What is FBAR?

Definition

The Foreign Bank Account Report (FBAR), officially known as FinCEN Form 114, is an annual disclosure that every US person must file with the Financial Crimes Enforcement Network (FinCEN) if the aggregate value of all foreign financial accounts exceeds $10,000 at any point during the calendar year. This is not an IRS form — it is filed electronically through the BSA E-Filing System, and the obligation exists independently of whether any tax is owed. Who Must File: US citizens, green card holders, resident aliens, and domestic entities (trusts, estates, partnerships, corporations) with a financial interest in or signature authority over one or more foreign financial accounts. The $10,000 threshold is measured in aggregate — if you have three accounts worth $4,000 each, the combined $12,000 triggers the filing requirement even though no single account exceeds the threshold. Accounts That Must Be Reported: Bank accounts (checking, savings), securities accounts (brokerage), mutual fund accounts, debit card accounts with a foreign financial institution, and accounts where you have signature authority even if you are not the owner. For US-Canada cross-border taxpayers, this commonly includes Canadian chequing and savings accounts, RRSP accounts (though treaty-protected for income tax, they must still be reported on the FBAR), TFSA accounts, RESP accounts, and any Canadian brokerage or investment accounts. Deadlines: The FBAR deadline is April 15, with an automatic extension to October 15 — no form or request is needed to obtain this extension. Unlike a tax return extension, there is no penalty for using the automatic FBAR extension. Penalties: FBAR penalties are among the most severe in the US tax code. For non-willful violations, the IRS can assess up to $16,536 per account per year (adjusted annually for inflation). For willful violations — which includes both intentional concealment and reckless disregard — penalties jump to the greater of $100,000 or 50% of the account balance at the time of the violation, per account per year. Criminal penalties including imprisonment up to five years and fines up to $250,000 may also apply. The Supreme Court ruled in Bittner v. United States (2023) that non-willful penalties are assessed per report, not per account, providing some relief. FBAR vs. FATCA Form 8938: Many taxpayers confuse the FBAR with Form 8938, which is filed under the FATCA regime. While both require reporting foreign financial accounts, they are separate obligations filed with different agencies (FinCEN vs. IRS), have different thresholds ($10,000 aggregate for FBAR vs. $50,000-$400,000 for Form 8938 depending on filing status and residence), and cover partially overlapping but distinct sets of assets. In most cases, US-Canada cross-border taxpayers must file both. Joint Accounts: If you hold a joint account with your spouse, both spouses may need to file separate FBARs reporting the full value of the joint account. A non-filing spouse may be included on the other spouse's FBAR only if all accounts are jointly owned and the filing spouse reports them. Streamlined Filing: US persons who have not been filing FBARs can often come into compliance through the IRS Streamlined Filing Compliance Procedures, which waive penalties for non-willful non-compliance. This is a critical program for US citizens in Canada who may not have been aware of their FBAR obligations.

Related Forms

Common Mistakes to Avoid

• 1Thinking the $10,000 threshold applies per account rather than in aggregate across all foreign accounts
• 2Not reporting accounts where you only have signature authority (such as a business account you can sign on)
• 3Failing to report Canadian RRSP, TFSA, and RESP accounts on the FBAR

Related Terms