FBAR for NRIs: Threshold, Deadlines & How to File? Complete Guide for NRIs

What is FBAR and Why You Need to Know About It

FBAR stands for Foreign Bank and Financial Accounts Report. The official form is FinCEN Form 114, and you file it with the Financial Crimes Enforcement Network (FinCEN), not the IRS.

Here's what confuses most NRIs: FBAR is not a tax form. You're not paying any taxes through FBAR. It's an information report that tells the US government about your financial accounts outside the United States.

The requirement comes from the Bank Secrecy Act of 1970, designed to prevent money laundering and tax evasion. After 9/11, enforcement became significantly stricter.

Why NRIs miss this requirement:

Your CPA might not ask about foreign accounts. Standard tax software doesn't always flag it clearly. Your NRE account interest is tax-free, so you assume there's nothing to report. But FBAR isn't about taxes, it's about disclosure.

Even if your Indian accounts don't generate taxable income, you must file FBAR if you cross the $10,000 threshold.

Who Must File FBAR?

You must file FBAR if you meet both conditions:

1. You're a "US person" under IRS rules
2. Your foreign accounts exceeded $10,000 combined at any point during the year

Are You a US Person?

US Citizens: If you have a US passport, you must file FBAR regardless of where you live. This includes Indians who became naturalized US citizens.

Green Card Holders: From the moment you get your Green Card, you're considered a US person. Your physical location doesn't matter.

Substantial Presence Test: This catches most visa holders. You meet this test if you were physically present in the US for:

• At least 31 days in the current year, AND
• At least 183 days calculated over three years using this formula:
• All days in the current year
• Plus 1/3 of days from the prior year
• Plus 1/6 of days from the year before that

Example: You're on an H1B visa. In 2024, you were in the US for 320 days. In 2023, you were here for 280 days. In 2022, you were here for 240 days.

Calculation: 320 + (280÷3) + (240÷6) = 320 + 93 + 40 = 453 days

You meet the substantial presence test. If your Indian accounts exceeded $10,000 at any point in 2024, you must file FBAR.

Most H1B and L1 visa holders meet this test after their first full year in the US. F-1 students have exemptions for their first five calendar years, but once you switch to H1B, the clock starts.

Understanding the $10,000 Threshold

The $10,000 threshold is where most mistakes happen. It's based on the aggregate maximum value of ALL your foreign accounts at any single point during the calendar year.

Not the year-end balance. Not the average. The highest combined total at any moment.

How It Works

Priya has three accounts in India:

• NRE Savings: peaked at ₹6 lakhs in March ($7,200)
• NRO Fixed Deposit: peaked at ₹5 lakhs in August ($6,000)
• Mutual Fund: peaked at ₹3 lakhs in November ($3,600)

By December 31, she had withdrawn most funds. Her year-end total was only $2,400.

Does Priya need to file FBAR? Yes, absolutely. Her aggregate maximum is $7,200 + $6,000 + $3,600 = $16,800. Even though her December 31 balance was only $2,400, she crossed the threshold during the year.

The Accounts Don't Peak Simultaneously

You take the highest balance from each account throughout the entire year and add them up. Your accounts don't need to hit their maximum on the same day.

Amit's NRE account peaked at $6,500 in February. His NRO account peaked at $4,800 in September. His accounts never exceeded $10,000 combined on any single day. But his aggregate maximum is $11,300. He must file FBAR.

Even One Day Above $10,000 Triggers Filing

If your aggregate maximum hits $10,001 for even a single day, you must file FBAR for that entire year. There's no grace period, no rounding, no minimum duration.

Converting Rupees to Dollars

You must convert balances to US dollars using the US Treasury's exchange rate for December 31 of the reporting year.

Example: Your NRO account peaked at ₹12 lakhs on August 15, 2024. The INR/USD rate on December 31, 2024 is 83.50.

Calculation: 1,200,000 ÷ 83.50 = $14,371

You always use the December 31 rate, even if your account peaked in March. Find official rates at Treasury Reporting Rates of Exchange.

How to File FBAR: Step-by-Step Process

Filing FBAR is free and takes 30-45 minutes once you have your information ready. Here's exactly what to do.

