Many people underestimate FBAR and that, is a mistake. As per the Bank Secrecy Act of US, certain foreign financial accounts must be reported to the IRS every year. FBAR or Foreign Bank Account reporting is basically a reporting on all your foreign bank accounts.

A foreign account is any account at a financial institution that is located outside of the US. FBAR is filed while filing taxes and it is mandatory part of the filing process. Regardless of whether an account produced taxable income or not it must be reported if it falls under the FBAR listed accounts. Not filling FBAR will invite attention of IRS and will attract penalties. The form used to file FBAR is FinCEN Form 114.

Conditions to file FBAR

When a US person is a signatory or other authority and has a financial interest

When the aggregate value of the foreign accounts exceeds $10,000 at any point during the calendar year reported

In case of a couple holding joint account(s), they must file FinCen 114a to cover both or each must file FBAR separately

Whether the foreign account produced taxable income or not, it still needs to be reported

Accounts under FBAR

Not all accounts fall under FBAR, only some accounts fall under FBAR. The following Financial accounts that must be reported: