Last month, Sandeep from California sent us a panicked message at 2 AM. He'd been living in the US for six years, maintaining his NRE account in India, and had just discovered something called "FBAR" while doing his taxes.
"Nobody told me about this," he wrote. "Am I in trouble?"
At Belong, we work primarily with NRIs in the UAE where financial compliance is simpler, but we regularly hear from US-based NRIs facing this exact confusion. FBAR (Foreign Bank and Financial Accounts Report) is one of the most misunderstood filing requirements for US-based Indians.
Miss it, and you could face penalties up to $165,353 or 50% of your account balance-even if you simply didn't know about it. Our community discussions reveal that thousands of NRIs discover FBAR years too late.
This guide answers every question you have about FBAR, from who needs to file to how to catch up if you've missed previous years.
The One-Minute FBAR Overview
Before we dive deep, here's what you absolutely need to know:
What it is: A report (not a tax form) filed with FinCEN (Financial Crimes Enforcement Network) to disclose foreign financial accounts.
Who files: US citizens, Green Card holders, and US residents with foreign accounts exceeding $10,000 combined at any point during the year.
When to file: April 15 annually (automatic extension to October 15).
Where to file: BSA E-Filing System (not with your tax return).
Cost: Free to file, but penalties for non-compliance are severe.
👉 Tip: If you're an NRI in the UAE, you don't need FBAR-this is specifically for US tax residents. Check your residential status to understand which country's tax rules apply to you.
Are You a "US Person"? Understanding Who Must File
This is where most confusion starts. You must file FBAR if you are a "US person" under IRS rules. Here's who qualifies:
US Citizens
If you hold a US passport, you're required to file FBAR regardless of where you live. This includes Indians who became naturalized US citizens and maintain accounts in India.
Green Card Holders (Lawful Permanent Residents)
Once you have your Green Card, you're considered a US person for tax purposes and must file FBAR if you meet the threshold.
US Residents Under the Substantial Presence Test
This catches many people off-guard. You're considered a US resident if you meet this test:
- You were physically present in the US for at least 31 days during the current year, AND
- The sum of days present equals 183 or more when calculated as:
- All days in the current year
- 1/3 of days in the prior year
- 1/6 of days in the second prior year
Example: Rajesh is in the US on an H1B visa. In 2024, he was present for 300 days. In 2023, he was present for 250 days. In 2022, he was present for 200 days. His calculation: 300 + (250/3) + (200/6) = 300 + 83 + 33 = 416 days. He meets the substantial presence test and must file FBAR.
Who Doesn't Need to File FBAR?
You're exempt if:
- You're on an F-1 student visa and don't meet the substantial presence test
- You're on a J-1 visa for less than 2 years
- You never had more than $10,000 combined in all foreign accounts at any point during the year
- You only have accounts at US financial institutions
👉 Tip: Many NRIs on H1B, L1, or Green Cards assume they're exempt. They're not. If you meet the substantial presence test, you must file.
The $10,000 Threshold: How It Actually Works
This is the most critical number to understand, and the IRS is very specific about how to calculate it.
It's the Aggregate Maximum, Not Year-End Balance
The threshold is based on the combined maximum value of all your foreign accounts at any point during the calendar year-not the year-end balance.
Example: Nipun had an NRO account with ₹10 lakhs (approximately $12,000) on November 28, 2024. He closed it completely on November 29, leaving zero balance. He still must file FBAR for 2024 because the account exceeded $10,000 at one point during the year.
Example: Priya has three accounts:
- NRE account: Maximum balance $4,000 (on March 15)
- NRO account: Maximum balance $4,500 (on July 20)
- Mutual fund account: Maximum value $3,000 (on December 10)
- Combined maximum: $11,500
Even though no single account hit $10,000, the combined maximum exceeded the threshold. Priya must file FBAR and report all three accounts.
Even $10,001 for One Day Triggers Filing
If your combined accounts totaled $10,001 for even a single day, you must file. There's no grace period or rounding down.
