatic extension. Moving forward, let's know what to do if you missed the FBAR filing deadline. 

What If You Miss the FBAR Filing Deadline?

If you find out that you missed the FBAR filing deadline, the right way is not to file it without considering your situation. Considering this, it depends on factors like whether you missed the filing unknowingly, the year you missed it, or whether you also forgot to report the related income. To know more about it in detail and the corrective procedure, read our guide on missed FBAR filing. 

If you missed an FBAR unintentionally, the appropriate corrective procedure depends on your circumstances. If the FBAR was the only missed filing and the related income was properly reported, you may need to file the delinquent FBAR directly. If foreign income and other reporting obligations were also missed, the Streamlined Filing Compliance Procedures or another compliance option may need to be evaluated. Want to know how this process works and what the specific conditions are? Read our blog on Streamlined Filing Compliance Procedure. 

Moving ahead, let's know about the FBAR penalties for incorrect or missing reporting. 

FBAR Penalties for Incorrect or Missing Reporting

The FBAR penalties for incorrect or missing reporting depend on whether it was non-willful or willful. The table below showcases the FBAR penalties for missing or incorrect reporting:

Here, non-willful violation means you did not know about the FBAR requirement or missed it unknowingly. If multiple years of FBAR reporting were missed, separate annual reporting violations may be involved. However, the amount and assertion of any penalties depend on the facts and circumstances, including whether the conduct was willful and whether reasonable cause may apply Additionally, willful violations mean you intentionally and knowingly failed to file your FBARs. Following a 2023 Court decision, non-willful penalties are calculated per missed FBAR form filing rather than per account.

This was all about your FBAR violation for missed or incorrect FBAR filing. If you want to know more about it and how these figures matter, read our guide on FBAR penalties, which includes the current numbers and a detailed overview of willful vs. non-willful violations.

Now, moving further, let's know the difference between FBAR and Form 8938. 

FBAR vs Form 8938: What Is the Difference?

Both FBAR and FATCA are associated with foreign account reporting but are used for different purposes. Here is the key difference between them.

• FBAR is directly filed with FinCEN, while FATCA Form 8938 is filed with the IRS.
• FBAR and Form 8938 have different reporting requirements and threshold rules. The FBAR uses a $10,000 aggregate foreign-account threshold, while Form 8938 has different thresholds depending on factors such as filing status and whether the taxpayer lives in or outside the United States. Some taxpayers may need to file both.
• FBAR is even filed when you do not have to file a U.S. tax return. 
• FBAR and Form 8938 are separate foreign-asset reporting requirements. FBAR is filed electronically with FinCEN, while Form 8938 is generally attached to the U.S. federal income tax return and filed with the IRS. Depending on the taxpayer’s circumstances, both forms may be required.

In simple words, FBAR is the U.S. Treasury that monitors your money, and FATCA ensures that you are paying taxes correctly as per your global income. Further, many U.S. persons need to file both FBAR and FATCA. 

Further, if you want to know more about FBAR and FATCA, read our guide on "FBAR vs Form 8938" and get all the information about it. Now, moving forward, let's know the common FBAR filing mistakes that NRIs should avoid.

Common FBAR Filing Mistakes NRIs Should Avoid

Here are some FBAR filing mistakes that NRIs should avoid

• Assuming your NRI status decides your FBAR filing requirements. As mentioned earlier, FBAR reporting applies only to U.S. persons with foreign bank accounts exceeding the $10,000 threshold at any time during the year.
• Calculating each foreign account separately without considering the aggregate maximum value can lead to a missed FBAR filing. Determine the maximum value of each reportable account and use the applicable aggregate value to test the $10,000 threshold. 
• Believing that FBAR reporting requirements are covered under your U.S. tax return. Considering this, FBAR reporting and U.S. tax return filing are two distinct processes that serve different purposes.
• Not reporting the FCNR or PPF accounts on FBAR, as you do not feel like they are conventional bank accounts.
• Instead of reporting the entire value, only mentioning a partial share of your joint foreign bank account.
• Ignoring a missed FBAR can make the compliance issue more difficult to resolve. Review the circumstances promptly and determine whether a delinquent FBAR or another applicable compliance procedure is appropriate.
• Using the wrong currency conversion method can lead to an incorrect FBAR value. Generally, convert the maximum account value into U.S. dollars using the U.S. Treasury Bureau of the Fiscal Service exchange rate for the last day of the calendar year. If that rate is unavailable, another valid exchange rate may be used and its source should be identified.

These are the things that NRIs should avoid when filing an FBAR.

Final Thoughts

Lastly, if you are a U.S. person with foreign accounts exceeding the $10,000 threshold at any point during a calendar year, FBAR reporting is mandatory, regardless of where you currently live. The threshold limit applies to the combined balance of foreign accounts during a year. 

Further, if you are unsure whether your foreign account requires an FBAR filing or you unknowingly missed it, connect with Savetaxs. The experts on our team help you determine your reportable account, correctly calculate the aggregate account balance, and file the FBAR on time with complete accuracy.