FBAR Filing Guide: FinCEN Form 114 Requirements and Penalties

What Is the FBAR?

FBAR stands for Foreign Bank Account Report. The official form is FinCEN Form 114, and it’s filed electronically through the BSA (Bank Secrecy Act) E-Filing system at the Financial Crimes Enforcement Network —. Not through the IRS. That distinction trips people up constantly.

The FBAR has existed in some form since 1970. Congress created it under the Bank Secrecy Act (31 U.S.C. §5314) to detect money laundering, tax evasion, and other financial crimes. The Treasury Department delegated enforcement authority to FinCEN, though the IRS handles the actual examination and penalty assessment under a memorandum of understanding. So while the IRS can audit you for it and penalize you for missing it, the form itself belongs to FinCEN.

Don’t confuse it with Form 8938 (FATCA), which is an IRS form filed with your tax return. They overlap in some areas, but they’re separate requirements with different thresholds, different filing methods, and different penalties. We’ll cover the FATCA comparison below.

Who Must File an FBAR?

Any “U.S. person”. Who has a financial interest in or signature authority over one or more foreign financial accounts must file FinCEN Form 114 if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year.

“U.S. person”. Includes:

• U.S. citizens —. Regardless of where they live. An American living in London or Tokyo still files.
• Lawful permanent residents (green card holders) —. Even if they’ve spent most of the year abroad.
• Resident aliens —. Anyone who meets the substantial presence test for tax purposes.
• Domestic entities —. Corporations, partnerships, LLCs, trusts, and estates formed or organized in the U.S. or under U.S. law.

There are two types of reportable relationships: financial interest and signature authority. Financial interest means you own the account or have a sufficient ownership stake in an entity that owns the account. Signature authority means you can control the disposition of assets in the account —. Even if you don’t own a dime in it. A corporate officer who can wire money from a company’s overseas bank account has signature authority, full stop.

What Counts as a Foreign Financial Account?

The definition is broader than most people expect. It’s not just a checking account at HSBC in Hong Kong. Foreign financial accounts include:

• Bank accounts —. Checking, savings, time deposits (CDs) at foreign banks
• Securities accounts —. Brokerage accounts held at foreign financial institutions
• Mutual funds and pooled investments —. If held through a foreign entity
• Insurance policies with cash value —. Foreign life insurance or annuity contracts with a surrender value
• Pension and retirement accounts —. Foreign employer pensions, superannuation funds (Australia), provident funds (India, Singapore), and similar arrangements
• Accounts held by foreign trusts or estates —. If you’re a beneficiary or have a financial interest

What doesn’t count? Accounts held at a U.S. military banking facility, correspondent or nostro accounts (used by banks internally), and certain IRS-specified accounts. U.S. mutual funds that invest overseas are not foreign accounts —. The fund itself is a U.S. entity.

One of the most common mistakes we see: clients who’ve lived abroad forget about old pension accounts, dormant savings accounts, or life insurance policies they purchased years ago. If the account existed at any point during the year —. Even if it was closed in January —. It’s reportable for that year.

The $10,000 Reporting Threshold

Here’s where people get confused. The $10,000 threshold is based on the aggregate value of all your foreign financial accounts at any point during the calendar year. Not at year-end. Not on average. At any point.

Say you have three accounts: one in Germany with a peak balance of $4,000, one in the UK peaking at $3,500, and one in Japan that hit $3,000 in March before you closed it. The aggregate peak is $10,500. You file.

And you report all the accounts, not just the ones that pushed you over the threshold. Every single one goes on the FBAR.

The values must be converted to U.S. dollars using the Treasury Department’s end-of-year exchange rate (published by the Bureau of the Fiscal Service). Using mid-year rates, bank statement rates, or Google rates is technically wrong and can create problems on exam.

FBAR Deadline and Extension

The FBAR deadline is April 15 of the year following the calendar year being reported. For tax year 2025 accounts, the deadline is April 15, 2026.

Miss April 15? There’s an automatic extension to October 15. You don’t need to file any extension form —. It’s built into the rules. No request, no paperwork, no excuses needed. FinCEN extended the deadline permanently starting in 2016 after years of confusion about the old June 30 deadline.

The FBAR is filed separately from your tax return. You file it through BSA E-Filing at FinCEN’s website. Your CPA can e-file it on your behalf with a signed authorization (FinCEN Form 114a).

FBAR Penalties: Willful vs. Non-Willful

FBAR penalties are where things get serious. The penalty structure separates violations into two categories: willful and non-willful.

