Who Must File FBAR? FinCEN Form 114 Filing Thresholds, Deadlines, and Penalty Math
Who Must File FBAR: The $10,000 Aggregate Threshold and the Any-Time-During-Year Rule
The threshold for filing FBAR is $10,000, and the word that does the heavy lifting in that sentence is aggregate. It is not $10,000 per account. It is $10,000 across all of your foreign financial accounts combined, measured at the highest point each account hit during the calendar year, summed together. If you had three foreign accounts that each peaked at $4,000 on different days, you are over the threshold and you must file. The fact that no single account ever crossed $10,000 does not matter.
The any-time-during-year rule trips up more people than the aggregate concept. The rule does not ask what your foreign balances were on December 31. It asks what the maximum value of each account was at any moment during the year. A foreign account that held $50,000 for one afternoon when a property sale closed, then wired the money to a US account the next morning, counts as a $50,000 balance for FBAR purposes. You report the maximum, not the year-end, not the average.
How you determine the maximum is in the FinCEN Form 114 instructions: review periodic account statements for the calendar year, identify the highest balance shown, and convert that amount to US dollars using the Treasury’s official year-end exchange rate. The rate to use is the Treasury Reporting Rates of Exchange published by the Bureau of the Fiscal Service for December 31 of the year being reported. Not the rate on the day of the high balance. The Treasury year-end rate, applied to the foreign-currency maximum.
The threshold has not been adjusted for inflation since the original Bank Secrecy Act was enacted in 1970. $10,000 in 1970 dollars is roughly $80,000 in current dollars. The threshold was set when an American holding $10,000 abroad was a meaningful indicator of activity worth investigating. Today, a single overseas vacation, a deposit on a foreign apartment rental, or a paycheck from a UK employer parked in a UK current account for two weeks can push a regular salaried professional over the line. Congress has not changed it.
The aggregation rule applies across account types. A foreign checking account, a foreign brokerage account, and a foreign mutual fund position all count together. A Canadian RRSP held at a Canadian bank, a French Livret A savings account, and a UK ISA all sum into the same $10,000 calculation. The FBAR does not care that one is a retirement vehicle, one is a tax-favored savings vehicle, and one is a brokerage account. They all count.
If you crossed the threshold for even one day, the filing requirement applies for the entire year. There is no partial-year reporting. The form asks for each account that existed at any point during the year, the maximum balance during the year, and the institution information. If an account was open for three weeks in February and closed before March, it still gets reported as long as the aggregate touched $10,001 at some point.
The filing deadline is April 15, with an automatic extension to October 15. You do not file an extension request. The extension is automatic for everyone. The form is filed electronically through the BSA E-Filing System, which is a separate Treasury system from the IRS e-file system. You cannot mail an FBAR. You cannot attach it to your 1040. It is its own filing on its own portal with its own deadline.
Who Counts as a US Person for FBAR Purposes
FBAR applies to US persons, and the definition of US person under the FBAR rules at 31 CFR section 1010.350 is broader than most people assume. It includes US citizens regardless of where they live, US lawful permanent residents (green card holders) regardless of where they live, and individuals who meet the substantial presence test for the year. It also includes US entities: corporations, partnerships, LLCs, trusts, and estates formed under US law.
US citizens living abroad are the largest population that gets surprised by FBAR. A US citizen who has lived in Paris for thirty years, votes in French elections, pays French income tax, and has a French bank account that holds the equivalent of $40,000 must file an FBAR every year. The fact that the account is normal banking activity for a French resident does not matter. The fact that the citizen has not lived in the US for decades does not matter. US citizenship attaches the filing requirement.
Green card holders are in the same position. If you hold a US green card, the IRS and Treasury treat you as a US person for tax and FBAR purposes for as long as you hold the card, even if you spend the entire year outside the US. Surrendering the green card is a formal process that requires a Form I-407 filing, and until that is processed, you are a US person for FBAR purposes.
The substantial presence test catches a category of people who do not realize they have become US persons. The test counts days physically present in the US: all of the current year’s days, one-third of the prior year’s days, and one-sixth of the days from two years ago. If the sum is 183 or more, you meet the test and you are treated as a US resident for tax purposes. A foreign national working in the US on an H-1B for two full years easily meets the test and is required to file FBAR for foreign accounts that person held during the residency period.
US entities also have FBAR obligations. A US LLC that opens a foreign bank account to helps international business must file an FBAR for that account. A US corporation with foreign subsidiary accounts may have FBAR obligations on accounts where it has financial interest or signature authority. The disregarded-entity treatment that an LLC gets for income tax purposes does not eliminate the FBAR filing obligation. A single-member LLC that is disregarded for federal income tax still files its own FBAR if it owns a foreign account.
Dual citizens face the FBAR requirement regardless of which passport they use day to day. A person born in the US who acquired German citizenship at birth through a German parent and has lived in Germany since age two is still a US citizen until that person formally renounces citizenship, and is so subject to FBAR for the German accounts. This is one of the most common sources of accidental non-compliance, particularly for so-called accidental Americans who do not realize their birthplace creates a lifelong filing obligation.
