FinCEN Form 114 (FBAR) Filing: Step-by-Step Guide for Americans with Foreign Bank Accounts

If you hold foreign financial accounts and their combined value crosses $10,000 at any point during the year, even for a single day, you will generally be required to file FinCEN Form 114, better known as the FBAR.

That obligation applies to US citizens, green card holders, and residents, and it has nothing to do with whether you owe any tax. Many people discover this requirement years after opening foreign accounts.

However, missing it can result in significant penalties. This guide walks you through who must file, which accounts qualify, how to submit, and what your options are if you’ve missed past filings.

What Is FinCEN Form 114?

It is the form you use to report foreign financial accounts to the US Department of the Treasury. It exists because of the Bank Secrecy Act, which gives the US government visibility into money held at overseas institutions.

Importantly, this is not a tax form. You’re not reporting income, and there’s no tax liability calculated on it. You’re simply telling the Treasury that certain accounts exist and what they were worth.

Many taxpayers incorrectly assume the FBAR does not apply if no foreign tax is owed. It still may be required. The form is filed electronically with FinCEN, a bureau of the Treasury, and is separate from your federal income tax return.

Who Must File and How the $10,000 Aggregate Threshold Works

You are generally required to submit FinCEN Form 114 (FBAR) if you are a U.S. person, and the aggregate value of your foreign financial accounts exceeds the established reporting threshold at any time during the calendar year. A U.S. person generally includes:

• US citizens (regardless of where you live)
• Green Card holders
• Residents under the substantial presence test
• US-formed entities such as corporations, LLCs, partnerships, and trusts

When determining whether an FBAR is required, all qualifying foreign financial accounts are added together. If the aggregate value of the accounts exceeds the applicable reporting threshold at any point during the year, a reporting obligation may arise. 

What Foreign Financial Accounts Must Be Reported?

Many taxpayers are surprised to learn that FBAR reporting extends well beyond traditional checking and savings accounts. Reportable accounts can include a wide range of foreign financial assets, such as:

• Foreign checking and savings accounts
• Foreign brokerage and securities accounts
• Foreign mutual funds
• Accounts where you have authorization to sign, even if you don’t own the funds
• Joint accounts (each co-holder must report the full value)
• Foreign life insurance policies with a cash surrender value

Generally not reported:

• Accounts held in a US-based bank, even if the funds are in a foreign currency
• Correspondent or nostro accounts held by financial institutions
• Government and international organization accounts

Foreign accounts subject to your signature authority may need to be reported, regardless of who owns the money.

What Information Is Required for Each Account?

For every foreign account you report, you’ll need to have the following ready:

• Account number (or equivalent identifier used by the foreign institution)
• Name and address of the foreign bank or financial institution
• The country where the account is held
• Account type (bank, securities, other)
• Maximum value held in the account at any point during the calendar year
• Your ownership status, whether you own the account, have joint ownership, or hold signing authority  only

A reduced reporting option may be available for large numbers of accounts, but detailed documentation is still required.

FBAR Reporting Rules for Joint Account Holders

Each joint account holder is generally responsible for meeting their own FBAR reporting obligations. When a foreign account is jointly owned, each person must report the account and its full value, not just their share.

In certain situations, spouses may file a single FBAR by completing FinCEN Form 114a, which authorizes one spouse to file on behalf of both. The form is kept in your records and provided only upon request. This option is available only when the spouses jointly own all reportable accounts.

Potential Additional Tax Liabilities for FBAR Noncompliance

Failing to file an FBAR when required can result in significant tax sanctions. The severity depends largely on whether the violation was considered non-willful or willful. Understanding the potential surcharges and the options available to correct past mistakes can help you address compliance issues before they become more costly.

• Non-willful violations: Civil penalties may apply even if the failure to file was unintentional, though penalty amounts may vary based on the specific facts and circumstances. 
• Willful violations: Deliberate failures to report foreign accounts can result in substantially higher charges, often tied to the value of the unreported accounts.
• Criminal exposure: In cases involving intentional concealment or related financial crimes, criminal penalties may also be pursued.
• Compliance programs:Taxpayers who missed prior filings may qualify for the IRS Streamlined Filing Compliance Procedures or Delinquent FBAR Submission Procedures, depending on whether unreported income is involved.

Addressing missed FBAR filings proactively is typically far less risky than waiting for the issue to be discovered during an examination or information-matching review.

The Bottom Line

The FinCEN 114 form is relatively straightforward once you understand the reporting requirements. However, the threshold is lower than most people expect, the accounts that qualify are broader than just checking accounts, and the penalties for non-compliance are real.

Determine whether your foreign accounts exceeded the reporting threshold, gather the required account information, and file electronically through the BSA E-Filing System by the applicable deadline. If prior FBARs were missed, consulting an international tax CPA experienced in FBAR compliance before submitting late filings can help determine the most appropriate correction procedure.