Step 1: Gather Your Information

For each account, you need:

• Bank name and complete address
• Account number
• Account type (savings, FD, securities, etc.)
• Maximum balance during the year (in USD)

For yourself:

• Social Security Number or ITIN
• Date of birth
• Current US address

Pro tip: Download statements for the entire year (January 1 to December 31) for all accounts. Create a simple spreadsheet to track the maximum balance for each account.

Step 2: Convert to US Dollars

For each account:

1. Find the highest balance during the year (review all monthly statements)
2. Go to the Treasury exchange rate website
3. Find the December 31 exchange rate for that year
4. Divide your rupee amount by the exchange rate
5. Round to the nearest dollar

Step 3: Access the BSA E-Filing System

Go to: https://bsaefiling.fincen.treas.gov/main.html

Don't search for "IRS FBAR" because FBAR isn't filed with the IRS.

Select "File FinCEN Form 114 individually" under "No Registration FBAR Filer." You don't need to create an account.

Step 4: Fill Out the Form

Part I - Your Information:

• Name (as on SSN), SSN, date of birth
• Filer type: Individual
• Your US address

Part II - Account Information (repeat for each account):

• Account type (bank, securities, other)
• Financial institution name: "State Bank of India" or "ICICI Bank Limited"
• Institution address (branch address or main office)
• Account number
• Maximum value in USD
• Ownership type (individual, joint, signature authority only)

Part III - Certification:

• Check the box certifying accuracy
• System generates electronic signature automatically

Step 5: Submit and Save Confirmation

After submitting, you'll receive a BSA Identifier Number. This is critical.

Screenshot or print this confirmation immediately. It's your proof of timely filing. Store it with your tax records for at least 6 years.

Step 6: Keep Records

Maintain for 5 years:

• Bank statements showing maximum balances
• Currency conversion calculations
• Copy of filed FBAR
• BSA confirmation number

Organization tip: Create a folder "FBAR 2024" and store everything together.

Which Indian Accounts Must You Report?

The general rule: if it's a financial account at an Indian institution where you have financial interest or signature authority, report it when your aggregate exceeds $10,000.

Bank Accounts (Always Report These)

NRE Accounts (Non-Resident External): Must be reported. Many NRIs think these are exempt because the interest is tax-free both in India and the US under the tax treaty. That doesn't matter for FBAR. These are foreign accounts and must be disclosed.

NRO Accounts (Non-Resident Ordinary): Fully reportable without exception. These hold your rupee income from India like rental income, pension, interest, or dividends.

All deposit types count:

• Regular savings accounts
• Fixed deposits (both NRE and NRO)
• Recurring deposits
• Current accounts
• Sweep accounts where excess savings automatically move to FDs

The account type or tax treatment doesn't change the FBAR reporting requirement.

Investment Accounts

Mutual Funds:

The reporting depends on how you hold them:

Scenario 1: You hold 15 mutual funds in your Zerodha demat account. You report the demat account number and the total value of all 15 funds combined.

Scenario 2: You bought 5 mutual funds directly from AMCs (HDFC Equity Fund, ICICI Bluechip Fund, SBI Small Cap Fund, etc.). You report each of the 5 funds separately with their individual account numbers.

Demat and Trading Accounts: Report the account number and total value of all securities held (stocks, bonds, ETFs). If your demat had ₹25 lakhs in January but dropped to ₹18 lakhs by December, you report ₹25 lakhs (converted to dollars) as the maximum value.

Insurance and Retirement Accounts

Life Insurance:

ULIPs (Unit Linked Insurance Plans): Must be reported because they have cash surrender value. Check your annual statement for the "investment value" or "cash surrender value." That's what you report.

Term Insurance: NOT reportable. Pure protection policies with no cash value don't need to be disclosed.

Retirement Accounts (The Gray Areas):

PPF (Public Provident Fund): This is the most controversial account for NRIs. Arguments against reporting: funds are locked for 15 years, withdrawals are heavily restricted, it's a government retirement scheme. Arguments for reporting: you can take loans after year 6, partial withdrawals after year 7.

Conservative approach: If you've taken any loans or withdrawals, report it. If it's completely untouched, many tax professionals say it's not reportable. Consult a CPA for your specific situation.