Children who are US citizens are subject to FBAR if they have foreign accounts in their names that meet the threshold. A parent typically signs the form on the child’s behalf. The most common scenario: a foreign grandparent opens a savings account for a US-citizen grandchild in the grandparent’s country. That account, if it crosses $10,000 in aggregate with the child’s other foreign accounts, requires an FBAR filing in the child’s name.
Financial Interest Versus Signature Authority
FBAR requires reporting on accounts where you have either financial interest or signature authority. These are two separate concepts and both trigger filing. A person can have signature authority without financial interest and still must report the account. A person can have financial interest without signature authority and still must report.
Financial interest is ownership. You have financial interest if you are the owner of record or holder of legal title, if you are the owner of an entity (corporation, partnership, trust) that holds the account, or if you are the beneficiary of a trust that has more than a 50% present beneficial interest. The rules also reach through nominee arrangements: if someone else holds an account on your behalf as a nominee, agent, or attorney-in-fact, you have financial interest.
Signature authority means you can control the disposition of money in the account by signing on your own. The most common signature-authority scenario is a US employee who has signing power on a foreign corporate account belonging to the employer. The employee does not own the money, will never own the money, and would be fired (and possibly prosecuted) for taking the money, but if the employee can sign a check or initiate a wire transfer, the employee has signature authority and must file FBAR for that account.
This rule sweeps in a lot of professionals who do not think of themselves as having foreign accounts. A CFO of a US company with a foreign subsidiary frequently has signing power on the subsidiary’s foreign bank account. The CFO must file FBAR for that account every year as long as the signature authority exists. The fact that the CFO has zero ownership interest does not eliminate the requirement.
There is a limited employer-employee exception that exempts certain corporate officers from FBAR filing on accounts they have signature authority over solely by virtue of their employment, but it only applies to specific categories of employers (publicly traded US companies, certain regulated entities). For most private-company executives with signature authority on foreign accounts, the exception does not apply and the filing is required.
Trustees, executors, and people holding powers of attorney are routinely caught by the signature authority rule. If you are the trustee of a trust that holds a foreign account, you have signature authority. If you are the executor of an estate that holds a foreign account, you have signature authority. If you hold a power of attorney over an elderly parent’s foreign account, you have signature authority. All of those situations require FBAR filing if the threshold is met.
Children’s accounts present a financial-interest question that depends on the structure. If the child is the legal owner and the parent is custodian, the child has financial interest and must file. The parent may also need to file if the custodian arrangement gives the parent control over disposition. We see joint custodial structures where both parent and child have separate filing obligations on the same account.
What Accounts Count: Bank, Brokerage, Mutual Fund, Insurance, Pension
The FBAR regulations at 31 CFR 1010.350(c) define a foreign financial account broadly. Anything that fits the regulatory definition is reportable. The main categories are bank accounts, securities accounts, and other financial accounts maintained with foreign financial institutions.
Bank accounts are the obvious category: checking, savings, time deposits, demand deposits, certificates of deposit, and any other account that a bank operating outside the US maintains for you. Currency does not matter. A US dollar account at a Singapore bank counts the same as a Singapore dollar account at the same bank. The location of the bank matters, not the currency.
Brokerage accounts maintained outside the US count. If you have a securities account with a foreign broker, the account is reportable. This includes margin accounts, cash accounts, and accounts at non-US branches of US-based brokers. A Charles Schwab account at the US Charles Schwab is not a foreign account. A Schwab Hong Kong account is. The location of the branch maintaining the account is the test, not the parent company.
Mutual funds held with a foreign fund manager are reportable. A position in a Luxembourg-domiciled mutual fund held through a European broker is a foreign financial account and goes on the FBAR. Foreign mutual funds, particularly EU-domiciled UCITS funds, also trigger Passive Foreign Investment Company (PFIC) reporting on the income tax side, which is a separate and miserable analysis that runs parallel to the FBAR filing.
Cash-value life insurance and annuity contracts issued by foreign insurers are reportable when they have a cash surrender value. A pure term life insurance policy with no cash value is not reportable because it does not have a balance to measure. A whole life or universal life policy with a cash value is reportable, and the reportable balance is the cash surrender value. Foreign annuities follow the same rule: report the cash value or surrender value.
Foreign retirement accounts are the most consistently misunderstood category. The position of the Treasury and FinCEN is that most foreign retirement accounts are reportable foreign financial accounts. A Canadian RRSP, an Australian superannuation fund, a UK SIPP, a Swiss Pillar 3a, an Irish PRSA, a French PEE, a German Riester-Rente: all generally reportable. The fact that the foreign country gives the account tax-deferred status does not exempt it from FBAR. The fact that the US has a totalization agreement or tax treaty with the country does not exempt it from FBAR. If you have control over a foreign retirement account and it is part of an aggregate above $10,000, you file.
