What Is an FBAR Used For and Who Is Required to File?

The Report of Foreign Bank and Financial Accounts, commonly known as FBAR, is a mandatory information report for U.S. persons with financial interests in or signature authority over foreign financial accounts. Its primary purpose is to assist the U.S. government in tracking financial assets held abroad and combat financial crimes like money laundering and tax evasion. The FBAR is an informational disclosure filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. It does not result in a direct tax payment. The Internal Revenue Service (IRS) is the primary agency responsible for enforcing FBAR compliance and pursuing penalties for non-compliance.

Determining Your Filing Obligation

Understanding your FBAR filing obligation begins with determining your status as a “U.S. person.” This broad definition includes U.S. citizens, green card holders, and any individual residing in the United States, regardless of where their income is earned. It also extends to domestic entities like corporations, partnerships, and trusts or estates formed under U.S. law, even if they primarily conduct business abroad.

The primary trigger for an FBAR filing is the aggregate value of your foreign financial accounts. If the total maximum value of all your foreign financial accounts exceeded $10,000 at any point during the calendar year, you are generally required to file. This threshold refers to the combined highest balance of all reportable accounts, not just individual account balances. For instance, if you have three foreign accounts with maximum balances of $4,000, $3,500, and $3,000 respectively, their aggregate maximum value of $10,500 would trigger a filing requirement, even if no single account reached $10,000.

A “financial interest” in a foreign account is another key determinant of a filing obligation. You have a financial interest if you are the owner of record or hold legal title to the account, whether alone or jointly with another person. This also includes situations where you are the beneficial owner of an account, even if legal title is held by another person or entity for your benefit. For example, if you are the grantor of a trust that holds foreign financial accounts, and you maintain an ownership interest in its assets, you would have a reportable financial interest. Similarly, if you own more than 50% of the voting power or total value of shares in a corporation that owns foreign financial accounts, you are considered to have a financial interest in those accounts.

“Signature authority” also establishes a filing requirement, even if you do not have a financial interest in the account. Signature authority means the ability, directly or indirectly, to control the disposition of money or other property in a foreign financial account by direct communication with the financial institution. This could apply to a corporate treasurer who manages a company’s foreign bank accounts, an employee with access to foreign business accounts, or a trustee who can direct funds in a trust’s foreign brokerage account. Such authority mandates reporting to ensure transparency regarding control over foreign assets, even without direct ownership.

Many types of foreign financial accounts are reportable on the FBAR. These include traditional bank accounts like checking and savings accounts, as well as securities accounts such as brokerage accounts and mutual funds. Other reportable accounts encompass commingled funds, foreign-issued life insurance or annuity policies with a cash surrender value, and certain foreign retirement accounts. Even accounts held through foreign entities, where the U.S. person has a direct or indirect financial interest, may be subject to FBAR reporting depending on the specific structure and the U.S. person’s level of control or ownership.

Gathering Required Information

Once you have determined that an FBAR filing is necessary, the next step involves gathering all the required information for each foreign financial account. For every reportable account, you will need to provide the full name and complete address of the financial institution, including street, city, country, and postal code.

Each account also requires its unique account number to be reported. You must also specify the type of account, such as checking, savings, securities, or other categories like mutual funds or insurance policies with cash value.

A crucial piece of information is the maximum value of each account during the calendar year. This refers to the highest balance in the account at any point during the reporting period. If the account is denominated in a foreign currency, you must convert this maximum value into U.S. dollars using the Treasury’s Financial Management Service exchange rate for the last day of the calendar year.

In addition to account-specific details, personal information about the U.S. person filing the FBAR is required. This includes your full legal name, current address, and your taxpayer identification number (TIN), which for individuals is typically your Social Security Number (SSN). For entities, it would be the Employer Identification Number (EIN).

When dealing with joint accounts or multiple accounts, each reportable account must be listed individually on the FBAR. For joint accounts, if both account holders are U.S. persons with a filing obligation, each person must report the entire value of the account, even though they are filing separate FBARs. If you hold multiple individual accounts that collectively meet the threshold, each one must be detailed separately within the same FBAR filing.

Submitting Your Report

After gathering all necessary information and completing the FBAR form, the final step is to submit your report. The FBAR must be filed electronically through the FinCEN BSA E-Filing System. This online platform is the sole method for submitting the form. Paper filings are generally not accepted unless specifically authorized by FinCEN.

To initiate the submission process, you will typically need to create an account or log in to the FinCEN BSA E-Filing System. Once logged in, you can either directly input the information into the online form or upload a previously prepared Form 114 data file. After all data has been entered or uploaded, you will review the complete report for accuracy.

Following the review, you will electronically sign the report, which serves as your certification that the information provided is true and accurate to the best of your knowledge. Upon successful submission, the system will provide a confirmation, including a unique confirmation number. It is important to retain this confirmation for your records.

The annual filing deadline for the FBAR is April 15th of the year following the calendar year being reported. For example, the FBAR for the 2024 calendar year would be due by April 15, 2025. However, FinCEN provides an automatic extension to October 15th for any filer who fails to meet the April 15th deadline. You do not need to request this extension; it is granted automatically.

Maintaining diligent records of your FBAR filing and all supporting documentation is a requirement. You should keep copies of the filed FBAR, along with all the account statements, bank records, and any other documents used to determine the maximum account values for at least five years from the due date of the FBAR. These records demonstrate your compliance and can be important if FinCEN or the IRS ever has questions about your filing.