What Is the FBAR and Why Should You Care
The FBAR (Report of Foreign Bank and Financial Accounts) is one of those US tax requirements that catches a lot of American expats completely off guard. If you have foreign bank accounts with a combined balance exceeding $10,000 at any point during the calendar year, you are legally required to report those accounts to the US government. Not reporting them can result in penalties that start at $10,000 per account per year for non-willful violations, and go up dramatically from there for willful violations.
I have been filing FBARs for over a decade while running my ecommerce businesses from different countries across Southeast Asia. The first time I learned about this requirement, I had already been abroad for a couple of years and had no idea it existed. Fortunately, the IRS has programs for catching up if you are behind (I will cover that later in this guide), but the smartest move is to understand your obligations now and file on time every year.
This guide covers everything you need to know about FBAR filing as an American expat: who has to file, what accounts to report, how to file, deadlines, penalties, and how to catch up if you are behind. If you are building a location-independent business from abroad and working with US-based suppliers, this is essential knowledge for staying compliant.
Who Has to File an FBAR
The filing requirement applies to any US person who has a financial interest in, or signature authority over, foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year. “US person” includes US citizens, permanent residents (green card holders), and certain resident aliens. It does not matter where you live. An American citizen in Bali with a local bank account is subject to the same rules as one living in Boise.
The $10,000 threshold is based on the aggregate value of all your foreign accounts combined, not each individual account. So if you have a checking account in Thailand with $6,000 and a savings account in the same bank with $5,000, the combined balance of $11,000 triggers the filing requirement even though neither account individually exceeds $10,000.
The threshold is also based on the maximum balance at any point during the year, not the year-end balance. If your account hit $10,001 for one day in March but ended the year at $3,000, you still have to file. This is an important distinction that trips up a lot of people.
What Counts as a “Foreign Financial Account”
The definition is broader than most people expect. According to FinCEN’s FBAR guidance, reportable accounts include bank accounts (checking, savings, time deposits), securities accounts (brokerage accounts held at foreign financial institutions), mutual funds and pooled investment funds, debit card accounts with a stored value, and any other account maintained at a foreign financial institution.
Accounts you might not immediately think of that still count: a Wise account holding foreign currency balances (since Wise holds funds in foreign institutions), a Revolut account if the entity holding your funds is based outside the US, cryptocurrency exchange accounts held at foreign exchanges, and prepaid card accounts issued by foreign banks.
Accounts that do not need to be reported on the FBAR: US-based accounts (even if they hold foreign currency), IRS-qualified retirement accounts, and accounts with a balance that never exceeds $10,000 in aggregate with all other foreign accounts.
FBAR vs FATCA: Understanding Both Requirements
The FBAR is often confused with FATCA reporting (Form 8938), and many expats do not realize they might need to file both. They are separate requirements administered by different agencies with different thresholds and different forms.
The FBAR (FinCEN Form 114) goes to the Financial Crimes Enforcement Network, a bureau of the US Treasury. The threshold is $10,000 aggregate balance at any point during the year. It is filed electronically through the BSA E-Filing System and is separate from your tax return.
FATCA Form 8938 goes to the IRS as part of your tax return. The thresholds are higher for expats: $200,000 at year-end or $300,000 at any point during the year for single filers living abroad. It covers a broader range of assets including foreign accounts, foreign stocks and securities, foreign partnership interests, and certain foreign trusts.
Yes, you may need to report the same accounts on both forms. It is redundant and the government knows it, but both requirements remain in effect. The good news is that the information you gather for one filing largely covers the other.
How to File Your FBAR Step by Step
The actual filing process is straightforward once you have your account information gathered. Here is exactly how to do it.
Step 1: Gather Your Account Information
For each foreign financial account you held during the year, you need the following information: the name on the account, account number, name and address of the foreign financial institution, the type of account (checking, savings, brokerage, etc.), and the maximum balance during the calendar year converted to US dollars.
For currency conversion, use the Treasury Department’s end-of-year exchange rates. Use the December 31 rate for converting maximum balances. Do not use the rate from the date the maximum balance occurred. This is a specific rule that differs from how you convert income for your tax return.
Keep records of your account statements showing the maximum balances. You are required to retain these records for five years from the FBAR due date. Store them digitally in a secure location since you may not have access to physical statements while living abroad.
Step 2: File Electronically Through BSA E-Filing
The FBAR must be filed electronically. There is no paper filing option. Go to the BSA E-Filing System, create an account (or log in if you already have one), select FinCEN Report 114 (FBAR), and fill in your personal information and account details. The system walks you through each section.
You can file yourself or authorize a third party (like your CPA or tax preparer) to file on your behalf. If you use expat tax software or a specialized CPA, they typically handle the FBAR filing as part of their service.
