If you’re a U.S. citizen, resident, or entity with foreign financial accounts, you’re likely required to file FinCEN Form 114, also known as the FBAR (Report of Foreign Bank and Financial Accounts). This guide provides everything you need to know to meet your filing obligation under the Bank Secrecy Act (BSA).
Let’s break it all down clearly, so you can understand what this form is, why it matters, and exactly what to do.
What Is FinCEN Form 114 (FBAR)?
FinCEN Form 114 is a mandatory disclosure form used to report foreign financial accounts to the Financial Crimes Enforcement Network (FinCEN). It is required under the Bank Secrecy Act and is designed to fight tax evasion and money laundering by ensuring transparency around foreign financial assets.
Unlike a typical federal tax return, the FBAR is filed separately, and electronically via the BSA E-Filing System.
Why the FBAR Exists
The U.S. government requires disclosure of offshore accounts because foreign institutions often fall outside IRS oversight. FinCEN uses the FBAR to:
- Identify taxpayers who may be hiding income offshore.
- Support criminal investigations related to financial fraud, money laundering, or terrorist financing.
- Penalize non-compliance through civil and criminal penalties.
Who Must File FinCEN Form 114?
You’re required to file the FBAR if you meet all of the following conditions:
- U.S. Person: Includes:
- U.S. citizens and residents
- Green card holders
- Domestic corporations, partnerships, or LLCs
- Trusts or estates organized under U.S. laws
- Foreign Financial Accounts:
- You have a financial interest in or signature authority over one or more accounts located outside the U.S.
- Aggregate Value:
- The combined value of all foreign accounts exceeds $10,000 USD at any point during the calendar year (not just on December 31).
Example: You have a checking account in Canada worth $4,000, and a brokerage account in France that hits $7,000 for one day in June. That’s $11,000 total → You must file the FBAR.
This filing requirement also applies to business entities like U.S. corporations and partnerships with qualifying foreign bank and financial accounts.
What Counts as a “Foreign Financial Account”?
A reportable foreign financial account includes:
- Foreign bank accounts (checking, savings)
- Brokerage accounts
- Mutual funds
- Retirement or pension accounts (in some cases)
- Foreign life insurance or annuity policies with cash value
- Accounts denominated in foreign currency
Accounts held at foreign branches of U.S. banks are not reportable. But accounts held at foreign subsidiaries or separate legal entities are reportable.
Note: If the account is jointly owned, each U.S. person must file unless exceptions apply.
What Is “Signature or Other Authority”?
You have signature authority if you can control or direct the account—even if you don’t own it.
This often applies to:
- Corporate officers with access to foreign business accounts
- Employees with power to move funds
- Trustees with account access for beneficiaries
You must report all accounts over which you have signature authority if the aggregate exceeds $10,000, even without financial interest.
You’ll need to provide the maximum value, bank name, address, and account details, including information about joint owners or people with other authority.
How to Determine the Maximum Value of an Account for FBAR
Joint Filers: Can Spouses File a Single FBAR?
Yes, under specific conditions:
- Spouses can file a single FBAR if one spouse has both individual and joint foreign financial accounts, and the other spouse only has joint ownership of the same accounts.
- In this case, only the spouse with individual and joint accounts files the FBAR, but both must sign FinCEN’s Authorization to Electronically File FBARs.
However, if both spouses have individually owned foreign accounts, each must file separately to report their own accounts.
Deadlines and Extensions
- Original FBAR Deadline: April 15 (same as tax return)
- Automatic Extension: Extended to October 15
You don’t need to request this extension; it’s automatic.
If you miss the deadline, file as soon as possible. Delinquent FBARs can trigger civil and criminal penalties.
Delinquent FBARs
If you’ve failed to file an FBAR or have filed late, you may be subject to penalties. To minimize potential penalties, it’s essential to file delinquent FBARs as soon as possible. You can use the BSA E-Filing System to submit late filings. If you’re under criminal investigation or have been contacted by the IRS, you should consult with an attorney or tax professional before filing. The IRS may offer relief programs or options for resolving delinquent FBARs, such as the Streamlined Filing Compliance Procedures or the delinquent FBAR submission program.
Penalties for Noncompliance
Failing to file your FBAR can lead to severe consequences:
Certain sections of the form must be completed as part of the overall process of reporting foreign bank accounts.
Civil Penalties
- Non-willful violations (unintentional errors): Up to $10,000 per violation
- Willful violations (intentional disregard): Greater of $100,000 or 50% of the account balance at the time of the violation
Criminal Penalties
- Fines up to $250,000
- Up to 5 years in prison
- Or both, in serious cases involving tax evasion or fraud
Non-willful violations may receive more lenient treatment, but willful violations trigger aggressive IRS enforcement.
Recordkeeping Requirements
There is no law specifying exactly which documents to keep, but you should maintain all records related to your FBAR filings for five years from the due date.
Keep:
- Bank statements and account records
- Documentation of ownership or signature authority
- Foreign exchange rates used
These records must be produced if requested by the IRS or Treasury Department.
Special Situations and Exceptions
You do not need to file if:
- Your accounts are included in a consolidated FBAR filing by a parent company or trust
- You qualify under specific IRS exceptions, such as being an employee of a regulated U.S. entity with signature authority only
U.S. citizens and residents must report foreign financial accounts for FBAR purposes. Always evaluate your circumstances carefully or consult a qualified tax professional.
Resolving FBAR Issues
If you’re experiencing issues with your FBAR filing, such as errors or omissions, you should take prompt action to resolve them. You can:
- Amend a previously filed FBAR: If you’ve already filed an FBAR and need to make changes, you can file an amended return.
- Seek professional help: Consult with an attorney, tax professional, or enrolled agent who has experience with FBAR issues.
Don’t Risk FBAR Mistakes
Filing FinCEN Form 114 is not optional—it’s a legal duty for anyone with qualifying foreign financial accounts. Even if you live abroad, hold dual citizenship, or only have signature authority, you could be subject to FBAR reporting.
1040 Abroad offers personalized support with FBAR filing, from helping you collect information, to reviewing bank and financial accounts, to guiding you through the BSA E-Filing System.
Ensure you’re fully compliant. Avoid fines. Protect your financial future.
Need assistance with your FBAR? Contact us today for expert help with all FBAR matters.
