FBAR: a definition
FBAR stands for Foreign Bank Account Report. Its official name is the Report of Foreign Bank and Financial Accounts, and it is filed on FinCEN Form 114. It is an annual report through which certain U.S. persons disclose financial accounts they hold — or control — outside the United States.
The report is submitted to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The legal basis for the requirement is the Bank Secrecy Act.
In short: if the combined value of your foreign financial accounts was more than $10,000 at any time during the calendar year, you generally must report those accounts on an FBAR — even if the accounts earned no income.
Why does the FBAR exist?
The FBAR was created to help the U.S. government maintain transparency over money held abroad and to deter the use of foreign accounts to conceal income or evade taxes. It gives federal authorities a record of who holds foreign financial accounts and roughly how much is in them. Importantly, the FBAR is an informational filing — its purpose is disclosure, not the direct collection of tax.
What counts as a "foreign financial account"?
The term is broad. It commonly includes:
- Bank accounts (checking, savings, time deposits) held at institutions outside the U.S.
- Brokerage and securities accounts held abroad.
- Certain foreign mutual funds and pooled investment funds.
- Foreign-issued life insurance or annuity policies with a cash value.
- Accounts held at a foreign branch of a U.S. institution.
The location of the account — not the currency or the nationality of the account holder — is generally what makes it "foreign." An account at a foreign branch is treated as foreign; an account at a U.S. branch of a foreign bank is generally not.
Note: Some assets are generally not reportable on an FBAR, such as foreign real estate held directly, precious metals held directly, or foreign stock certificates held in your own possession. The rules have nuances, so check the current FinCEN instructions or ask a professional.
How the FBAR differs from your tax return
A frequent point of confusion is the relationship between the FBAR and your income tax return. They are separate obligations, filed with different systems.
| FBAR (FinCEN Form 114) | Federal Income Tax Return | |
|---|---|---|
| Filed with | FinCEN (via the BSA E-Filing System) | The IRS |
| Purpose | Disclose foreign accounts | Report and pay income tax |
| Trigger | Aggregate accounts over $10,000 | Income above filing thresholds |
| Filing method | Electronic only | Electronic or paper |
You may also encounter IRS Form 8938 (Statement of Specified Foreign Financial Assets), which is a different report filed with your tax return under a separate law (FATCA). Some people must file both; the two have different thresholds and rules and are not interchangeable.
Key terms at a glance
- U.S. person — a citizen or resident of the U.S., and certain corporations, partnerships, trusts, and estates. See Who Must File.
- Financial interest — you own the account or are the beneficial owner.
- Signature authority — you can control the disposition of assets in the account, even if you do not own it.
- Aggregate value — the combined maximum value of all your foreign accounts during the year.
Important: This page is general information, not legal or tax advice. FBAR rules contain exceptions and change over time. Always confirm your specific obligations with the official FinCEN instructions or a qualified professional. See our full disclaimer.