If you are a U.S. citizen or resident with financial accounts in a foreign country, you may be required to file the Foreign Bank Account Report (FBAR) annually. A critical part of this filing is calculating the maximum account value of each account held outside the United States during the calendar year. This guide explains how to determine this value accurately and stay compliant with the law.
What Is the Aggregate Maximum Account Value?
The aggregate maximum value is the total of the maximum values of all your foreign financial accounts during the calendar year. This includes any foreign bank and financial accounts where you have a financial interest or signature authority—even if the account is jointly owned or you’re not the primary owner.
To calculate this, you need to review your bank statements or periodic account statements for each single account and identify the maximum account balance at any point in the year.
The maximum value of an account for FBAR refers to the highest account value of your foreign financial accounts at any point during the year—before deducting fees, withdrawals, or accounting for currency fluctuations.
This account value must be reported in United States dollars on FinCEN Form 114, the electronic form used to file an FBAR through the Financial Crimes Enforcement Network, not with your federal tax return.
Steps to Determine the Maximum Value of an Account for FBAR
Step 1: Review Your Account Statements
To determine the highest balance of your foreign account:
- Gather your monthly or daily account statements for the entire year.
- Identify the highest recorded balance at any point during the year.
Pro Tip: Some foreign banks report balances in a different format (e.g., quarterly or biannually). If you don’t have daily records, use the highest available balance from your statements.
Step 2: Convert Foreign Currency to U.S. Dollars
FBAR reporting requires converting foreign balances to U.S. dollars using the Treasury Department’s year-end exchange rate (December 31). Avoid using multiple exchange rates—consistency is required.
Example:
If your maximum balance was €12,000 and the year-end exchange rate was 1.10 USD/EUR:
€12,000 × 1.10 = $13,200
That’s the amount you would report on your FBAR.
Step 3: Report All Relevant Accounts
Include all foreign bank accounts, brokerage accounts, mutual funds, and savings accounts, whether you own them or merely have signature authority.
Even if you don’t hold legal title, a financial interest means you’re responsible for reporting the account. If the account is jointly owned, report the entire value.
What If You Don’t Know the Maximum Value?
If you’re filing FBARs retroactively—perhaps through a Streamlined Compliance Program—you may lack complete data from the past six years. In such cases, it’s acceptable to overestimate the cash value of your account denominated in a foreign currency.
There are no penalties for overreporting on an FBAR, as it is an informational form only. No taxes are assessed based on FBAR submissions.
Common Mistakes to Avoid
- ❌ Using an average balance instead of the maximum account value
- ❌ Ignoring brief periods when the balance exceeded $10,000
- ❌ Using anything other than the December 31 Treasury exchange rate
- ❌ Failing to report multiple accounts
Penalties for Non-Compliance
Failing to file an FBAR can result in serious consequences:
- Non-willful violations: Penalties up to $12,500 per account per year
- Willful violations: Penalties of the greater of $100,000 or 50% of the account balance
- Filing late can also result in criminal penalties, depending on circumstances
The purpose of the FBAR is to help the U.S. government detect potential use of foreign financial institutions to evade laws. Accurate and timely filing supports transparency and compliance.
If you’re unsure how to navigate FBAR filing or determine the fbar maximum account value, our experts can help. We offer professional assistance and free tax advice for U.S. expats—reach out today.
