U.S. persons—including citizens, green‑card holders, and anyone who meets the substantial‑presence test—must report foreign financial accounts when the combined value of those accounts exceeds $10,000 at any point during a calendar year. The requirement is enforced through the Foreign Bank Account Report (FBAR), which is separate from the income‑tax return.
Who must file
| Category | Requirement |
|---|---|
| U.S. citizens | Must file an FBAR if the $10,000 threshold is met, regardless of residence. |
| Green‑card holders | Same obligation as citizens; filing can be avoided only by relinquishing the green card. |
| Substantial‑presence test | Non‑citizens who spend enough days in the U.S. (generally 183 days in a 12‑month period) are treated as U.S. persons for FBAR purposes. |
What must be reported
- All foreign accounts in which the filer has a legal ownership interest, including checking, savings, brokerage, mutual‑fund, and retirement accounts.
- Nominee or “signature‑authority” accounts – even if the money belongs to someone else, the filer must report if they have authority to act on the account.
- Non‑bank accounts that can hold funds, such as PayPal, cryptocurrency exchanges, or other digital‑wallet services, when the aggregate balance reaches the $10,000 threshold.
- Aggregate value is calculated by adding the highest balance of each account during the year; a single day of $10,000 or more triggers the filing requirement.
Filing mechanics
- Form: FinCEN Form 114 (FBAR) is filed electronically through the BSA E‑File system.
- Deadline: Aligns with the individual tax return—April 15 (with an automatic six‑month extension to October 15 if requested). Prior to 2013 the deadline was June 30 and required paper filing.
- Confirmation: After electronic submission, a confirmation receipt must be retained as proof of filing.
Relationship to the tax return
- The FBAR is not part of the Internal Revenue Code; it falls under the Bank Secrecy Act. It is filed separately from the IRS Form 1040.
- Failure to file the FBAR can result in severe civil and criminal penalties, independent of any tax liability.
Practical considerations
- Aggregate accounts: Even a $9,999 account plus a $1 account triggers filing—partial thresholds do not apply.
- Short‑term balances: Accounts held for a single day at $10,000 or more are still reportable.
- Professional assistance: Because the FBAR is distinct from the tax return and many U.S. accountants lack experience with expatriate reporting, engaging a tax preparer familiar with international filings is advisable.
- Record‑keeping: Keep statements, account opening documents, and the electronic filing confirmation for at least five years.
Risks of non‑compliance
- Civil penalties can reach up to $10,000 per violation for non‑willful failures, and the greater of $100,000 or 50 % of the account balance for willful violations.
- Criminal penalties may include fines up to $250,000 and imprisonment of up to five years for willful violations.
In summary, any U.S. person with foreign financial accounts totaling $10,000 or more must file an FBAR electronically by the tax‑return deadline, retain proof of filing, and consider specialized tax advice to avoid substantial penalties.