There are narrow exceptions for certain foreign government employer-sponsored plans where the participant has no individual account balance and no ability to direct investments, but these are unusual and most ordinary foreign workplace retirement accounts do not qualify for the exception. A US person working in the UK who accumulates a workplace pension with a stated cash value and any participant-directed investment options will be required to file FBAR for that pension.
Foreign exchange accounts used to hold currency positions count as financial accounts. Precious metals accounts at foreign banks where you hold an unallocated position (a credit balance representing your interest in pooled metal) count. Allocated metals accounts where you own specific bars in a vault are a closer question and have historically been treated less consistently.
What Does Not Count: Real Estate, Physical Gold, Cryptocurrency
Several categories of foreign assets that people assume are reportable on FBAR are not. Understanding what does not count is as important as understanding what does, because over-reporting wastes time and can create confusion in your filing history.
Foreign real estate held directly is not reported on FBAR. If you own a vacation home in Italy or a rental apartment in Mexico in your own name, that real estate is not a financial account. It does not go on the form. The bank account that holds the rental income from the property is a financial account and is reportable, but the property itself is not. If you own the property through a foreign entity, the entity’s bank accounts are reportable for you as the entity owner, but the real estate held inside the entity is still not a reportable item.
Physical gold, silver, and other precious metals stored in a foreign vault in your own name and accessible to you are not financial accounts. A safe deposit box containing gold bars in Zurich is not an FBAR account. The same gold held through an unallocated pool credit at a Swiss bank is an FBAR account because the bank’s balance sheet shows you as a creditor. The form of ownership matters: direct physical custody is outside the FBAR system, account-based custody is inside it.
Cryptocurrency is complicated and the answer is evolving. As of the current guidance, virtual currency held in a foreign account is not required to be reported on FBAR under the existing regulations, based on FinCEN Notice 2020-2. FinCEN signaled an intent to amend the rules to require crypto reporting, but the formal amendment has not been finalized. The current position is that foreign-exchange-held crypto is not reportable on FBAR.
That is the FBAR position. The Form 8938 position is different. The IRS treats foreign-held crypto as a foreign financial asset for Form 8938 purposes in many circumstances. A taxpayer with substantial offshore crypto may have a Form 8938 filing obligation even without an FBAR obligation. This is one of the few areas where the two forms diverge significantly.
Our recommendation for clients holding crypto on offshore exchanges: file the FBAR voluntarily reporting the foreign-exchange-held crypto, even though the current letter of the rule does not require it. The conservative approach forecloses any future enforcement risk if FinCEN’s pending amendment is made retroactive or interpreted to cover prior years. The cost of filing an additional account is low. The cost of being on the wrong side of a future interpretive ruling is high.
Foreign business inventory, equipment, and intangible assets are not reported on FBAR. A US person who owns a manufacturing business in Vietnam does not report the factory equipment or the inventory. The Vietnamese bank account the business operates from is reportable. The business itself, viewed as an operating asset, is not. Ownership of foreign business entities may trigger separate filings (Form 5471, Form 8865) but not FBAR.
Stock held directly in a foreign company in physical or registered form, where the shareholder does not hold the position through a brokerage account, is not reportable on FBAR. The shares are an ownership interest in a foreign company, not a financial account. The dividend account where dividends are deposited is reportable if it is at a foreign financial institution.
Joint Accounts and Dependent Children
Joint accounts create double reporting in many cases. Each US person who is a joint owner of a foreign account must file FBAR for the account if the aggregate threshold is met for that person. Each owner reports the maximum balance during the year, not a divided portion. If a US husband and US wife hold a joint Italian account that peaked at $40,000 during the year, both spouses file FBAR and both report the $40,000 maximum, not $20,000 each.
There is a spousal exception that allows a non-filing spouse to be covered by the filing spouse’s FBAR, but it has specific conditions: the only reportable accounts are jointly owned with the filing spouse, the filing spouse files a complete FBAR reporting all jointly owned accounts, and the non-filing spouse signs a Form 114a authorization. If any of those conditions is missing, both spouses must file their own FBARs. A spouse with even one solely owned foreign account does not qualify for the joint-filing exception and must file separately.
Joint accounts with non-US persons get reported the same way: the US person reports the full account, regardless of whether the joint owner has any US filing obligation. A US citizen who holds a joint French account with her French parent must file FBAR and report the maximum balance of the joint account. The French parent does not file. The US person’s filing covers only the US person’s obligation.
Children who are US citizens or residents are required to file FBAR on accounts in their name that meet the threshold. There is no minor exemption. A four-year-old US citizen with $15,000 in a foreign bank account opened by a grandparent has a filing obligation. The parents typically file the form on the child’s behalf, signing as parent or guardian. We see this frequently with families where one parent is a foreign national and the foreign side of the family routinely sets up accounts for US-citizen grandchildren.
