FBAR Explained: Avoid Massive Penalties With This Simple 2025 Filing Guide
If you have bank or investment accounts outside the United States, you may have a legal obligation to report them—even if those accounts generate no income.
That requirement is called FBAR, and missing it can lead to some of the harshest penalties in the U.S. tax system.
📌 Table of Contents
1️⃣ What Is FBAR?
FBAR stands for Report of Foreign Bank and Financial Accounts.
It is a mandatory report filed with the U.S. Department of the Treasury—not the IRS—via the BSA E-Filing System.
FBAR is not a tax form. It does not calculate tax or determine how much you owe.
Instead, it is a compliance report that discloses your foreign financial accounts to the U.S. government.
2️⃣ Who Must File?
If both of the conditions below apply, you must file FBAR:
- You are a U.S. Person (citizen, green card holder, or U.S. resident for tax purposes)
- Your combined maximum value of foreign financial accounts exceeded $10,000 at any time during the year
Even if each account is small, the total matters.
A single day over the limit triggers the filing requirement.
3️⃣ Types of Foreign Accounts Included
Your FBAR filing must include all foreign accounts such as:
- Bank accounts
- Foreign brokerage or investment accounts
- Time deposit or savings accounts
- Foreign pension or retirement accounts (case-by-case)
- Mutual fund or managed investment accounts
- Joint accounts with family members overseas
If you are listed as a joint owner—even if the funds belong to your parents—you may have an FBAR filing requirement.
FBAR is based on access to the funds, not ownership percentage.
4️⃣ Understanding the $10,000 Threshold
Many taxpayers are surprised to learn that the $10,000 limit applies to the combined maximum value of all foreign accounts.
It is not a per-account threshold.
Example thresholds:
- Account A: $4,000
- Account B: $7,000
- Total: $11,000 → FBAR required
5️⃣ How to File FBAR Online
FBAR must be filed electronically through the BSA E-Filing portal.
Below is the basic process:
- Go to the BSA E-Filing website
- Select “Report Foreign Bank and Financial Accounts (FBAR)”
- Enter account details: bank name, account number, and highest balance
- Submit the form electronically
The due date is April 15 each year, with an automatic extension to October 15.
6️⃣ FBAR Penalties
FBAR penalties can be severe because the U.S. government treats foreign account reporting very seriously.
- Non-willful violations: up to $10,000 per account
- Willful violations: up to $100,000 or 50% of account balance—whichever is greater
Over 100 countries—including South Korea—share financial data with the U.S.
Assuming “the IRS won’t find out” is extremely risky.
7️⃣ Real-Life Example
David maintains two accounts in South Korea:
– Kookmin Bank savings account: max balance $3,900
– Mirae Asset investment account: max balance $6,800
Combined total = $10,700 → FBAR filing required, even though neither account exceeded $10,000 individually.
8️⃣ EA Practitioner Tips
1) Use the official U.S. Treasury year-end exchange rate (Dec 31).
2) For joint accounts, report the full account value.
3) If past years were not filed, consider Streamlined Filing procedures.
4) Crypto exchanges overseas are generally not FBAR accounts—yet—but foreign custodial wallets may be included case-by-case.
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