Non-Willful Violations

A non-willful violation is one that results from negligence, inadvertence, or a genuine mistake. The maximum penalty is $10,000 per violation (adjusted for inflation —. The 2026 amount is $16,536). After the Supreme Court’s 2023 decision in Bittner v. United States (more on that in a moment), the penalty applies per report, per year —. Not per account.

That’s a huge distinction. Before Bittner, the government argued it could stack penalties for every unreported account on every missed FBAR. Someone with 50 foreign accounts who missed five years of FBARs could face 250 separate penalties. The math got absurd quickly.

Willful Violations

Willful violations carry dramatically steeper consequences. The penalty is the greater of $100,000 (inflation-adjusted to $165,353 in 2026) or 50% of the account balance at the time of the violation. And “willful”. Doesn’t require you to have sat down and decided to break the law. Courts have found willfulness through “willful blindness” —. Deliberately avoiding learning about the requirement, or recklessly disregarding it.

Criminal prosecution is also on the table for willful violations. Penalties can reach $500,000 in fines and up to 10 years in prison. The Department of Justice has pursued criminal FBAR cases against individuals who hid money in Swiss and other offshore accounts.

Bittner v. United States: The Supreme Court Ruling That Changed FBAR Penalties

In February 2023, the Supreme Court decided Bittner v. United States, 598 U.S. 122 —. And it was a genuine win for taxpayers.

Alexandru Bittner, a dual U.S.-Romanian citizen, returned to the United States in 2011 and learned about his FBAR obligation after the fact. He filed late FBARs covering five years (2007 through 2011). Those five reports collectively involved 272 foreign accounts. The government calculated non-willful penalties on a per-account basis: 272 accounts times $10,000 equals $2.72 million.

Bittner argued the penalty should apply per report —. One penalty per year, not one per account. The Fifth Circuit had sided with the government. The Ninth Circuit, in a different case, had sided with the taxpayer. The Supreme Court took the case to resolve the split.

By a 5-4 majority, the Court held that the $10,000 non-willful penalty accrues on a per-report basis, not a per-account basis. The BSA treats the failure to file a compliant report as one violation carrying a maximum penalty of $10,000. Bittner’s total penalty dropped from $2.72 million to $50,000 — $10,000 for each of the five annual reports he failed to file on time.

This matters enormously for expats and dual citizens who may have accumulated numerous foreign accounts over years spent abroad. Before Bittner, the IRS’s per-account approach created penalties that were wildly disproportionate to the offense. A retiree who’d lived in France for 20 years and had a handful of local bank accounts, a brokerage account, and a pension fund could face six-figure penalties for a non-willful failure.

One caveat: Bittner only applies to non-willful penalties. Willful penalties are still calculated per account and remain devastatingly large.

Signature Authority vs. Financial Interest

This distinction catches corporate officers and employees of multinational companies off guard.

Financial interest means you own the account or hold a sufficient ownership stake (generally 50% or more) in an entity that owns the account. This one’s intuitive —. It’s your money, or your company’s money that’s effectively yours.

Signature authority is different. You have signature authority if you can control the disposition of funds in the account by direct communication with the bank —. Whether or not you own any part of the account. A CFO at a U.S. company who can authorize wire transfers from the company’s London bank account has signature authority. An employee who can sign checks on the company’s Swiss account has it too.

Both trigger FBAR filing obligations. The form has separate sections for accounts where you have a financial interest versus accounts where you have only signature authority. Corporate employees often don’t realize they need to file personally, independent of whatever the company does.

There are narrow exemptions for employees and officers of certain regulated financial institutions and listed companies, but the exemptions are specific and don’t apply to most private businesses.

Joint Accounts and Spousal Filing

If you and your spouse both have a financial interest in the same foreign account, both of you must file an FBAR —. Unless you qualify for the spousal joint filing exception.

Under the exception, one spouse can be included on the other’s FBAR if: (1) all accounts are jointly owned, (2) the filing spouse reports all jointly owned accounts on a timely-filed FBAR, and (3) both spouses sign FinCEN Form 114a. If even one account is held separately, each spouse must file their own complete FBAR.

This isn’t optional. We’ve seen situations where one spouse files and the other doesn’t, assuming they’re covered. They’re not —. Unless the exception requirements are met precisely.

Streamlined Filing Compliance Procedures

If you’ve fallen behind on FBARs and didn’t do it on purpose, the IRS offers a path back into compliance through the Streamlined Filing Compliance Procedures. There are two versions:

Streamlined Domestic Offshore Procedures (SDOP)

For U.S. residents who failed to report foreign income, pay tax on that income, or file required information returns (including FBARs). You file three years of amended or delinquent tax returns and six years of delinquent FBARs. There’s a 5% miscellaneous offshore penalty based on the highest aggregate balance of the unreported accounts during the compliance period.

