FBAR Explained: Who Must File FinCEN 114 and the Real Penalties

A single day. That is all it takes. If your foreign accounts, added together, cross $10,000 for even one day during the calendar year, you have an FBAR filing obligation — regardless of whether the account earned a dime, and regardless of whether that income was already reported on your 1040.

The $10,000 figure trips up more people than any other rule I see in international work. Clients read it as "$10,000 per account" or "$10,000 of income" or "$10,000 still sitting there on December 31." It is none of those. It is the highest aggregate balance across every foreign account you hold or control, measured at any point in the year. Get the mechanics wrong and the penalties are not proportional to the mistake — they are proportional to the account balance.

Who has to file an FBAR?

Any "United States person" with a financial interest in, or signature authority over, foreign financial accounts whose aggregate value exceeds $10,000 at any time during the calendar year must file FinCEN Form 114. This obligation comes from 31 U.S.C. §5314 and its regulations at 31 CFR §1010.350.

A "United States person" is broader than most people assume. It includes:

• U.S. citizens, including those living abroad
• U.S. resident aliens (green-card holders and anyone meeting the substantial-presence test)
• Domestic corporations, partnerships, LLCs, trusts, and estates

"Signature authority" is the trap I see most often. You do not need to own the money. A CFO who can sign on the company's foreign account, an adult child added to an aging parent's account overseas, or an employee with authority over an employer's account can all have their own personal filing obligation. Ownership and authority are separate triggers under 31 CFR §1010.350(f).

What counts as a foreign financial account?

More than a bank account. Reportable accounts under 31 CFR §1010.350(c) include:

• Foreign bank accounts (checking, savings, time deposits)
• Foreign securities and brokerage accounts
• Foreign mutual funds and pooled funds
• Certain foreign-issued cash-value life insurance and annuity policies
• Foreign online accounts and certain custodial arrangements holding funds abroad

The location of the institution controls, not the currency or the account holder's nationality. A euro account at a branch of a U.S. bank located in Frankfurt is foreign; a dollar account at a foreign bank is foreign. Cryptocurrency held on a foreign exchange has been a gray area — FinCEN signaled in Notice 2020-2 an intent to require reporting of virtual-currency accounts, but as of 2024 it has not amended the regulations to do so. Treat that as unsettled and ask before you assume you are exempt.

How and when do you file FinCEN 114?

The FBAR is filed electronically through FinCEN's BSA E-Filing System — not with your tax return, and not to the IRS as a form attachment. It is a separate filing to the Financial Crimes Enforcement Network.

The deadline is April 15, with an automatic extension to October 15. You do not have to request the extension; it applies to everyone. That automatic six-month grace, established after the FBAR deadline moved under the 2015 highway-funding act, means missing April 15 alone is not a failure to file. Missing October 15 is.

Report the maximum value of each account during the year, converted to U.S. dollars using the Treasury year-end exchange rate.

What are the FBAR penalties, really?

The penalties split sharply based on whether the failure was non-willful or willful, and the numbers are set by 31 U.S.C. §5321(a)(5) and adjusted annually for inflation.

Violation type	Statutory base	Inflation-adjusted ceiling (2024)
Non-willful	$10,000 per violation	roughly $16,000
Willful	Greater of $100,000 or 50% of the account balance	roughly $160,000 floor, or 50% of balance if larger

Two points matter enormously here.

First, in Bittner v. United States, 598 U.S. 250 (2023), the Supreme Court held that the non-willful penalty applies per report, not per account. A taxpayer with five unreported accounts on one late FBAR faces one non-willful penalty, not five. This was a major taxpayer win — the government had been assessing per-account, which turned a handful of small accounts into a six-figure liability.

Second, willful penalties are where the real damage lives. Fifty percent of the account balance can be assessed per year, and courts have upheld stacking those across multiple years. "Willful" for FBAR purposes includes reckless disregard, not just knowing intent — a lower bar than criminal willfulness. Criminal penalties under 31 U.S.C. §5322 exist too, though prosecutions are reserved for the worst fact patterns.

The most common miss I see is a well-meaning immigrant or expat who genuinely did not know the account was reportable. That is squarely non-willful territory — but you still have to fix it correctly, because leaving it unfixed converts an honest oversight into a pattern that looks worse each year.

How do you fix past missed FBARs?

The right path depends on whether you also have unreported foreign income. Two main routes exist:

1. Delinquent FBAR submission procedures. If you reported and paid tax on all the income from the foreign accounts and simply forgot the FBAR, you can e-file the delinquent reports with a statement of reasonable cause. FinCEN's stated position is that it will not impose a penalty for a delinquent FBAR when there is no unreported income and you were not already under examination.

2. Streamlined Filing Compliance Procedures. If there is unreported income and the failure was non-willful, the streamlined program lets you file amended returns and delinquent FBARs. Domestic filers pay a 5% miscellaneous offshore penalty on the highest account balance; the foreign-resident (streamlined foreign offshore) track carries no such penalty for those who qualify. Certification of non-willfulness under penalty of perjury is required, so do not enter it casually.

If the conduct was willful, neither of these is appropriate, and the analysis crosses into legal exposure. Consult a tax attorney before filing anything — a botched streamlined certification can foreclose better options.

FBAR versus Form 8938: are they the same?

No. They overlap but are separate filings with different thresholds and different agencies. Filing one does not satisfy the other.

Feature	FBAR (FinCEN 114)	Form 8938
Authority	31 U.S.C. §5314	IRC §6038D
Filed with	FinCEN, e-filed separately	IRS, attached to Form 1040
Threshold	$10,000 aggregate, any time	Varies: $50,000+ for single U.S. residents, higher for MFJ and expats
Covers	Financial accounts	Broader "specified foreign financial assets"

Many taxpayers with foreign accounts must file both. The FATCA-based Form 8938 thresholds are higher and vary by filing status and residence, so it is entirely possible to owe an FBAR but not an 8938, or both. Check each independently.

Every fact here depends on your specific accounts, residency, and the years at issue, and international penalty exposure is jurisdiction-sensitive — treat this as a framework, not a determination, and confirm your situation with your advisor.

Sources

• 31 U.S.C. §5314 (FBAR reporting requirement)
• 31 U.S.C. §5321(a)(5) (civil penalties)
• 31 U.S.C. §5322 (criminal penalties)
• 31 CFR §1010.350 (reportable accounts, signature authority definitions)
• IRC §6038D (Form 8938 / FATCA reporting)
• Bittner v. United States, 598 U.S. 250 (2023)
• FinCEN Form 114 (Report of Foreign Bank and Financial Accounts)
• FinCEN Notice 2020-2 (virtual currency reporting intent)
• IRS Streamlined Filing Compliance Procedures and Delinquent FBAR Submission Procedures