For U.S. citizens, green card holders, and U.S. tax residents living abroad, FBAR filing is one of the most common—and most misunderstood—U.S. reporting requirements. If you have foreign bank or financial accounts, understanding whether you need to file an FBAR is critical to staying compliant and avoiding severe penalties.

This guide explains what the FBAR is, who must file, how balances are calculated, and what happens if you miss the requirement. 

What Is the FBAR? 

The FBAR, short for Foreign Bank Account Report, is officially filed as FinCEN Form 114. It is not a tax return and does not result in additional tax owed. Instead, it is a disclosure form submitted to the U.S. Treasury to report foreign financial accounts.

The FBAR reports the maximum balance of each foreign account during the calendar year. These accounts include more than just checking and savings accounts. Reportable accounts may include:

• Investment and brokerage accounts
• Joint personal or business accounts
• Business bank accounts
• Accounts where you have signature authority, even if you do not own the funds

If the combined value of all your foreign financial accounts exceeds $10,000 USD at any point during the year, you are required to file an FBAR—even if the balance was only over the threshold for a single day.

Understanding the “Cumulative Balance” Rule 

One of the most common FBAR mistakes involves misunderstanding the $10,000 threshold. The threshold is cumulative, meaning you must add together the highest balance of each foreign account—not just your largest account.

For example:

-You have €6,000 in one account and €3,800 in another. Then, your total balance is €9,800. This exceeds $10,000 USD. You are required to file an FBAR. You must remember

-Another common scenario involves transfers. If you held €5,000 in an ING account and later transferred that €5,000 to a Wise account, your cumulative balance is €10,000—even if the same money merely moved between accounts. 

Calculating the Highest Account Balance 

• To calculate the highest balance for each account:
• Review your bank statements for the year
• Identify the highest end-of-day balance for each account
• Convert that amount to U.S. dollars using the Treasury’s year-end exchange rate

Repeat this process for all foreign accounts and add the highest balances together to determine whether you exceed the $10,000 threshold.

If you do not know the exact highest balance, it is preferable to use annual statements or make a reasonable estimate. If there is truly no way to determine the amount, reporting the balance as “unknown” is acceptable.

Who Must Be Included on an FBAR 

When filing an FBAR, you must report not only your own accounts, but also any account where you have control or authority over the funds.

This includes but is not limited to: A spouse or business partner on a joint account, an employer’s account if you have signature authority, or a child’s or family member’s account where you can access funds

The basic rule is, “if you can move money in or out of the account, it is likely reportable.”

Gathering the Required Account Details 

To complete your FBAR accurately, you will need the following information for each account:

1. Account number
2. Name and address of the financial institution
3. Type of account (checking, savings, investment, etc.)
4. Highest balance during the year
5. Details of other account holders: full name, address, and an identifying number such as a passport number, TIN (Tax Identification Number), or BSN (Burgerservicenummer)

Having this information organized in advance helps prevent errors and delays. For BNC clients, an FBAR template is provided, and FBAR preparation and submission are typically included with tax return preparation.

Penalties for Not Filing an FBAR

The FBAR filing deadline aligns with your tax return. You must file by April 15, with an automatic extension to October 15. If you don’t file in a timely manner, FBAR penalties can be severe. Penalties generally fall into two categories. The first is non-willful violations (unintentional errors), which may result in penalties of up to $10,000 per account. The second is willful violations can result in significantly higher penalties and may even include criminal consequences

If you have missed FBAR filings in prior years, do not panic. Programs such as the Streamlined Filing Procedures may allow you to come into compliance without penalties, provided the failure to file was non-willful.

Final Notes on FBAR Compliance

The FBAR can seem intimidating, but at its core, it is simply about awareness and disclosure. By tracking your accounts and reporting them accurately, staying compliant is very manageable.

If you have questions about FBAR filing or other expat reporting requirements, BNC Tax & Accounting is here to help. We specialize in U.S. tax compliance for Americans living abroad and guide clients through complex reporting with clarity and confidence.