FBAR: Who Must Report Foreign Bank Accounts and How to File It Correctly

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Many people living in the United States who maintain bank accounts outside the country are unaware of an important requirement called FBAR.

Lack of knowledge about this rule is one of the most common reasons for tax noncompliance among Brazilians living in the United States.

In this article, I will explain in a clear and practical way:

• what FBAR is

• who is required to file it

• which accounts must be reported

• how the filing process works

I will also address specific situations, such as when a person has authority to move funds in corporate bank accounts located in Brazil or other countries.

What Is FBAR

FBAR (Foreign Bank Account Report) is an annual reporting requirement imposed by the United States government for individuals and entities that maintain financial accounts outside the United States.

The report is submitted to FinCEN (Financial Crimes Enforcement Network), an agency of the U.S. Department of the Treasury.

The purpose of FBAR is to allow the U.S. government to monitor financial assets held abroad and combat tax evasion or hidden wealth.

It is important to understand a key point.

FBAR is not a tax.

It is simply an informational report. Even if no tax is due on those accounts, the obligation to report them may still exist.

Who Must File FBAR

In general, FBAR must be filed by any U.S. Person who has financial accounts outside the United States.

For FBAR purposes, the term U.S. Person includes:

• U.S. citizens

• permanent residents (green card holders)

• tax residents of the United States (resident aliens)

• certain U.S. entities, such as companies and trusts

This means that many Brazilians who have U.S. tax residency may be subject to this reporting requirement.

The Main Threshold: $10,000

The FBAR filing requirement arises when the combined total value of all foreign financial accounts exceeds $10,000 at any moment during the year.

Two important points must be understood.

1. The value considered is the total combined balance of all accounts, not each account individually.

2. The relevant amount is the highest balance reached at any point during the year, not the balance on December 31.

Practical Example

Imagine a person holds the following accounts:

• Checking account in Paraguay

Highest balance on March 25, 2025: $3,000

• Savings account in Brazil

Highest balance on July 7, 2025: $4,000

• Investment account in Brazil

Highest balance on August 12, 2025: $5,000

Total: $12,000

Even though no single account exceeds $10,000, the combined total surpasses the threshold.

In this situation, FBAR reporting becomes mandatory.

Which Accounts Must Be Reported

FBAR reporting is not limited to checking accounts.

Several types of financial accounts may be subject to reporting, including:

• bank accounts in Brazil or other countries

• brokerage accounts held abroad

• certain investment accounts maintained with foreign financial institutions

Foreign Corporate Accounts: When They Must Be Reported

This is a point that often causes confusion.

Many people believe that only personal accounts must be reported, but that is not correct.

FBAR may also require reporting of corporate accounts, depending on the person’s relationship with the account.

Two main situations can trigger the reporting requirement.

Financial Interest

This occurs when the person owns the account or the funds in the account.

Examples include:

• a personal account in Brazil

• a joint account

• a corporate account of a company owned by the individual

Signature Authority

This occurs when a person has authority to control or move funds in the account, even if the money does not belong to them.

This is common in situations involving:

• business partners

• company administrators or financial officers

• individuals authorized to manage corporate bank accounts

In other words.

If an individual living in the United States has authority to move funds from a company’s bank account located in Brazil, that account may need to be reported on the FBAR.

This applies even if:

• the money does not belong to the individual

• the individual is not the owner of the company

• the account belongs solely to the company

The determining factor is financial control or signature authority.

How to Determine Whether an Account Must Be Reported

In simplified terms, a foreign account must be reported on FBAR when:

1. The account is located outside the United States

2. The individual has financial interest or signature authority over the account

3. The combined value of all foreign accounts exceeds $10,000 at any moment during the year

If these three conditions are met, the account must be reported.

Information Required to File FBAR

For each reported account, certain information must be provided.

Typically, the system requires:

• name of the bank or financial institution

• country where the account is located

• account number

• type of account

• name of the account holder

• the highest balance the account reached during the year

How to Find the Maximum Account Balance

To correctly complete the FBAR, it is necessary to determine the highest balance the account reached during the calendar year.

This is usually done by reviewing:

• bank statements

• account transaction history

After identifying the maximum balance, it must be converted into U.S. dollars using the applicable official exchange rate.

How FBAR Is Filed and Filing Deadline

FBAR is not filed together with the income tax return.

Instead, it must be submitted separately through the government’s electronic system called the BSA E-Filing System.

The form used is FinCEN Form 114, and the entire filing process is completed online.

The standard filing deadline is April 15.

However, there is an automatic extension until October 15.

Penalties for Failure to File

Failure to file FBAR or filing it incorrectly may lead to significant penalties.

Non-willful violation:

Civil penalty up to $10,000

Inflation-adjusted amount applied in 2025: up to $16,536

Willful violation:

Civil penalty of the greater of $100,000 or 50% of the account balance

Inflation-adjusted amount applied in 2025: greater of $165,353 or 50% of the account balance

Criminal penalties may include:

• up to $250,000 in fines and/or 5 years in prison

• in aggravated cases, up to $500,000 in fines and/or 10 years in prison

Conclusion

FBAR is a relatively common requirement for individuals with U.S. tax residency who maintain financial accounts outside the United States.

Carefully reviewing all accounts connected to the individual — personal or corporate — is essential to ensure proper compliance with U.S. financial reporting rules.

Correct reporting helps avoid significant penalties and potential issues with U.S. authorities.