Custodial accounts present aggregation questions. If a parent is the custodian of a foreign account held for a minor child, the legal owner of the account is the child, and the child’s filing obligation is determined by the child’s aggregate foreign account holdings. The parent’s separate FBAR obligation is determined by the parent’s own accounts and signature authority. The parent likely has signature authority on the custodial account, which can create a separate filing obligation for the parent even though the child owns the money.
Trust beneficiaries face the financial-interest rule based on percentage of beneficial interest. A US beneficiary of a foreign trust who has more than a 50% present beneficial interest in the trust assets is treated as having financial interest in the trust’s accounts and must file FBAR. A US beneficiary with a smaller interest, or a remainder interest, generally does not have financial interest. The 50% threshold makes settled discretionary trusts a frequent area of ambiguity that requires careful analysis of the trust documents.
Powers of attorney over a parent’s or elderly relative’s foreign account create signature authority for the US-person agent. An adult child who holds power of attorney over a parent’s foreign account, even one the child has never used, must file FBAR for the parent’s account. The unused signature authority is still signature authority. We have seen this trigger filings for clients managing the affairs of foreign-resident parents who do not realize their power-of-attorney status creates an annual filing obligation.
Filing Mechanics: BSA E-Filing, Deadlines, and Recordkeeping
The FBAR is filed electronically through the BSA E-Filing System at https://bsaefiling.fincen.treas.gov. It is not filed with the IRS, not attached to Form 1040, not mailed anywhere. The BSA E-Filing System is a separate Treasury portal operated by FinCEN. You create an account, complete the electronic form, and submit. You receive a tracking ID as confirmation.
There are two ways to file. Individual filers complete the form directly through the BSA portal as a Discrete Filer. Tax professionals filing for clients use the Batch Filer system, which allows submission of multiple FBARs from a software package. Most accountants use professional tax software that generates the FBAR XML and submits through the batch system. The result is the same: an electronic submission to FinCEN with a confirmation.
The deadline is April 15, with an automatic extension to October 15. The automatic extension applies to everyone. You do not request it, you do not file an extension form. If you miss April 15, the form is automatically considered timely if filed by October 15. After October 15, the filing is late.
There is no monetary filing fee. The form itself is free. Tax software and professional preparers charge for the work; the filing itself does not have a Treasury fee attached.
Recordkeeping requirements run separately from the filing. You are required to keep records that support the FBAR filings for at least five years. The records must show the name on each account, the account number, the name and address of the foreign institution, the type of account, and the maximum value during the year. Most clients use bank statements as the supporting records. The five-year retention is a legal minimum; we recommend keeping the records indefinitely because penalty assessments can reach back further in egregious cases.
The form requires the maximum value of each account, in US dollars, using the Treasury year-end exchange rate. Foreign-currency accounts are converted using the published rate. If the Treasury rate is not available for a particular currency, you can use a different verifiable source, but you must use it consistently and document it. Most major currencies are covered by the Treasury rate, so this is rarely an issue.
An amended FBAR can be filed at any time using the same BSA E-Filing System. Check the Amend box and provide the BSA Identifier of the original filing. The amendment replaces the original. We recommend filing amended FBARs promptly when errors are discovered because amendments filed contemporaneously with the discovery of an error are viewed more favorably in any subsequent penalty consideration than amendments filed years later or only after IRS contact.
Signature authority filings include the same information as financial interest filings, but in the Account Information section, you indicate that the filer has signature authority only. The principal account holder is identified. The maximum value reported is the maximum value the filer had authority over during the year.
Penalties: Non-Willful, Willful, and Criminal Exposure
FBAR penalties are the reason this filing matters so much. The income tax owed on foreign account income is often small. The FBAR penalty for not reporting the account is often large. The math is not symmetric and that asymmetry has caused enormous problems for taxpayers who treated the form as a minor administrative item.
Non-willful penalties are assessed when the failure to file was not deliberate. The statutory maximum is $10,000 per violation, indexed for inflation (currently around $15,611 per violation). The Supreme Court in Bittner v United States (2023) ruled that the non-willful penalty applies per form (per annual filing), not per unreported account. Before Bittner, the IRS had been assessing the $10,000 per account, which could turn a single year of missed filings into a six-figure penalty for someone with multiple accounts. Bittner limited the per-year exposure to a single penalty, which significantly reduced the maximum exposure for non-willful violations with multiple accounts.
Willful penalties are far larger. The statutory maximum for a willful violation is the greater of $100,000 (indexed for inflation, currently around $156,107) or 50% of the balance in the unreported account at the time of the violation. A taxpayer who willfully failed to report a $1,000,000 foreign account faces a $500,000 FBAR penalty for one year. Willfulness can be assessed for multiple years, and the penalty can stack across years.
Willfulness for FBAR purposes is interpreted broadly. It does not require an affirmative intent to evade. It includes willful blindness, which means deliberately avoiding learning facts that would create a known filing obligation. Checking the No box on Schedule B (Form 1040) Question 7a, which asks whether you had foreign accounts, when you in fact did, has been used by the government as evidence of willfulness. So has signing a return without reading the foreign account question. This is one reason we go through Schedule B foreign-account questions carefully with clients during return preparation.
