DIRECT ANSWER
What to know first
A United States person generally must file an FBAR when that person had a financial interest in, or signature or other authority over, one or more foreign financial accounts and the aggregate value of all covered foreign accounts exceeded $10,000 at any time during the calendar year. The threshold applies to the combined maximum value, not $10,000 per account. The FBAR is filed electronically with FinCEN, separately from the federal income-tax return.
Apply all parts of the filing test
The filing analysis begins with whether the filer is a United States person under the FBAR rules. It then considers whether the person had a financial interest in, or signature or other authority over, a financial account located outside the United States.
Foreign bank, securities, and certain other financial accounts may be covered. Ownership, joint ownership, entity interests, agency relationships, trusts, retirement arrangements, and signature authority can change how an account is reported or whether an exception applies.
Calculate the $10,000 threshold across all covered accounts
Determine the maximum value of each covered foreign financial account during the calendar year, convert foreign-currency amounts to U.S. dollars using an accepted year-end exchange rate, and combine the values. If the aggregate exceeded $10,000 at any point, all covered accounts generally must be reported, including accounts below $10,000 individually.
Do not net negative balances against positive balances or test each institution separately. Keep the records used to identify the account, owner, institution, maximum value, exchange rate, and reporting treatment.
File the FBAR separately and track its own deadline
The annual FBAR due date is April 15 following the calendar year reported. FinCEN provides an automatic extension to October 15 when the April deadline is missed; no separate extension request is required for that automatic extension.
The FBAR is submitted through FinCEN's BSA E-Filing system, not attached to Form 1040. Retain required account records for the applicable recordkeeping period and keep a copy of the filed report and confirmation.
Check Form 8938 and delinquent years independently
Filing an FBAR does not satisfy Form 8938, and filing Form 8938 does not satisfy the FBAR. The forms use different definitions, thresholds, filing systems, and coverage rules.
A late or omitted FBAR should be reviewed before filing. The appropriate correction path depends on the complete reporting history, income, other international forms, prior agency contact, and the reason for the omission. No penalty outcome or compliance procedure should be assumed from a general website article.
AUTHOR
Stefano Tavella, CPA
Stefano Tavella, CPA leads Tavella CPA Group, a cloud-based CPA firm serving individuals and small businesses with tax preparation, planning, notice assistance, and related services.
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