After submitting, you will receive a confirmation with a BSA identifier number. Save this confirmation. You do not receive any other acknowledgment from FinCEN, so this is your proof of filing.
Step 3: File on Time
The FBAR is due April 15, the same date as your tax return. However, there is an automatic extension to October 15 for anyone who misses the April deadline. You do not need to request this extension, as it is applied automatically. There is no further extension beyond October 15.
Unlike your tax return, there is no payment associated with the FBAR. It is purely informational. But “purely informational” does not mean optional. The penalties for non-filing are severe, which is why this is something you need to take seriously.
Common FBAR Mistakes and How to Avoid Them
These are the errors I see most frequently among expats, and each one is avoidable with a little attention.
Forgetting accounts you rarely use. That savings account you opened when you first arrived in Thailand and forgot about? It still counts. Even if it has $50 in it, it contributes to your aggregate balance. Make a complete list of every foreign account you have, including ones you do not actively use.
Not counting joint accounts. If you have a joint account with your spouse or partner, both account holders who are US persons must file their own FBAR reporting the full balance of the joint account. The balance is not split 50/50 for reporting purposes.
Using the wrong exchange rate. As I mentioned above, you must use the Treasury’s end-of-year exchange rate for converting maximum balances to USD. Using Google’s spot rate or your bank’s rate on a random date is incorrect and could lead to under-reporting or over-reporting.
Forgetting about Wise, Revolut, and similar fintech accounts. Many expats use multi-currency fintech accounts without realizing they may qualify as foreign financial accounts for FBAR purposes. If Wise holds your funds in a non-US institution (which it does for many currency balances), those balances are reportable. The same applies to other fintech platforms depending on where they custody funds.
Not filing because you already paid foreign taxes. The FBAR has nothing to do with taxes. It is a separate reporting requirement. Paying taxes in your country of residence does not exempt you from FBAR filing. They are completely independent obligations.
FBAR Penalties: What Happens If You Do Not File
The penalties for FBAR non-compliance are among the harshest in the US tax code, and they are assessed per account, per year. This means that if you have three foreign accounts and miss three years of filing, you could be looking at nine separate penalties.
Non-willful violations: Up to $10,000 per account per year. “Non-willful” means you did not know about the requirement or made an honest mistake. This is the most common category for expats who simply were not aware of the FBAR obligation.
Willful violations: The greater of $100,000 or 50% of the account balance per account per year. “Willful” means you knew about the requirement and deliberately chose not to file. This is reserved for cases where the government can demonstrate intentional non-compliance.
Criminal penalties: In extreme cases, willful failure to file an FBAR can result in criminal prosecution with fines up to $250,000 and imprisonment of up to five years. This is rare and typically reserved for cases involving significant tax evasion or money laundering.
The good news is that FinCEN and the IRS have shown a preference for bringing non-compliant taxpayers into compliance rather than punishing honest mistakes. If you are behind on your filings, the programs I describe below provide a path to get current without penalties in most cases.
How to Catch Up If You Are Behind
If you have been living abroad and did not know about the FBAR requirement, you are not alone. The IRS offers several programs for getting back into compliance.
Streamlined Filing Compliance Procedures
This is the most commonly used program for expats who are behind. You file the last three years of income tax returns and the last six years of FBARs. If your failure to file was non-willful (you did not know about the requirement or misunderstood it), there are zero penalties for taxpayers who qualify as living abroad. To qualify as a foreign filer, you must have been physically outside the US for at least 330 days in at least one of the last three tax years.
You submit a certification statement explaining why you failed to file, and as long as your non-compliance was truly non-willful, you are brought into full compliance with no penalties. This is an incredibly generous program and it will not be available forever, so if you need to use it, do it sooner rather than later.
Delinquent FBAR Submission Procedures
If your only compliance issue is missing FBARs (your tax returns were filed correctly and on time), you can use the delinquent FBAR submission procedure. You file the missing FBARs through the BSA E-Filing System with a note explaining why they are late. If the IRS has not already contacted you about the missing filings and your failure was non-willful, penalties are typically not assessed.
What Not to Do
Do not ignore the problem and hope it goes away. The IRS receives information about foreign accounts through FATCA agreements with foreign governments and automatic exchange of information treaties. Over 100 countries now share financial account information with the US. Your foreign bank has almost certainly reported your account to the IRS already. Filing late with a reasonable explanation is dramatically better than getting caught not filing at all.
How FBAR Fits Into Your Overall Expat Tax Strategy
The FBAR is just one piece of your tax compliance puzzle as an American expat. Here is how it connects to everything else.
Your annual tax return handles your income reporting, the Foreign Earned Income Exclusion (Form 2555), Foreign Tax Credits (Form 1116), and self-employment tax. Your expat tax software or CPA handles all of this.
The FBAR handles foreign account reporting. Filed separately through BSA E-Filing, due April 15 with automatic extension to October 15.
