I still remember the panic in Ravi’s voice when he called me at 11 PM from California.
“Mani, I just found out about something called FBAR. My colleague got hit with a $30,000 penalty for not filing it.
I’ve had my NRE and NRO accounts in India for six years and never heard of this form. Am I in trouble?”
That call led to a 2-hour conversation and eventually inspired this guide. Because here’s the thing – FBAR is one of those compliance requirements that catches thousands of NRIs off guard every year.
The penalties can be brutal. But the filing itself? Actually pretty straightforward once you understand what’s involved.
If you have bank accounts, fixed deposits, mutual funds, or a demat account in India, and you’re a US person (more on that in a moment), this guide is for you.
I’ll walk you through exactly what FBAR is, who needs to file, what accounts count, the deadlines, and what to do if you’ve missed filing in the past.
What Exactly is FBAR?
FBAR stands for Foreign Bank Account Report. Its official name is FinCEN Form 114 – that’s the Financial Crimes Enforcement Network, a bureau of the US Treasury Department.
Here’s the key thing to understand: FBAR is not a tax form. It’s a disclosure form. You’re not paying taxes through FBAR – you’re simply telling the US government about your foreign financial accounts.
It exists to prevent tax evasion and financial crimes.
FBAR is completely separate from your regular US tax return (Form 1040). You file it through a different system altogether – the BSA E-Filing System – not through the IRS website where you file your taxes.
This separation is exactly why so many NRIs miss it. Your tax software doesn’t automatically prompt you, and many CPAs who don’t specialize in expat taxes don’t think to ask about foreign accounts.
Do You Need to File FBAR?
You need to file FBAR if you meet ALL of these conditions:
1. You’re a “US Person”
This includes:
- US citizens (including those living abroad)
- Green Card holders
- Anyone who meets the Substantial Presence Test
The Substantial Presence Test trips up many NRIs on work visas. Here’s how it works: You count all days present in the US during the current year, plus 1/3 of days in the prior year, plus 1/6 of days from two years ago. If this total exceeds 183 days, you’re considered a US person for tax purposes.
Example: Priya is in the US on an H1B visa. In 2024, she was present for 320 days. In 2023, she was present for 280 days. In 2022, she was present for 250 days. Her calculation: 320 + (280/3) + (250/6) = 320 + 93 + 42 = 455 days. She clearly meets the test and must file FBAR.
2. You have foreign financial accounts
This means any accounts outside the United States. For NRIs, this typically includes all your accounts in India.
3. The total value exceeded $10,000 at ANY point during the year
This is where it gets important. It’s not your year-end balance that matters – it’s the highest balance at any point during the calendar year. And it’s the total across ALL your foreign accounts combined.
Example: Amit has an NRE account with a maximum balance of Rs. 4 lakhs, an NRO account that peaked at Rs. 3 lakhs, and an FD of Rs. 2 lakhs. Total: Rs. 9 lakhs (roughly $11,000). Even though no single account exceeded $10,000, the combined amount does. Amit needs to file.
Example: Neha closed her NRO account in March when it had Rs. 12 lakhs. By year-end, she had zero foreign accounts. She still must file FBAR for that year because the threshold was exceeded while the account was open.
What Accounts Need to Be Reported?
Here’s a breakdown of what counts as a reportable foreign financial account:
| Account Type | Reportable? | Notes |
|---|---|---|
| NRE Savings Account | Yes | Even though interest is tax-free in India |
| NRO Savings Account | Yes | Including joint accounts |
| Fixed Deposits (FD) | Yes | Both NRE and NRO FDs |
| Recurring Deposits | Yes | Treated like bank accounts |
| Demat Account | Yes | If it holds stocks, mutual funds, or bonds |
| Mutual Funds in India | Yes | Individual funds may also trigger PFIC rules |
| PPF Account | Situation varies | May be reportable – consult a tax professional |
| EPF/PF Account | Situation varies | Complex – consult a tax professional |
| Life Insurance with cash value | Yes | ULIPs and similar products |
| Indian stocks held directly | Yes | Through demat account |
| Pension accounts (NPS) | Situation varies | Consult a tax professional |
What’s NOT reportable on FBAR:
- Real estate held directly in India (not through an entity)
- Physical gold, jewelry, or other tangible assets
- Accounts at US branches of foreign banks
- US-based mutual funds that invest in India (like Matthews India Fund)
For NRIs planning their return, understanding these reporting requirements early helps avoid complications later. Many in our community planning their move back have found it helpful to organize their accounts well before the actual relocation.
Important Deadlines You Can’t Miss
Primary deadline: April 15 (following the calendar year you’re reporting)
Automatic extension: October 15
Good news here – you automatically get the extension to October 15 without filing any paperwork. If you miss April 15, just file by October 15 and you’re still considered timely.
For the 2024 calendar year, your FBAR is due April 15, 2025 (or October 15, 2025 with the automatic extension).