Criminal penalties exist for willful FBAR violations. The maximum criminal penalty is $250,000 and up to five years in prison, increased to $500,000 and ten years if the violation is part of a pattern of illegal activity exceeding $100,000. Criminal FBAR cases are not common but they happen, and they have happened to people who thought their conduct was on the safe end of aggressive. The government has prosecuted FBAR cases involving relatively modest dollar amounts when the facts suggested deliberate concealment.
Reasonable cause is a defense to non-willful penalties. The taxpayer must show that the failure to file was due to a reasonable cause and not willful neglect. Successful reasonable cause arguments have included reliance on a tax professional who failed to ask about foreign accounts, lack of awareness of the FBAR requirement (in limited circumstances), and incapacity due to illness. The IRS does not grant reasonable cause readily. The taxpayer carries the burden of proving the elements.
The IRS has discretion to assess less than the statutory maximum, and in practice most non-willful cases are resolved for less than the maximum, particularly through the Streamlined Filing Compliance Procedures discussed in the next section. But the maximums are the negotiating use the government brings to the table. A taxpayer’s position improves dramatically when filings are made voluntarily before IRS contact, and deteriorates dramatically when the IRS reaches out first.
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Frequently Asked Questions
Who must file FBAR if I only had one foreign account briefly during the year?
The short answer: you must file FBAR if, at any moment during the calendar year, the aggregate balance across all of your foreign financial accounts exceeded $10,000, even if that aggregate was only over the threshold for one day, and even if you only had one foreign account during the year. The any-time-during-year rule and the aggregate threshold work against the assumption that a short or single-account holding period escapes the requirement. It does not. The question of who must file FBAR is decided by the highest aggregate balance during the year, not by how long the accounts were held or how many there were.
A common scenario we see: a US citizen takes a job in London for six months on a UK contract. Her UK employer requires a UK bank account to deposit her salary. She opens an HSBC UK account in February, accumulates four months of after-tax UK salary in it (peaking at the equivalent of $35,000 in June), then transfers the full balance to her US bank account in July when she returns to the US. She closes the UK account in August. She had one foreign account, held for six months, with a maximum balance of $35,000.
She must file FBAR for that year. The account existed during the calendar year, the maximum balance during the year was over $10,000, and she is a US person. The fact that the account was open for only six months does not matter. The fact that it was empty for six months of the year does not matter. The reportable maximum is $35,000 (converted at the December 31 Treasury rate), and the form must be filed by April 15 of the following year, with the automatic extension to October 15.
What if the account never crossed $10,000? If the maximum balance during the year was $9,500, and you have no other foreign accounts, you have no FBAR filing requirement. The threshold is a hard threshold based on aggregate maximum balances. Below the threshold, no filing is required. We still recommend that clients in this position keep careful records of the maximum balance, because the determination is made for each year separately, and a year of borderline activity can be followed by a year of clearly reportable activity, and consistent records support the analysis.
What if you had two short-lived accounts during the year that never overlapped, each with a maximum of $8,000? Aggregate the maximums across the year. $8,000 plus $8,000 is $16,000, over the threshold, and you must file. The accounts do not need to have existed at the same time. The aggregation is across all accounts that existed at any point during the year, using each account’s maximum balance.
What if you closed the account before the end of the year and the bank no longer issues statements? You are still responsible for knowing and reporting the maximum balance. Request final statements at the time of closing. Save them. The FBAR information requires the institution name, account number, account type, and maximum value, and the burden is on the filer to document the maximum value. We recommend always pulling the closing-statement package the day an account is closed.
What if the account was held in a currency you did not convert during the year? The conversion happens at the December 31 Treasury rate for the year you are reporting. The conversion is mechanical: take the maximum balance in the foreign currency, divide by the Treasury year-end rate (or multiply, depending on how the rate is quoted), and report the US dollar amount. The fact that you never converted the foreign currency to dollars during the year does not change the rule.
The bottom line on this scenario: who must file FBAR includes anyone with a brief foreign account holding period if the threshold was hit. Brevity is not a defense. The conservative practice is to file even in borderline years, and to keep records of foreign account activity in every year, because the question of who must file FBAR is asked retroactively when problems arise, and contemporaneous records resolve disputes that retrospective reconstruction cannot.
If you discover you should have filed for a prior brief account and did not, the Streamlined Filing Compliance Procedures (discussed in a later FAQ) are typically available and provide a path back into compliance with reduced or eliminated penalties for non-willful cases. We have walked many clients through this exact scenario: a single short-term foreign account from years ago, never reported, surfacing because the client read something or asked a question. The fix is straightforward when handled correctly.
Who must file FBAR for joint accounts and dependent children’s accounts?