FATCA Form 8938 handles foreign asset reporting above higher thresholds. Filed with your tax return.
If you are running a business from abroad, your business formation structure affects all of these filings. A single-member LLC is a disregarded entity for tax purposes, meaning the business income flows through to your personal return. Your business bank accounts (both US and foreign) may need to be reported on the FBAR depending on where they are held.
Keep all of these filings coordinated. The information should be consistent across your tax return, FBAR, and Form 8938. Discrepancies between filings can trigger scrutiny. Using a single tax professional or software platform for all filings helps ensure consistency.
Practical Tips for Staying Compliant
Track your maximum balances monthly. Set a calendar reminder for the first of each month to log the balances of all your foreign accounts. At the end of the year, you will have a clear record of the maximum balance for each account without having to dig through 12 months of bank statements. A simple spreadsheet works fine for this.
Keep your accounts organized. If you have accounts in multiple countries, maintain a master list with the bank name, account number, currency, and purpose (personal, business, savings). Update this list whenever you open or close an account. When FBAR time comes, you pull up the list and file in minutes.
Consolidate accounts where possible. Every foreign account you hold is another account to track and report. If you have three checking accounts across three countries that you no longer live in, consider closing the ones you do not need. Fewer accounts means simpler compliance and less risk of forgetting to report one.
Use a multi-currency account strategically. A Schwab checking account is US-based, so it does not trigger FBAR reporting regardless of where you use the debit card. If you keep your primary banking with a US institution and only use foreign accounts for local spending needs, you minimize the number of accounts you need to report.
Set your filing deadline in your calendar now. The FBAR due date is April 15 (with automatic extension to October 15). Add it to your calendar right now with a reminder two weeks before. The filing itself takes 15 to 30 minutes if your records are organized. Do not let a simple time management failure result in a $10,000 penalty.
Frequently Asked Questions
Do I need to file an FBAR if my foreign accounts never exceeded $10,000?
No. If the aggregate maximum balance of all your foreign accounts combined never exceeded $10,000 at any point during the calendar year, you do not need to file. The threshold is $10,000 in aggregate, not per account.
Does my Wise or Revolut account count as a foreign account for FBAR purposes?
It depends on where the funds are custodied. Wise holds certain currency balances at foreign institutions, which would make those balances reportable. The safest approach is to report these accounts if you are above the threshold. Over-reporting has no penalty; under-reporting does.
My spouse and I have a joint foreign account. Do we both file?
Yes. Each US person with a financial interest in or signature authority over a foreign account must file their own FBAR. For a joint account, both spouses report the full balance of the account on their individual FBARs. However, if all your accounts are jointly owned, one spouse can file and the other can file a simplified FBAR (FinCEN Form 114a) referencing the first spouse’s filing.
I closed my foreign account mid-year. Do I still file?
Yes. If the account existed at any point during the year and your aggregate balance across all foreign accounts exceeded $10,000 at any point, you need to report the closed account with its maximum balance before closure.
Can my tax software file the FBAR for me?
Some expat tax services include FBAR filing as part of their package. The FBAR is filed through a separate system (BSA E-Filing) from your tax return, so even if your tax software handles it, the filing goes to FinCEN separately. Check whether your tax preparer or software includes FBAR filing or if it is an additional service.
Conclusion
The FBAR is not complicated once you understand what it is and how to file it. The biggest risk is simply not knowing about it, which leads to years of non-compliance and potentially significant penalties. Whether you are researching profitable niches or already running a store, now that you know about this requirement there is no excuse not to file. If you are current, keep filing annually. If you are behind, use the Streamlined Filing Compliance Procedures to catch up without penalties while that program is still available.
The key is to build FBAR filing into your annual routine alongside your tax return. Track your foreign account balances throughout the year, file by the deadline, and keep records for five years. It takes less than 30 minutes once you have your information organized, and it keeps you fully compliant with US law.
If you need help getting your overall expat business and financial setup right, here are some resources:
Our done-for-you turnkey store service builds your ecommerce business on a proper legal and financial foundation from the start.
Want personalized guidance on your expat tax and business strategy? Book a 1-on-1 coaching session and we will work through your specific situation together.
Join the Ecommerce Paradise Masterclass and Community to connect with other location-independent entrepreneurs navigating the same compliance challenges.
Need help driving more revenue to your store? Our Google Shopping Ads service handles campaign management while you focus on your business.
Browse all of our recommended resources for the tools and services that make running a business from abroad easier.
I wish you guys the best of luck out there. Taxes and compliance are a pain in the butt, but getting them right means you sleep better at night and your business runs without legal risk hanging over your head. Take care.
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Trevor Fenner
Email: trevor@ecommerceparadise.com
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Trevor Fenner is an ecommerce entrepreneur and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