Important: The FBAR deadline is completely separate from your tax return deadline. Filing an extension on your Form 1040 does not extend your FBAR deadline. They’re different forms filed with different agencies.
Step-by-Step: How to File Your FBAR
Filing FBAR is actually one of the simpler US compliance requirements once you have your information ready.
What You’ll Need
Before you start, gather:
- Account numbers for all foreign accounts
- Name and address of each foreign financial institution
- Maximum balance during the year for each account (in the original currency)
- Type of account (savings, checking, investment, etc.)
Filing Process
Step 1: Go to the BSA E-Filing System (bsaefiling.fincen.treas.gov)
Step 2: Select “File FinCEN Form 114 individually” under the “No Registration FBAR Filer” option (for individual filers)
Step 3: Enter your personal information – name, address, Social Security Number, date of birth
Step 4: Add each foreign account with the required details
Step 5: Convert foreign currency balances to USD using the Treasury’s official exchange rate for December 31 of the reporting year (you can find these rates on the Treasury’s website)
Step 6: Review and submit electronically
Step 7: Save your confirmation – you’ll receive a BSA Identifier Number. Keep this safe.
Pro tip: Create a dedicated folder for your FBAR records each year. The IRS requires you to keep FBAR-related documents for five years from the filing due date.
Joint Accounts and Spousal Filing
If you have joint accounts with your spouse and both of you are US persons, you have two options:
- File separately: Both spouses file their own FBAR reporting the full value of joint accounts
- File jointly: Complete FinCEN Form 114a (spouse authorization) and file one FBAR
Note: If your spouse is not a US person, you still need to report the full value of any joint accounts.
FBAR vs FATCA: Understanding the Difference
I see this confusion constantly in our WhatsApp community. FBAR and FATCA both involve reporting foreign accounts, but they’re different requirements.
| Feature | FBAR (FinCEN Form 114) | FATCA (Form 8938) |
|---|---|---|
| Filed with | FinCEN (Treasury) | IRS |
| Threshold | $10,000 aggregate | $50,000-$200,000 (varies by residency) |
| Due date | April 15 / Oct 15 | With tax return |
| Penalties | Up to $16,536 non-willful; $165,353 or 50% willful | Up to $10,000 non-filing |
| Filing method | BSA E-Filing System | Attached to Form 1040 |
Key point: You may need to file both FBAR and Form 8938 if you meet both thresholds. They’re not mutually exclusive.
If you’re working with a tax advisor who specializes in NRI taxation, they should be checking both requirements for you.
The Penalties: Why This Matters
I won’t sugarcoat this – FBAR penalties can be devastating.
Non-willful violations (you didn’t know or made an honest mistake):
- Up to $16,536 per violation (2025 figure, adjusted annually for inflation)
Willful violations (you knew and deliberately didn’t file):
- The greater of $165,353 or 50% of the account balance
- Per account, per year
- Potential criminal charges including fines up to $250,000 and up to 5 years in prison
Here’s what makes this particularly painful: The IRS can assess penalties per account, per year. So if you have 3 accounts and missed 5 years of filing, that’s potentially 15 violations.
Example: Vikram knew about FBAR but decided not to file for four years while maintaining accounts totaling $200,000. If the IRS determines this was willful, the penalty could be: 50% of $200,000 = $100,000 per year x 4 years = $400,000. In severe cases, the penalty can exceed the account value.
The silver lining? The IRS distinguishes between honest mistakes and intentional evasion. If you genuinely didn’t know, penalties are often reduced or waived entirely through proper disclosure programs.
What If You’ve Missed Filing in Previous Years?
First, don’t panic. You have options, and the sooner you address it, the better your outcome will be.
Option 1: Delinquent FBAR Submission Procedure
If you:
- Haven’t been contacted by the IRS
- Are not under civil or criminal investigation
- Have already reported all income and paid all taxes
- Simply didn’t know about FBAR
You can file your late FBARs through the BSA E-Filing System and select the option indicating you’re filing late. Include a brief statement explaining why you’re late. The IRS generally doesn’t impose penalties for this situation if the failure was non-willful.
Option 2: Streamlined Filing Compliance Procedures
If you have unreported income along with unfiled FBARs, this program lets you:
- File 3 years of amended tax returns
- File 6 years of FBARs
- Pay a reduced penalty (0% if you live abroad, 5% if US-based)
You’ll need to certify that your non-compliance was non-willful.
Option 3: Voluntary Disclosure Practice
For more serious situations where willfulness may be an issue, this provides a path to come into compliance while potentially avoiding criminal prosecution.
My strong recommendation: If you’ve missed multiple years of FBAR filing, work with a tax professional who specializes in international tax. The cost of professional help is minimal compared to potential penalties.
Many NRIs in our community who are managing investments in India while living in the US have found that getting professional advice early prevented much bigger headaches later.
Practical Tips from Our Community
Over the years, our community members have shared what works for them:
✓ Keep a spreadsheet updated monthly Track the maximum balance of each account throughout the year. This makes April filing much easier than scrambling to pull statements.
