FBAR

Meaning and filing threshold

The FBAR is a report required when a U.S. person has a financial interest in or signature authority over foreign financial accounts whose aggregate value exceeds $10,000 at any time during the calendar year.^[2]

The regulation defines a U.S. person to include a U.S. citizen, a U.S. resident, and certain entities formed under U.S. law. It defines foreign country by reference to geographic areas outside the United States.^[3]

Accounts and interests covered

The regulation identifies bank accounts, securities accounts, and certain other financial accounts as reportable account types. Other accounts include cash value insurance or annuity policies, certain futures or options accounts, and mutual funds or similar pooled funds with public shares, regular net asset values, and regular redemptions.^[3]

A U.S. person has a financial interest in an account held in their name, including an account held jointly. The definition also reaches accounts legally held by agents acting on the person's behalf, certain entities in which the person owns more than 50 percent, and trusts under specified grantor or beneficiary conditions.^[3]

Signature or other authority means the ability, alone or with another person, to direct the disposition of money or other assets in an account through direct communication with the institution.^[3]

Exceptions and special rules

The regulation excludes certain government accounts, international financial institution accounts, U.S. military banking facilities abroad, and bank correspondent or nostro accounts used solely for bank-to-bank settlements.^[3]

Some officers or employees do not report signature authority over an employer's account when they have no financial interest and the employer meets the specified regulatory conditions. Participants and beneficiaries in listed retirement plans and IRAs are also exempt for accounts held by or on behalf of those plans or accounts.^[3]

The FBAR instructions state that a trust beneficiary with a financial interest based on a greater than 50 percent present beneficial interest in the trust's assets or income need not report the trust's foreign accounts if the trust, trustee, or agent is a U.S. person and files an FBAR disclosing those accounts. A person with a financial interest in 25 or more accounts reports only the number of accounts and basic information on the FBAR, and must provide detailed account information if FinCEN or its delegate asks.^[3]

Relationship to Form 8938

The IRS instructions state that filing Form 8938 does not remove an FBAR filing requirement that otherwise applies. Form 8938 reports specified foreign financial assets above its applicable threshold, while the FBAR has its own aggregate account value threshold and coverage test.^[1]

The two reports are separate reporting regimes. The IRS directs readers to FinCEN Form 114 and its instructions for FBAR filing requirements.^[1]

FinCEN Form 114

FinCEN Form 114 is the Report of Foreign Bank and Financial Accounts, known as the FBAR. The federal regulation describes the filing obligation for a United States person with a financial interest in, or signature or other authority over, certain foreign accounts. Signature or other authority means an individual's authority, alone or with another person, to control the disposition of money, funds or other assets held in a financial account through direct communication with the person maintaining the account.^[1][3]

The regulation also specifies circumstances involving accounts legally held by agents or trusts. For a trust, a U.S. person has a financial interest if that person is the grantor with a federal tax ownership interest, has a present beneficial interest in more than half its assets, or receives more than half its current income.^[3]

Exceptions include accounts of specified U.S. government entities and international financial institutions of which the U.S. government is a member. Certain retirement plan participants and beneficiaries, and IRA owners and beneficiaries, need not report accounts held by or for the plan or IRA. A beneficiary of a specified trust need not report its foreign accounts when a U.S. trust, trustee, or agent files a report disclosing them.^[3]

FinCEN Form 114 and IRS Form 8938 are separate reporting requirements. Filing Form 8938 does not remove an FBAR requirement that otherwise applies. Form 8938 is attached to an annual return under its own instructions. FinCEN describes individual filers as people who personally own, or jointly own with a spouse, a reportable foreign account. Individuals may submit the FBAR electronically through the BSA E-Filing System without registering for a BSA E-Filing account.^[1][2]

Questions and answers

Related terms

• Signature authority over an account: The FBAR rules define signature authority by the power to direct disposition of account funds through direct communication with the financial institution.
• Foreign financial account: Form 8938 treats an account outside the United States as a specified foreign financial asset. FBAR rules identify reportable accounts by type and location.
• Financial interest in an account: FBAR rules define financial interest through account ownership or relationships to the legal title holder. A U.S. person named on an account has an interest.

Related guides and articles

• FBAR Rules for Trust Beneficiaries: A reference for U.S. citizens on the FBAR value threshold, financial interests, signature authority, and the reporting rule for certain trust beneficiaries.
• FBAR and Form 8938 for accounts linked to trusts: FBAR and Form 8938 are separate reports with different filing tests for a U.S. citizen.
• The FBAR: reporting foreign financial accounts: FBAR reporting for U.S. citizens covers foreign financial accounts, the reporting threshold and filing exceptions, as well as submission and recordkeeping.

Related pages

• Glossary: All terms.
• Maximum account value
• Participating foreign financial institution
• IRS forms