Streamlined Foreign Offshore Procedures (SFOP)

For U.S. taxpayers who’ve been living outside the country. Same filing requirements —. Three years of returns and six years of FBARs —. But the miscellaneous offshore penalty is waived entirely. That’s a significant break.

Both versions require a certification statement under penalty of perjury confirming that your failure to comply was non-willful. “Non-willful”. Means it was due to negligence, inadvertence, or a genuine misunderstanding of the law. If the IRS later determines the failure was willful, the certification won’t protect you and could expose you to additional consequences.

We handle streamlined submissions regularly for expats who discover their filing obligations years after moving abroad. The process works, but the certification language matters and the submission needs to be right the first time.

Delinquent FBAR Submission Procedures

If you’ve missed FBARs but properly reported and paid all tax on the income from the foreign accounts, you may qualify for the Delinquent FBAR Submission Procedures. This is a simpler path than the streamlined procedures.

You file the late FBARs through BSA E-Filing and include a statement explaining why the reports are late. If the IRS hasn’t already contacted you about an examination or requested the delinquent FBARs, and you’ve reported and paid tax on all foreign account income, the IRS won’t impose penalties.

That last part is worth repeating: no penalties. But it only works if you come forward before the IRS comes to you, and if the underlying income was already reported correctly. If you also owe back taxes, this procedure won’t help —. You’ll need the streamlined procedures or possibly the voluntary disclosure practice.

Common FBAR Filing Mistakes

After years of handling these filings, here are the errors we see most frequently:

• Not converting to USD correctly. The FBAR requires the Treasury Department’s year-end exchange rate. Clients often use mid-year rates, their bank’s rate, or XE.com rates from random dates. Wrong rate, wrong balance, potential problem on audit.
• Missing accounts that aren’t obvious. Foreign pension funds, superannuation accounts, insurance policies with cash value, and accounts held through a foreign trust or entity are all reportable. Clients routinely forget about old employer pensions from years working abroad.
• Not reporting closed accounts. If you held a foreign account at any point during the year —. Even if you closed it on January 3 —. You must report it on that year’s FBAR. The maximum balance during the period you held it is what matters.
• Assuming the FBAR goes with the tax return. The FBAR is filed separately through BSA E-Filing at fincen.gov. It does not attach to your 1040. CPAs can file it on your behalf, but it’s a separate electronic submission.
• Forgetting accounts where you have signature authority only. Company accounts overseas, accounts belonging to elderly parents where you’re an authorized signer, trust accounts —. Signature authority triggers filing even without ownership.
• Ignoring accounts below $10,000 individually. The threshold is aggregate. Five accounts at $2,500 each means you’re at $12,500 and must file. Every single account gets reported.

FBAR vs. FATCA (Form 8938): What’s the Difference?

FBAR and FATCA both deal with foreign financial accounts, and there’s real overlap. But they’re different requirements administered by different agencies with different thresholds.

• FBAR (FinCEN Form 114) —. Filed with FinCEN through BSA E-Filing. Reporting threshold: $10,000 aggregate at any time during the year. Applies to all U.S. persons.
• FATCA (Form 8938, Statement of Specified Foreign Financial Assets) —. Filed with the IRS as an attachment to your tax return. Thresholds vary: $50,000 on the last day of the year or $75,000 at any point for single domestic filers; $200,000/$300,000 for married filing jointly living in the U.S.. And $200,000/$300,000 for single filers living abroad ($400,000/$600,000 for MFJ abroad).

Form 8938 also covers a broader range of assets beyond bank accounts —. Foreign stocks and securities not held in a financial account, interests in foreign entities, and certain foreign financial instruments. The FBAR is narrower (accounts only) but has a much lower threshold.

If you meet both thresholds, you file both forms. They don’t replace each other. Yes, you’ll report some of the same accounts twice —. Once on the FBAR and once on Form 8938. That’s by design, not a mistake.

How Reedcorp Handles FBAR and International Tax Compliance

Foreign bank account reporting isn’t the kind of thing you want to figure out on your own. The rules are technical, the penalties are steep, and the interaction between FBAR, FATCA, treaty obligations, and your regular tax return creates real complexity.

We prepare FBAR filings for expats, dual citizens, green card holders, and business owners with overseas accounts. We also handle streamlined compliance submissions for clients who’ve fallen behind, delinquent FBAR filings for those with reasonable cause, and the full suite of international tax reporting that goes along with cross-border financial life. If you’re also navigating estimated tax payments or capital gains from foreign investments, we handle that coordination too.

If you’ve got foreign accounts and you’re not sure whether you’re compliant, that’s exactly the right time to talk to someone. Not after the IRS sends a letter.