How to Calculate Maximum Balance
For each account, take the highest balance at any point during the year. You can find this on:
- Bank account statements (monthly/quarterly)
- Mutual fund statements from AMC
- Demat account statements
- NPS trust statements
- Fixed deposit certificates
👉 Tip: Download statements for January 1 to December 31 from all your Indian accounts right now and note the maximum balance. Set a calendar reminder to do this every January.
What Accounts Must Be Reported? The Complete List
Bank Accounts (Always Reportable)
- NRE (Non-Resident External) savings accounts
- NRO (Non-Resident Ordinary) savings accounts
- NRE fixed deposits
- NRO fixed deposits
- Regular savings accounts
- Checking/current accounts
- Time deposits/recurring deposits
Example: Melissa relocated to the US in February 2024 on an L-1 visa. Before moving, she had four bank accounts and three fixed deposits worth $250,000. She must report all seven accounts on FBAR, even though she now lives in the US.
Also Read - NRE vs NRO vs FCNR
Investment Accounts
Mutual Funds: If held in a single brokerage account, report the account number and total value. If held individually (not in a brokerage), report each fund separately.
Example: Scott has 27 different Indian mutual funds in a single demat account. For FBAR purposes, he reports the main account number and total value of all funds under that account. (But note: for IRS Form 8621/PFIC purposes, he must report each fund separately-that's a different requirement).
Example: Steven has 13 different mutual funds not contained in a single account. He owns each fund directly with different AMCs. For FBAR purposes, Steven must list each fund separately.
Demat Accounts: Report the account with the total value of all securities held.
Other Reportable Accounts
- Life insurance policies with cash surrender value
- Foreign pension accounts (including NPS in India)
- Foreign mutual funds and ETFs
- Foreign brokerage accounts
- Accounts where you have signature authority (even if not your money)
What's NOT Reportable on FBAR?
- Real estate held directly (not through an entity)
- Physical gold, jewelry, art, collectibles
- Cryptocurrency held in private wallets (though this is evolving)
- Accounts at US financial institutions (even if they're investing in foreign markets)
Example: Prashant invested in Matthews India Fund, a US-based mutual fund that invests in Indian companies. He doesn't report this on FBAR because it's a US account. However, if he invested directly with an Indian mutual fund like PPFAS, he must report it on FBAR.
👉 Tip: Confused about which accounts to report? Join our WhatsApp Community where US-based NRIs share experiences and clarifications on FBAR filing.
FBAR vs FATCA (Form 8938): What's the Difference?
Many NRIs confuse FBAR with FATCA reporting. Here's the breakdown:
Feature | FBAR (FinCEN Form 114) | FATCA (Form 8938) |
|---|---|---|
Filed with | FinCEN via BSA E-Filing | IRS with tax return |
Threshold (Single, US-based) | $10,000 aggregate max | $50,000 year-end or $75,000 anytime |
Threshold (Married filing jointly, US-based) | $10,000 aggregate max | $100,000 year-end or $150,000 anytime |
Assets covered | Only financial accounts | Financial accounts + stocks, partnership interests, etc. |
Required even if no tax return filed? | Yes | No |
Penalties for non-filing | Up to $165,353 0 or 50% of account | Up to $50,000 |
Most US-based NRIs need to file both if they meet the respective thresholds. They're not mutually exclusive.
👉 Tip: FBAR has a lower threshold ($10,000) and stricter penalties. Prioritize FBAR compliance first, then worry about FATCA.
How to File FBAR: Step-by-Step Instructions
Filing FBAR is free and done electronically. Here's exactly how to do it:
Step 1: Gather Your Information
Before you start, collect:
- Names and addresses of all foreign financial institutions
- Account numbers
- Type of account (savings, checking, securities, etc.)
- Maximum value of each account during the year (in USD)
- Your SSN or ITIN
- Date of birth
Step 2: Convert Currency to USD
Use the US Treasury's official exchange rate for December 31 of the reporting year. Find it at the Treasury's exchange rates page.
