2025 FBAR Filing Requirements: Who Must File FinCEN Form 114?
Contents
- 1 2025 FBAR Update
- 2 First, a Quick FBAR Intro
- 3 Bank Accounts
- 4 Pooled Funds (Account vs No Account)
- 5 Foreign Life Insurance Policies
- 6 Foreign Pension Plans
- 7 Signature Authority Accounts
- 8 Social Security
- 9 The Tip of the Iceberg
- 10 Late Filing Penalties May be Reduced or Avoided
- 11 Current Year vs. Prior Year Non-Compliance
- 12 Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
- 13 Need Help Finding an Experienced Offshore Tax Attorney?
- 14 Golding & Golding: About Our International Tax Law Firm
2025 FBAR Update
While there are several international information reporting forms that U.S. Taxpayers must file each year to report their foreign accounts, assets, investments, etc. to the U.S. government, the most common foreign reporting form is the ‘FBAR’ (Foreign Bank and Financial Account Reporting). Technically, the FBAR is not even a tax form but rather a FinCEN form and falls under Title 31 of the U.S. Code (Money & Finance) and not Title 26 (Internal Revenue Code). Many different types of foreign accounts and assets are reported on the annual FBAR — it is not limited to just bank accounts. And while FBAR reporting can get complicated (especially if the Taxpayer is out of IRS foreign account compliance), once the Taxpayer gets the hang of it, it just becomes another over-burdensome form the Taxpayer must file each year in addition to their regular tax return (the FBAR is not part of the tax return filing). Let’s go through some common examples of FBAR reporting. *For all examples, please note that the Taxpayers are U.S. persons for tax purposes who have not made any treaty elections to be treated as a Non-Resident Alien (NRA). Also, these examples are for illustrative purposes only and Taxpayers should consult with a Board-Certified Tax Law Specialist if they have specific questions about their reporting requirements and not rely on this article for legal advice.First, a Quick FBAR Intro
The international tax law specialist team at Golding & Golding has authored hundreds of articles on foreign account reporting. Here are the quick basics about FBAR:-
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It is required when a Taxpayer has more than $10,000 in annual aggregate total in their foreign accounts.
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Only the total value of all accounts combined must exceed $10,000, not the value of each account.
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It is filed electronically, directly on the FinCEN website.
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It is due on April 15th but is currently on automatic extension to October (subject to change).
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It includes jointly held accounts and accounts in which the Taxpayer only has signatory authority and no financial interest.
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Bank Accounts
Many situations will warrant the Taxpayer to have to file the FBAR when they are the owner of a bank account:-
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Example: David has 15 foreign accounts for a total value of $180,000. 12 of the accounts are active and three of the accounts are dormant, with less than a few dollars in each of them. All 15 accounts are reportable on the FBAR.
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Example: Dean has nine accounts, but they are all located at the same Foreign Financial Institution. Even though all nine accounts are located at the same foreign financial institution, Dean must report all nine accounts on his FBAR.
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Example: Deborah had four foreign accounts, but she recently closed all of them in the current year. Even though Deborah closed the accounts in the current year, she still must report all the accounts on the FBAR because at one point during the year the total annual aggregate value of the accounts was $600,000.
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Example: Dianne has seven accounts, but it is the same $200,000 transferred into a new different account every six to eight weeks (in order to take advantage of increasing interest rates). Even though it is the same $200,000 that was transferred to different accounts throughout the year, Dianne must report all seven accounts on the FBAR. That is because the FBAR is not used to report the total amount of money the Taxpayer has, but rather to report the maximum value of each of the different accounts throughout the year.
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Example: Dustin has 31 accounts of which he is the owner of and has no signature authority accounts. Dustin must identify on the FBAR that he has more than 25 accounts and prepare the supplemental FBAR form for his records.
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Pooled Funds (Account vs No Account)
Pooled funds such as foreign mutual funds and ETFs are reportable for FBAR purposes, but the extent of the reporting will be determined by how those funds are being held:-
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Example: Scott has 27 different mutual funds, but they are all located in a single account under one account number. For purposes of the FBAR, Scott will report the main account number and the total value of all the assets under that account — but for purposes of IRS Form 8621, Scott will report each fund separately.
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Example: Steven has 13 different foreign ETFs, but they are not contained in a single account. Instead, he owns each fund individually. For FBAR purposes, Scott will list out each fund separately.
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Foreign Life Insurance Policies
Some foreign life insurance policies are reportable as well — depending on whether they have a cash or surrender value or not:-
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Example: Peter is the owner of a life insurance policy that has a face value of $800,000 and a current cash/surrender value of $250,000. Peter will report the surrender/cash value of the policy on the FBAR.
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Example: Penelope is the owner of an insurance policy that has no cash or surrender value. Generally, this type of policy is not reportable for the FBAR, although exceptions and exclusions may apply.
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Example: Parker is listed as a beneficiary on an insurance policy which he does not own and does not have any control or financial interest in. Parker typically is not required to report this type of insurance policy because he is not the owner.
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Foreign Pension Plans
A few years back the IRS published some ambiguous information about the requirement to report foreign pensions on the FBAR. In short, foreign pension plans are generally reportable for FBAR (and FATCA):-
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Example: Brian has a foreign pension plan through his prior employer when he lived abroad. He has not made any contributions to the plan in several years (since becoming a U.S. person) and has not yet received any distributions from the pension plan either. The pension plan is still reportable on the FBAR.
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Example: Brenda has a personal foreign pension plan that she purchased when she was living overseas. Over time, the value of the pension plan grew significantly (although Brenda has not made any contributions or received any distribution since becoming a U.S. person). Brenda is also required to report the pension plan on the FBAR.
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Signature Authority Accounts
Unlike Form 8938 (FATCA), for FBAR reporting purposes, a Taxpayer must include accounts even if they do not have a financial interest in the account but only have signature authority over the account:-
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Example: Charlie was listed as a signatory on a bank account that his grandma owns in a foreign country. He does not have any ownership over the account and has not made any contributions to the account. Charlie is still required to report the account on his FBAR.
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Example: Chris works for a company that operates in various foreign countries and the company listed Chris as a signatory on these accounts so that he can issue checks to employees and vendors worldwide. Even though Chris did not open the account and does not have any ownership of the funds in the account, he is still required to report the account on the FBAR.
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Example: Caroline recently started her own business and opened a few foreign accounts under her business — and listed herself as a signatory. She does not own the accounts herself and the contributions to the accounts were made directly by the business. Since Caroline is a signatory on these accounts, she is required to report the accounts on the FBAR.
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Social Security
Accounts in foreign countries that are Social Security equivalent are generally exempt from FBAR reporting.The Tip of the Iceberg
The goal of this article is to help clarify some of the basics of FBAR reporting. Reporting foreign assets to the U.S. tax authorities can be very complicated, especially when it involves additional items such as foreign life insurance policies, foreign corporations, foreign partnerships, and transactions between U.S. persons and foreign companies. Taxpayers should try to stay in compliance if they are already in compliance or should consider getting into compliance if they have not properly filed the necessary reporting forms if for no other reason than the fact that the IRS has made offshore compliance a key enforcement priority and has been issuing fines and penalties for non-compliance.