Joint account holders each have their own FBAR obligation. If two US persons hold a joint foreign account that peaked at $50,000 during the year, both must file, and both report the full $50,000 maximum on their separate filings. The aggregation is not divided. Each joint owner reports as if they owned the full balance. The question of who must file FBAR for a joint account has two answers when both owners are US persons: both file, both report the full account.
There is a narrow spousal exception. If two spouses file joint income tax returns, the only reportable foreign accounts of one spouse are jointly owned with the other spouse, the filing spouse files a complete FBAR reporting all of the joint accounts, and the non-filing spouse signs Form 114a authorizing the filing spouse to file on their behalf, then the non-filing spouse does not have to file separately. Each of these conditions must be met. If the non-filing spouse has even one solely owned foreign account, the exception is lost and both spouses must file their own FBARs.
Joint accounts with non-US joint owners require only the US person’s filing. If a US citizen holds a joint account with a foreign-national spouse who is not a US person, the US citizen files FBAR and reports the full account. The foreign-national spouse has no US filing obligation (because foreign nationals who are not US persons are outside the FBAR system). The US citizen’s filing covers the full account from the US-tax perspective.
Dependent children who are US persons have independent FBAR obligations. There is no age threshold and no minor exception. A US citizen child who has a foreign bank account in the child’s name that, alone or in aggregate with other foreign accounts, exceeded $10,000 during the year must file FBAR. A parent typically signs on the child’s behalf as parent or guardian. The form is filed in the child’s name with the child’s information.
Foreign grandparents opening accounts for US grandchildren is the most common scenario. A French grandmother opens a Livret de Developpement Durable for her US-citizen grandchild and deposits the legal maximum (around 12,000 euros). The grandchild now has a French account in her name that exceeds the FBAR threshold. The parents must file an FBAR in the child’s name, every year, until the account is either closed or transferred. We see this with families where one parent is a foreign national and the foreign side of the family routinely opens accounts for US-resident grandchildren as gifts.
Custodial accounts held under foreign-country versions of the Uniform Transfers to Minors Act create joint filing analyses. The minor typically has financial interest as legal owner. The custodian (often the parent) typically has signature authority. The result: both the child (in the child’s name) and the parent (under the parent’s signature authority) may have separate filing obligations on the same account. The double filing looks redundant but it is what the regulations require.
Trust accounts held for the benefit of minor US children may trigger filings depending on the trust structure. If the child has more than a 50% present beneficial interest, the child has financial interest and the child must file. If the trust is discretionary with no fixed beneficial interest, the analysis turns on the specific trust terms. We work through these case by case because the trust language controls the outcome and generic answers are not safe.
Foreign court-ordered guardianship arrangements over US-person beneficiaries create signature-authority filings for the guardian. A US person who is appointed by a foreign court as guardian over a foreign relative’s accounts has signature authority and an FBAR filing obligation on those accounts, even though the assets in the accounts belong to the foreign relative. The fiduciary role is enough to trigger the requirement.
The practical advice for families with foreign relatives: ask every year whether any new foreign accounts have been opened in the children’s names. Foreign grandparents and aunts and uncles often open accounts as gifts without telling the US parents, and the US parents discover the accounts during inheritance or family reorganizations. By then, multiple years of unfiled FBARs may have accumulated. Asking the question annually catches new accounts before they become a compliance problem.
Who must file FBAR versus Form 8938? Are they the same thing?
FBAR and Form 8938 are two separate filings that overlap significantly but are not the same. FBAR is filed with FinCEN through the BSA E-Filing System. Form 8938 (Statement of Specified Foreign Financial Assets) is filed with the IRS as an attachment to your Form 1040. They are required by different statutes, enforced by different agencies, have different thresholds, and have different asset definitions. The question of who must file FBAR is answered separately from the question of who must file Form 8938, and many taxpayers must file both.
FBAR is required at the $10,000 aggregate threshold, measured by maximum balance at any time during the year, for any US person with a reportable foreign financial account. Form 8938 is required at higher thresholds that vary based on filing status and residency. For an unmarried US-resident taxpayer, the Form 8938 threshold is $50,000 on the last day of the year or $75,000 at any time during the year. For a married couple filing jointly resident in the US, the threshold is $100,000 on the last day or $150,000 at any time. For taxpayers living abroad, the thresholds are much higher: $200,000 on the last day or $300,000 at any time for an unmarried US-citizen living abroad, and $400,000 / $600,000 for married couples filing jointly living abroad.
A taxpayer with $20,000 in foreign accounts and no other foreign assets has an FBAR obligation but no Form 8938 obligation. A taxpayer with $200,000 in foreign accounts living in the US has both obligations. A taxpayer with $100,000 in foreign accounts living abroad has an FBAR obligation but probably no Form 8938 obligation (depending on filing status). The thresholds do not align.
The asset categories also differ. FBAR covers foreign financial accounts. Form 8938 covers specified foreign financial assets, which is a broader category that includes financial accounts plus certain non-account assets: interests in foreign entities held for investment, foreign-issued securities held outside of accounts, foreign partnership interests, certain foreign retirement plans, and certain foreign insurance contracts. A US person with a direct holding of foreign company stock (held in physical or registered form, not through a brokerage) might have a Form 8938 obligation for that stock but no FBAR obligation because there is no foreign financial account.