Example: Your NRE account had a maximum balance of ₹12 lakhs on March 15, 2024. The INR to USD rate on December 31, 2024 was 83.50. Convert: 1,200,000 ÷ 83.50 = $14,371. Report $14,371 on FBAR.
Step 3: Access the BSA E-Filing System
Go to the BSA E-Filing System. For individual filers, select "File FinCEN Form 114 individually" under the "No Registration FBAR Filer" option.
Step 4: Complete the Form
Part I - Filer Information:
- Enter your personal details (name, SSN, date of birth)
- Indicate filer type (individual)
- Provide your US address
Part II - Information on Financial Account(s): For each account, provide:
- Type of account
- Financial institution name and address
- Account number
- Maximum value during the year (in USD)
Part III - Signature:
- Check the box confirming accuracy
- The system will generate a timestamp as your electronic signature
Step 5: Submit and Save Confirmation
After submission, you'll receive a BSA Identifier Number. Save this confirmation-you'll need it if you ever need to amend your FBAR or respond to IRS inquiries.
👉 Tip: File as soon as you have all information, don't wait until the deadline. Early filing demonstrates good-faith compliance efforts to the IRS.
Joint Accounts: Special Reporting Rules
Joint accounts have specific rules that confuse many filers.
When Both Spouses Are US Persons
You have two options:
Option 1 - File Jointly:
- Complete Form 114a (Record of Authorization to Electronically File FBARs)
- Both spouses sign Form 114a
- One spouse files FBAR for all jointly owned accounts
- The filing spouse checks a box indicating they're filing for both
Option 2 - File Separately:
- Each spouse files their own FBAR
- Both report the full value of joint accounts (not split)
- Each reports any individually owned accounts
Example: You and your husband have joint NRE and NRO accounts in India totaling $80,000. Neither of you has individual foreign accounts. You can file one joint FBAR by completing Form 114a, or each file separately and both report the full $80,000.
When One Spouse Is Not a US Person
If your spouse is not a US person (e.g., they're an Indian citizen living in India), you cannot file jointly. You must file individually and report:
- Full value of joint accounts (even though spouse is not US person)
- All individually owned accounts
Joint Accounts with Non-Spouse
If you have joint accounts with parents, siblings, or others, report the full value of the account. The IRS doesn't split values among joint holders.
Penalties: What Happens If You Don't File
FBAR penalties are among the harshest in the US tax code. The IRS categorizes violations as either non-willful or willful.
Non-Willful Violations
If you didn't know about FBAR or made an honest mistake:
- Civil penalty: Up to $16,536 per FBAR form (per year) for non-willful violations
- No criminal charges for genuine mistakes
Example: Anita had an NRE account since 2015 but only learned about FBAR in 2024. She never filed for years 2015-2023. Her violation is non-willful.She could face up to $16,536 per year unfiled, but the IRS often reduces penalties for first-time, non-willful violations.
Willful Violations
If the IRS determines you knew about FBAR and intentionally didn't file:
- Civil penalty: Greater of $165,353 or 50% of account balance per violation per year
- Criminal penalties: Fine up to $250,000 (or twice the amount of the transaction) and/or up to 5 years in prison for severe cases. (sources)
Example: Vikram knew about FBAR requirements but deliberately didn't file for five years while maintaining $500,000 in Indian accounts. This is willful. Maximum penalty: $165,353 or 50% of $500,000 = $250,000 per account per year = $1,250,000 for five years (Willful penalties are assessed per account).
Recent IRS Enforcement
The IRS has significantly increased FBAR enforcement due to:
- FATCA implementation requiring foreign banks to report US account holders
- Automatic information exchange agreements between countries
- Improved IRS data analytics identifying non-filers
👉 Tip: If you've never filed FBAR and think you should have, don't panic-but don't ignore it. There are amnesty programs to help you get compliant with reduced penalties.
What If You Missed Filing Previous Years? Amnesty Options
If you discover you should have filed FBAR in previous years, the IRS offers several programs to get compliant with reduced or eliminated penalties.