✓ Set a calendar reminder for March Give yourself time to gather documents before the April deadline.
✓ Screenshot your account balances On the last day of each quarter, screenshot your balances. This creates a record and helps identify the maximum value.
✓ Use the December 31 exchange rate When converting INR to USD, always use the Treasury’s official rate for December 31 of the reporting year. Don’t use Google or your bank’s rate.
✓ Don’t guess on account types If you’re unsure whether an account is reportable, err on the side of reporting it. Over-reporting isn’t penalized; under-reporting is.
✓ Consider your parents’ accounts If you have signatory authority on your parents’ accounts in India (even if you don’t own the money), you may need to report them.
Checklist: FBAR Filing
Use this checklist to ensure you’re compliant:
- [ ] Determine if you meet the “US Person” definition
- [ ] List all foreign financial accounts (bank, investment, insurance)
- [ ] Calculate the maximum balance for each account during the year
- [ ] Convert balances to USD using Treasury’s December 31 exchange rate
- [ ] Determine if aggregate maximum exceeded $10,000
- [ ] Gather account numbers and institution details
- [ ] File FinCEN Form 114 via BSA E-Filing System
- [ ] Save confirmation (BSA Identifier Number)
- [ ] Store supporting documents for 5 years
- [ ] Also check if Form 8938 (FATCA) filing is required
Frequently Asked Questions
Q: I’m on an H1B visa. Do I really need to file FBAR?
Yes, if you meet the Substantial Presence Test (which most H1B holders do after their first partial year), you’re considered a US person for FBAR purposes. Visa type doesn’t determine your filing requirement – it’s your physical presence in the US.
Q: My NRE account interest is tax-free in India. Do I still need to report it?
Absolutely. FBAR is about disclosure, not taxation. The tax treatment of your account in India has no bearing on your US reporting requirements. You report the account on FBAR regardless of whether the income is taxable.
Q: What exchange rate should I use?
Use the Treasury Reporting Rates of Exchange for December 31 of the year you’re reporting. You can find these on the Treasury’s website. Don’t use Google’s exchange rate or your bank’s rate.
Q: Do I need to report my parents’ accounts?
Only if you have signatory authority or financial interest in them. If your name is on the account as a joint holder or you can access and transact on the account, you need to report it. If your parents’ accounts are solely in their names and you have no access, you don’t report them.
Q: I filed my taxes but forgot FBAR. What now?
File your FBAR as soon as possible through the BSA E-Filing System. Select the option indicating it’s a late filing and provide a brief explanation. If you’re filing before the IRS contacts you and your non-compliance was non-willful, penalties are typically waived.
Q: What if my account balance briefly exceeded $10,000 for just one day?
You still need to file. The rule is based on the maximum aggregate value at ANY point during the year, even if just for a single day.
Q: Can my CPA file FBAR for me?
Yes, you can authorize a CPA or enrolled agent to file on your behalf. You’ll need to complete FinCEN Form 114a (Record of Authorization) to grant them authority.
Q: Is there any fee to file FBAR?
No, filing FBAR through the BSA E-Filing System is completely free. If you use a tax professional, they may charge for their services, but the actual filing has no government fee.
Q: I’m planning to return to India. Do I still need to file FBAR?
If you’re still a US person during the reporting year and had foreign accounts exceeding $10,000, yes. After you return and no longer meet the substantial presence test (and don’t have a Green Card or citizenship), the requirement phases out. Planning your return to India from the USA involves getting your tax compliance in order before you leave.
Q: What about cryptocurrency held on foreign exchanges?
This is an evolving area. FinCEN has indicated plans to require reporting of foreign crypto accounts, but final regulations are pending. Currently, if your crypto is held on a foreign exchange in a custodial account, many tax professionals recommend reporting it. Consult with a specialist for your specific situation.
The Bottom Line
FBAR compliance isn’t complicated once you understand the rules. The key points:
- If you’re a US person with foreign accounts totaling over $10,000 at any point during the year, you must file
- File by April 15 (automatic extension to October 15)
- Use the BSA E-Filing System – it’s free and takes about 20-30 minutes
- Keep records for 5 years
- If you’ve missed past filings, address it proactively through the delinquent filing procedures
The penalties for non-compliance are severe, but the filing itself is straightforward. And if you’ve made honest mistakes in the past, there are clear paths to fix them without devastating consequences.
Don’t let FBAR become that thing that keeps you up at night. Get it sorted, set up a system to stay compliant, and focus on what matters – whether that’s building your career in the US or planning your eventual return home.
If you’re planning your move back to India, join our WhatsApp community at backtoindia.com/groups – 20,000+ NRIs helping each other with real, lived experience. It’s free and volunteer-run.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. FBAR rules can be complex and individual circumstances vary. Please consult a qualified tax professional for advice specific to your situation.
Last updated: December 2025
Sources: IRS.gov, FinCEN.gov, Treasury Department
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