Foreign cryptocurrency is treated differently between the two forms. Crypto held on a foreign exchange is not currently reportable on FBAR (pending FinCEN’s anticipated rule change) but is generally reportable on Form 8938. A US taxpayer with substantial offshore crypto holdings may have a Form 8938 filing without a corresponding FBAR. This is one of the few areas where the two forms diverge clearly.
Reporting on one form does not satisfy the other. Filing FBAR does not eliminate the need to file Form 8938 if the Form 8938 thresholds are met. Filing Form 8938 does not eliminate the need to file FBAR if the FBAR threshold is met. The two forms are independent filings with independent penalty regimes. Form 8938 penalties start at $10,000 for failure to file and can go up to $50,000 for continued non-filing after IRS notice, plus additional penalties on the income tax side for unreported income from foreign assets.
The practical approach we recommend: complete the FBAR analysis first because the threshold is lower and the universe of accounts is more limited. Then run the Form 8938 analysis using the same account data plus any non-account foreign assets. If a taxpayer needs Form 8938, the FBAR data is mostly the foundation. The reverse does not work as well because Form 8938 includes assets that FBAR does not.
The penalty asymmetry favors fixing FBAR problems even when Form 8938 problems are smaller. The FBAR penalty maximums (especially the willful 50% of balance penalty) dwarf the Form 8938 penalty maximums. A taxpayer with multi-year non-compliance on both forms typically faces much larger exposure on the FBAR side, and the compliance strategy is built around resolving the FBAR exposure first.
The streamlined procedures cover both forms. The Streamlined Filing Compliance Procedures require the filing of amended income tax returns (including any required Form 8938) for the last three years and the filing of FBARs for the last six years. The streamlined approach addresses both compliance gaps in one process.
Who must file FBAR for cryptocurrency held on offshore exchanges?
Under the current FinCEN guidance, virtual currency held in foreign accounts is not required to be reported on FBAR. FinCEN Notice 2020-2 announced an intent to propose amendments to the regulations to include virtual currency as a type of reportable account, but the formal amendment to the regulations has not been finalized. The current letter of the rule does not include offshore crypto exchange accounts in the FBAR filing requirement. So under a strict reading, who must file FBAR does not currently include taxpayers whose only foreign assets are crypto on offshore exchanges.
That strict reading is not where we land for clients. Our recommendation is to voluntarily report offshore crypto exchange accounts on FBAR, treating the crypto holdings as foreign financial accounts for reporting purposes even though the current rule does not require it. The reasoning is risk-asymmetric: the cost of filing additional accounts is low, the conservative position is unambiguous, and the downside of being on the wrong side of a future interpretive ruling is meaningful.
FinCEN’s pending amendment has been signaled for several years. If and when it is finalized, the question will be whether the new rule applies prospectively only or whether it picks up prior years through some interpretive mechanism. Voluntary reporting forecloses the issue. A taxpayer who has been reporting offshore crypto on FBAR all along has no exposure regardless of how the amendment is structured.
The Form 8938 analysis is different. The IRS treats foreign-held cryptocurrency as a specified foreign financial asset under existing Form 8938 rules in many circumstances. A US taxpayer with substantial offshore crypto holdings likely has a Form 8938 filing obligation today, whether or not the holdings are reported on FBAR. The Form 8938 thresholds apply, and the asset categories under Form 8938 are broader than the FBAR categories.
What counts as offshore crypto for these purposes? Crypto held in your own self-custody wallet (a hardware wallet, a software wallet where you control the keys) is not in any account anywhere. It is direct ownership, like physical gold in your safe. Self-custodied crypto is not on FBAR and is generally not on Form 8938 either, regardless of which jurisdiction’s blockchain or exchange originally held it. The location-based test does not apply because there is no account and no third-party custodian.
Crypto held on a US-based centralized exchange (Coinbase, Kraken-US, Gemini, the US-licensed exchanges) is not a foreign account. It is a US account. No FBAR. No Form 8938 reporting for the crypto on those exchanges. The fact that the underlying blockchain assets are global does not change the analysis. The custodial relationship is US.
Crypto on a foreign-based centralized exchange (the offshore Kraken entities, Bitfinex, KuCoin, OKX, Bybit, MEXC) is where the question gets interesting. The exchange is a foreign financial institution. The account is at the foreign institution. Under current FBAR rules, the account is not reportable as long as it only holds crypto. If the account also holds fiat currency (USD, EUR balances pending settlement), the fiat portion is reportable on FBAR under the current rules. The crypto portion is currently not. We recommend reporting both.
Stablecoins occupy an awkward middle ground. Stablecoins are technically tokens on a blockchain, but they represent fiat-currency value and are used like cash balances. Our position: stablecoin balances on offshore exchanges should be reported on FBAR. They function as currency for practical purposes and the conservative treatment is to report them.