Delinquent FBAR Submission Procedures
Who qualifies:
- Non-willful violations only
- You're not under IRS examination or investigation
- No previous contact from IRS about missing FBARs
How it works:
- File all delinquent FBARs
- Include a statement explaining why you didn't file timely
- No penalties if you have reasonable cause
Example: Deepak has been filing his tax returns correctly but didn't know about FBAR. He has no income from his Indian accounts (just salary deposited and saved). He files six years of delinquent FBARs through this program with zero penalties.
Streamlined Filing Compliance Procedures
For US residents (Streamlined Domestic Offshore Procedures):
- File or amend last 3 years of tax returns
- File last 6 years of delinquent FBARs
- Pay 5% penalty on highest aggregate balance
- Certify that non-compliance was non-willful
For US expats (Streamlined Foreign Offshore Procedures):
- File or amend last 3 years of tax returns
- File last 6 years of delinquent FBARs
- Zero penalties
- Must have lived outside the US for 330 days in one of the last three years
- Certify that non-compliance was non-willful
Voluntary Disclosure Program
For cases involving willful violations or potential criminal issues, the IRS offers voluntary disclosure in exchange for no criminal prosecution. This requires working with experienced tax attorneys.
👉 Tip: Never attempt a "quiet disclosure" by simply starting to file FBARs going forward without addressing prior years. The IRS flags this and it can trigger audits and higher penalties.
Deadline and Extensions
Primary Deadline: April 15 of the year following the reporting year
Automatic Extension: October 15 (no request needed)
For the 2024 calendar year, FBAR is due April 15, 2025, with automatic extension to October 15, 2025.
Unlike tax return extensions, the FBAR extension is automatic-you don't need to request it. However, we recommend filing as early as possible.
Example: For all your 2024 foreign accounts, you must file FBAR by April 15, 2025 (or October 15, 2025 if you need extra time). This is separate from your 2024 tax return deadline.
Record Keeping Requirements
The IRS requires you to keep FBAR-related records for five years from the due date. This includes:
- Bank statements showing maximum balances
- Account opening documents
- Currency conversion calculations
- Correspondence with financial institutions
- Copies of filed FBARs and confirmation receipts
👉 Tip: Create a dedicated folder (digital or physical) for FBAR records each year. Label it "FBAR 2024" and store all relevant documents. This saves enormous time if the IRS ever questions your filing.
Common FBAR Mistakes to Avoid
Mistake 1: Assuming $10,000 Is Per Account
The threshold is the aggregate of all accounts, not per account. Three accounts with $4,000 each require FBAR filing.
Mistake 2: Using Year-End Balance Instead of Maximum
You must report the maximum balance at any point during the year, not the December 31 balance.
Mistake 3: Not Reporting Closed Accounts
If you closed an account during the year but it exceeded $10,000 before closure, you must still report it.
Mistake 4: Forgetting Signature Authority Accounts
If you have signing authority on your elderly parent's NRE account or your family business account in India, you must report it-even if the money isn't yours.
Mistake 5: Not Filing Because of No Tax Due
FBAR is required even if you don't owe any taxes. It's a separate reporting requirement.
Mistake 6: Only Reporting Interest-Bearing Accounts
All accounts count toward the $10,000 threshold, including:
- Zero-balance accounts that had money during the year
- Dormant accounts
- Non-interest-bearing accounts
FBAR for Specific NRI Situations
H1B and L1 Visa Holders
You must file FBAR if you meet the substantial presence test and exceed the $10,000 threshold. Your visa type doesn't exempt you.
Example: Rajesh is on an H1B visa working in the US for 3 years. He maintains an NRE account with ₹15 lakhs ($18,000). He must file FBAR annually.
Green Card Holders
From the moment you receive your Green Card, you're considered a US person and must file FBAR if you meet the threshold.
Example: Michelle is a lawful permanent resident with an NRE account worth $90,000. Even though NRE interest is tax-free in India, she must report the account on FBAR (and report the interest income on her US tax return, though it is taxable in the US).
Recent Immigrants to the US
If you moved to the US mid-year, you still must file FBAR for the entire calendar year if you meet the substantial presence test and threshold.
