Most of the people who call us about FBARs are not hiding anything. They moved to the United States with a bank account back home, inherited an account from a parent, or opened a brokerage account abroad years ago and never heard of the form. The rules are strict, but the law draws a sharp line between honest mistakes and willful ones, and there is usually a clean way to fix the past. Here are the questions we hear most.
What is an FBAR?
The FBAR is FinCEN Form 114, the Report of Foreign Bank and Financial Accounts. It comes from the Bank Secrecy Act (Title 31 of the U.S. Code), not the Internal Revenue Code, although the IRS enforces it. It is filed electronically through FinCEN’s BSA E-Filing System, separately from your tax return (31 U.S.C. §5314; 31 C.F.R. §1010.350).
Who has to file?
A “U.S. person” who has a financial interest in, or signature or other authority over, foreign financial accounts whose combined value exceeded $10,000 at any time during the calendar year. U.S. persons include citizens, green card holders and others who are U.S. residents under the tax residency tests, and entities formed in the United States — corporations, partnerships, LLCs, trusts and estates. An LLC must file even if it is disregarded for income tax purposes.
The $10,000 test is on the total of all your foreign accounts. Three accounts of $4,000 each mean all three must be reported.
Which accounts count?
- Bank accounts — savings, checking, time deposits.
- Securities and brokerage accounts.
- Commodity futures and options accounts.
- Insurance or annuity policies with a cash value.
- Mutual funds and similar pooled funds offered to the public with regular redemptions.
An account is “foreign” if it is held outside the United States, even if the bank has a U.S. branch.
I am not the owner — I only have signing authority, or I am a beneficiary. Do I file?
Signing authority alone is enough, with some exceptions for employees of certain regulated or listed companies. For trusts, being a beneficiary is not automatically a “financial interest.” You have one if you have a present beneficial interest in more than 50% of the trust’s assets, receive more than 50% of its current income, or are the grantor treated as the trust’s owner for income tax purposes (31 C.F.R. §1010.350(e)(2)). Owning more than 50% of a company that holds a foreign account also counts.
How do joint accounts work? Can spouses file once?
Each joint owner reports the full value of the account. Spouses can file a single FBAR only if every account the non-filing spouse must report is jointly owned with the filing spouse, the filing spouse files on time, and both sign Form 114a (kept in your records). Otherwise each spouse files separately.
What value do I report, and when is it due?
Report the highest value of each account during the year, converted to dollars at the Treasury’s year-end reporting rate. The FBAR is due April 15 of the following year, with an automatic extension to October 15 — no request needed. Keep account records for five years (31 C.F.R. §1010.420).
What are the penalties?
Non-willful. Up to $10,000 per violation under the statute, adjusted for inflation to $16,536 under the current table (31 U.S.C. §5321(a)(5)(B); 31 C.F.R. §1010.821). In Bittner v. United States, 598 U.S. 85 (2023), the Supreme Court held that the non-willful penalty applies per report, not per account. Someone who missed one FBAR listing ten accounts faces one penalty for that year, not ten. No penalty applies if the violation was due to reasonable cause and the account balance was properly reported (31 U.S.C. §5321(a)(5)(B)(ii)).
The IRS has also changed its internal guidance. The Internal Revenue Manual (IRM 4.26.16, updated August 26, 2025) no longer uses fixed “mitigation levels” for non-willful cases; examiners use judgment, usually recommend one penalty per year, and cap the total for all years at 50% of the highest combined balance.
Willful. The greater of $100,000 (now $165,353 after inflation) or 50% of the account balance at the time of the violation, per account (31 U.S.C. §5321(a)(5)(C)–(D)). Reasonable cause is not a defense. Under IRM 4.26.16.5.5.3, total willful penalties are generally limited to 50% of the highest combined balance, and in no event more than 100%.
Criminal. A willful violation can be prosecuted: up to $250,000 and five years in prison, or up to $500,000 and ten years if it occurs while violating another federal law or as part of a pattern of illegal activity involving more than $100,000 in a year (31 U.S.C. §5322).
What does “willful” mean?
Knowing violation, reckless disregard, or willful blindness — deliberately avoiding learning about the duty (IRM 4.26.16.5.5.1). Courts, including the Ninth Circuit in United States v. Hughes (2024), agree recklessness is enough. Negligence is not willfulness. Not knowing the form existed, by itself, usually points to non-willful conduct, though checking “no” to the foreign-account question on Schedule B can be used as evidence of recklessness.
Can I rely on my accountant?
It depends on what you relied on. Under United States v. Boyle, 469 U.S. 241 (1985), relying on someone else to file on time is not reasonable cause — filing is your own duty. Relying in good faith on a professional’s substantive advice, after giving them the full facts, can be.
I missed past years. What now?
File the late FBARs electronically and explain the delay using the reason field on the form. If all income from the accounts was reported and taxed, the IRS’s delinquent FBAR procedure often ends without a penalty. If income was also left off your returns, the Streamlined Filing Compliance Procedures may fit non-willful cases. Where conduct may have been willful, talk to a lawyer before filing anything — the IRS Criminal Investigation Voluntary Disclosure Practice is the route, and the order of steps matters.
Is FBAR the same as Form 8938?
No. Form 8938 is filed with your income tax return under IRC §6038D, has higher thresholds and covers some assets the FBAR does not. Many people must file both.
What records should I keep?
For each account, keep the name on the account, the account number, the bank’s name and address, the type of account and the maximum value during the year, for five years from the FBAR due date (31 C.F.R. §1010.420). Year-end statements are not always enough, because the test is the highest balance at any time. Many banks will issue an annual statement showing the maximum balance on request.
Sources: 31 U.S.C. §§5314, 5321, 5322; 31 C.F.R. §§1010.350, 1010.420, 1010.821; IRM 4.26.16 (Aug. 26, 2025); Bittner v. United States, 598 U.S. 85 (2023); United States v. Boyle, 469 U.S. 241 (1985). Penalty amounts are as of November 2026 and are adjusted each year.