DeFi positions held through self-custody wallets, even on offshore protocols, are not accounts and are not reportable on FBAR. The taxpayer holds the private keys, the protocol does not custody anything, and there is no account in the traditional sense. The question of whether decentralized custody can ever create an FBAR account has not been answered by FinCEN and the position is currently that DeFi self-custody does not create an FBAR obligation.
The bottom line for clients with offshore crypto: file FBAR voluntarily reporting the offshore exchange accounts, complete Form 8938 for the offshore holdings if the thresholds are met, and report all crypto transactions correctly on the income tax return. The compliance posture should be conservative because the rules are evolving and the penalty regime for getting it wrong is severe.
What happens if someone who must file FBAR didn’t file and has missed past years?
Missing FBAR filings are fixable, and the fix is often less painful than the dread suggests, as long as the fix happens before the IRS reaches out. The path back into compliance depends on whether the past non-compliance was willful or non-willful, and whether the IRS has already made contact. The question of who must file FBAR who has missed years has a well-developed answer through the Streamlined Filing Compliance Procedures and the Delinquent FBAR Submission Procedures.
Streamlined Filing Compliance Procedures are the most commonly used pathway. The procedures have two versions: Streamlined Domestic Offshore (for US-resident taxpayers) and Streamlined Foreign Offshore (for taxpayers meeting the non-residency requirement). Both versions require the taxpayer to certify under penalties of perjury that the failure to file was non-willful. The Foreign Offshore version has no miscellaneous offshore penalty. The Domestic Offshore version has a 5% miscellaneous offshore penalty assessed on the highest aggregate year-end balance of the unreported foreign accounts during the covered period.
Mechanics of the Streamlined approach: file amended income tax returns (Form 1040X) for the last three years, reporting all previously omitted foreign income and including any required Form 8938. File FBARs for the last six years through the BSA E-Filing System, with the Reason for Late Filing identified as Streamlined. Include the Form 14653 (Foreign Offshore) or Form 14654 (Domestic Offshore) certifying non-willfulness with a detailed narrative explaining how the failure occurred. Pay any tax and interest owed on the amended returns, and pay the 5% miscellaneous offshore penalty if Domestic Offshore.
The non-willfulness certification is the heart of the Streamlined process. The IRS reviews the narrative and the facts to determine whether the non-willful certification is credible. The certification must be specific: what the taxpayer knew, when the taxpayer learned of the obligation, why the foreign accounts existed, what professional advice was sought (or not sought) at the time. Generic certifications get pushed back. Detailed, specific, credible narratives get processed.
If the non-compliance was willful, the Streamlined procedures are not available. The path for willful taxpayers is the IRS Criminal Investigation Voluntary Disclosure Practice, which is a different and more involved process that resolves both civil and potential criminal exposure but requires acceptance into the program and is not anonymous in the same way the Streamlined process effectively is. We do not recommend attempting the Streamlined process for a willful case. The certification is signed under penalties of perjury and a false certification creates its own legal problem.
Delinquent FBAR Submission Procedures are a separate, simpler track for taxpayers who have reported all foreign income on their tax returns and paid the tax owed but simply did not file FBARs for the relevant years. The procedures allow the late FBARs to be filed with an explanation, and the IRS will not assess penalties as long as the income was properly reported and the failure was not willful. This is the cleanest fix when the only gap was the FBAR filing itself, not the income reporting.
Quiet disclosures (filing amended returns and back FBARs without using the Streamlined or Delinquent procedures) are not recommended. The IRS has stated that taxpayers who file amended returns and back FBARs outside of the formal compliance procedures may still face full FBAR penalty assessment. The whole point of the formal procedures is to obtain the reduced-penalty treatment in exchange for the formal certification and documentation. Skipping the process gives up the protection.
Timing matters significantly. The Streamlined procedures are available only to taxpayers whose non-compliance has not been the subject of an IRS examination or investigation. Once the IRS opens an audit or sends a letter inquiring about foreign accounts, the Streamlined door closes for that taxpayer. The procedures must be initiated before IRS contact. We have seen multiple cases where a client waited too long, the IRS sent a letter, and the Streamlined path was no longer available, forcing a much more expensive resolution.
Statute of limitations on FBAR penalty assessment is six years from the date of the violation. The IRS can assess FBAR penalties for the most recent six years. This is why the Streamlined procedures cover six years of FBARs (matching the assessment statute) but only three years of income tax returns (matching the standard income tax statute). The longer FBAR statute is one reason the FBAR penalty exposure is so much larger than the income tax exposure in many missed-year cases.
Our standing recommendation for any client who realizes they have missed FBAR filings: do not file anything until the strategy is decided. The wrong amended return filed in the wrong way can prejudice your position. Engage a tax professional who handles international compliance, lay out all the facts, evaluate the willful versus non-willful posture honestly, and choose the appropriate procedure. The cost of professional help is much lower than the cost of a botched self-help correction.