NRIs Returning to India
If you give up your Green Card or no longer meet the substantial presence test, you don't need to file FBAR for subsequent years. However, file for all years when you were a US person.
Also Read -What Happens to Your NRI Account When You Return to India
Why FBAR Exists (And Why It Matters)
FBAR originated from the Bank Secrecy Act of 1970, designed to combat money laundering and tax evasion through offshore accounts. After 9/11, enforcement increased dramatically as part of anti-terrorism financing efforts.
The US government uses FBAR to:
- Track foreign financial assets
- Ensure proper tax reporting of foreign income
- Prevent use of foreign accounts for illegal activities
- Maintain transparency in international financial flows
For law-abiding NRIs, FBAR is simply an annual reporting requirement-it doesn't generate tax liability by itself. But non-compliance carries severe consequences because the IRS takes foreign account reporting very seriously.
How Belong Can Help (Even Though We Focus on UAE NRIs)
At Belong, most of our clients are NRIs in the UAE where financial compliance is significantly simpler-no FBAR, no complex tax reporting for foreign accounts. This is one advantage of being based in the UAE versus the US.
However, we recognize that many Indians in the US need clarity on these issues. While we can't provide US tax advice (you need a CPA or Enrolled Agent for that), we can help you:
- Understand your NRI status from an Indian regulatory perspective
- Navigate Indian banking compliance (NRE/NRO accounts, FEMA rules)
- Access tax-efficient investment options in India
- Explore GIFT City investments that may offer advantages for returning NRIs
If you're considering moving from the US to the UAE or back to India, we can guide you through the financial transition. Many of our community members have made this move and share their experiences.
👉 Tip: US tax compliance is complex. Always work with a qualified CPA or Enrolled Agent who specializes in NRI taxation. Don't rely solely on online articles (including this one) for tax advice specific to your situation.
The Bottom Line on FBAR
If you're a US person (citizen, Green Card holder, or resident) with more than $10,000 combined in foreign accounts at any point during the year, you must file FBAR by April 15 (auto-extended to October 15). The filing is free, takes about 30 minutes once you have the information, and must be done separately from your tax return via the BSA E-Filing System.
Penalties for non-compliance are severe-up to $100,000 or 50% of account balance for willful violations. If you've missed prior years, amnesty programs exist to help you get compliant with reduced or eliminated penalties.
The key is awareness and action. Thousands of NRIs discover FBAR requirements years too late. Now that you know, you can stay compliant and avoid the stress and financial cost of IRS penalties.
For UAE-based NRIs, FBAR doesn't apply-but you still need to understand Indian banking regulations, repatriation rules, and tax compliance in India.
Join our WhatsApp community to connect with other NRIs navigating financial compliance across multiple countries: Join Here.
Download the Belong App to access tools, compare investment options, and stay on top of NRI financial compliance: Download Now.
Also Read - How to File Income Tax Return in India as an NRI
Sources:
- FinCEN - BSA E-Filing System
- IRS - Report of Foreign Bank and Financial Accounts (FBAR)
- GoINRI - What is FBAR? Complete Guide
- Arthgyaan - PFIC and FBAR Rules for US NRIs
- Indian Community - FBAR for NRIs Guide
- Chi Border Tax Advisory - FBAR Filing Instructions 2025
- Abhinav Gulechha CA - FBAR Reporting by US-based NRIs
- Dinesh Aarjav - FBAR Filing Requirements for NRIs
- Gordon Law - FBAR Filing Requirements 2025
- IRS Streamlined Procedures - FBAR Filing Requirements
Disclaimer: This article is for informational purposes only and should not be construed as professional tax or legal advice. FBAR requirements are complex and penalties for non-compliance are severe. We strongly recommend consulting with a qualified CPA, Enrolled Agent, or tax attorney who specializes in international tax compliance and NRI matters before making any decisions. Tax laws are subject to change and individual circumstances vary. Belong primarily serves UAE-based NRIs and does not provide US tax preparation or advisory services.
