What is FBAR? FinCEN Form 114 explained

FBAR (Report of Foreign Bank and Financial Accounts) is filed annually on FinCEN Form 114 by US persons whose foreign financial accounts aggregate over USD 10,000 at any point during the calendar year. The form goes to FinCEN (Financial Crimes Enforcement Network), not the IRS, and is filed electronically through the BSA E-Filing System. The penalties for non-filing are punitive: USD 10,000+ per non-willful violation, and willful penalties can reach the greater of USD 100,000 or 50% of account value per year per account.

US person includes: US citizens, US residents (green card holders, substantial-presence-test residents), and US-organized entities (corporations, partnerships, trusts, LLCs). The aggregation test: if the highest balance of all foreign accounts combined, at any one point during the year, exceeded USD 10,000, all foreign accounts must be reported. Foreign means non-US. An Indian-resident green-card holder with Indian bank accounts, mutual funds, demat, NRO/NRE accounts and EPF easily crosses the threshold and must file FBAR every year, regardless of whether they file a US income tax return.

Reportable accounts include: bank accounts (savings, current, FD, NRE, NRO), brokerage/demat accounts, mutual fund holdings (held in fund-house records or demat), insurance with cash surrender value, retirement accounts (EPF, PPF, NPS - though scope is debated), foreign-issued credit cards with prepaid balance, online wallets with foreign deposits, and accounts where you have signature authority but no ownership (e.g., as a director or signatory). Real estate is not reportable on FBAR but is on Form 8938 if held through an entity. Cryptocurrency is currently outside FBAR but FinCEN has proposed to extend it.

FBAR is filed electronically at bsaefiling.fincen.treas.gov using FinCEN Form 114. For each account: maximum value during the year (in USD, converted at the Treasury year-end rate), financial institution name and address, account number, account type (bank, securities, other), joint or signature-authority status. The filer's identifying information (SSN/ITIN/EIN) is required. Due date 15 April with automatic extension to 15 October. No paper filing accepted. No filing fee.

Non-willful penalty: USD 10,000 per violation (per form per year as recently interpreted by some courts, not per account). Willful: greater of USD 100,000 or 50% of account balance per violation per year per account. Criminal penalties possible. For non-willful past filers, the IRS Streamlined Filing Compliance Procedures (Foreign or Domestic Offshore variants) offer reduced-penalty resolution: file last six years of FBAR, last three years of amended income tax returns and Form 8938 as needed, and a non-willful certification. The Streamlined Foreign Offshore version has no monetary penalty for qualifying filers.

Do I need to file FBAR if my account had under USD 10,000 all year?
No, if the aggregate maximum across all foreign accounts stayed under USD 10,000 throughout the year. The instant the aggregate crosses USD 10,000 at any point in the year, all foreign accounts become reportable, even those with small balances.

Is FBAR the same as Form 8938?
No. FBAR is filed with FinCEN separately from the tax return. Form 8938 is filed with the IRS as part of the income tax return. Thresholds and content differ; many US persons must file both. Compare the two forms for your specific account list.

Does an Indian-resident non-US-citizen file FBAR?
Only if they are a US person under the substantial-presence test (183 days weighted over current and prior two years). A pure Indian-resident NRI with no US person status does not file FBAR even with US bank accounts.

What about EPF and PPF accounts?
EPF accounts are generally reportable on FBAR (the account holder has a balance with a foreign institution). PPF treatment is less settled but most practitioners include it on FBAR for safety. Disclose conservatively; under-disclosure penalty is far worse than over-disclosure cost.

Is signature authority on a company account reportable?
Yes. If you have signature authority over a foreign account, even without ownership interest, the account is reportable if you are a US person and the aggregate threshold is met. Directors and CFOs of Indian companies who are US persons should track signature authority.

What if I forgot to file FBAR for past years?
Use the IRS Streamlined Filing Compliance Procedures. The Streamlined Foreign Offshore version (for non-US residents) has no monetary penalty; the Streamlined Domestic Offshore version (for US residents) has a 5% miscellaneous offshore penalty. Both require non-willful certification.