EPF (Employee Provident Fund): Generally not reportable because it's a mandatory retirement account with access restrictions. However, if you've made voluntary contributions or taken loans, the waters get murky.

NPS (National Pension System): Similar to EPF. Most tax professionals say it's not reportable, but the IRS hasn't provided crystal clear guidance.

Read more about NPS for NRIs

When in doubt, report it. The penalty for over-reporting is zero. The penalty for under-reporting can be substantial.

Special Account Types

Gold Bonds: Sovereign Gold Bonds held in your demat account are reportable as part of your demat account value. Physical gold, jewelry, and gold coins are NOT reportable.

Cryptocurrency: If you hold crypto on Indian exchanges like WazirX or CoinDCX, this is a gray area. Many tax professionals recommend reporting these accounts to be safe. Crypto in private wallets (where you control the private keys) is generally not reportable.

What You DON'T Report

Real Estate: Your apartment in Mumbai or plot in Bangalore is not reportable on FBAR, even if it's worth crores. Real estate is not a financial account.

Physical Assets: Gold jewelry, art, antiques, cars, and other tangible assets are not reportable.

US-Based Accounts: Your Charles Schwab account that invests in Indian stocks or ADRs is NOT reportable because Schwab is a US institution. The location of the financial institution matters, not where it invests.

Joint Accounts and Signature Authority

This is where many NRIs get tripped up.

Joint with Spouse (both US persons):

Option 1: File one joint FBAR. Both spouses complete and sign Form 114a (Record of Authorization). One spouse files the FBAR for all jointly owned accounts. Keep Form 114a with your records for 5 years (you don't submit it).

Option 2: File separately. Each spouse reports the full value of joint accounts, not split 50/50.

Example: You and your wife have a joint NRE account with $60,000. If filing separately, you both report $60,000 on your individual FBARs.

Joint with Non-US Spouse:

You must file individually and report the full value of joint accounts. You cannot file jointly when one spouse is not a US person.

Example: You're a Green Card holder. Your wife is an Indian citizen in Mumbai. Your joint NRO account has $45,000. You report the full $45,000 on your FBAR. Your wife has no FBAR requirement.

Joint with Parents (The Big Surprise):

Your parents added you as a joint holder on their Indian account for convenience. Maybe they wanted you to handle emergencies or make transfers when needed.

The rule: You must report the full value of that account, even though the money is 100% theirs.

Real scenario: Your father's NRO savings account has ₹50 lakhs ($60,000). He adds you as joint holder. You've never taken a single rupee from it. You must still report the full $60,000 on your FBAR.

This catches thousands of NRIs completely off guard. If you're a joint holder on your parents' account, your mother's account, and a sibling's account, you report all three at their full values.

Signature Authority on Business Accounts:

If you have signing authority over your family business accounts in India, you must report them even if you own 0% of the business.

Exception: If you're an employee of a large US company and have signature authority over company accounts solely due to your job (and you have zero financial interest), you might be exempt if the company files its own FBAR. This exception is narrow and doesn't apply to family businesses or companies where you have ownership.

FBAR Filing Deadlines

Primary deadline: April 15 of the year following the reporting year

Automatic extension: October 15 (you don't need to request it)

For your 2024 accounts, you file by April 15, 2025, or October 15, 2025 if you need extra time.

Unlike tax returns, there's no penalty for using the extension. October 15 is treated as the actual deadline. This gives you six extra months to gather Indian bank statements.

FBAR Penalties: What Happens If You Don't File

FBAR penalties are among the harshest in the US tax code. Understanding them helps you grasp why compliance is so critical.

Non-Willful Violations (Honest Mistakes)

If you didn't know about FBAR or made an honest mistake: penalty up to $16,536 per year (adjusted for inflation annually).

What counts as non-willful:

• You genuinely didn't know about the FBAR requirement
• Your CPA didn't tell you about it
• You reasonably couldn't have been expected to know
• You made an honest reporting error

Example: Meera lived in the US for six years, filing tax returns correctly every year. Nobody told her about FBAR. She maintained her NRE account in India with about $45,000. When she discovered FBAR in 2024, she immediately filed delinquent returns for six previous years. Her violation was non-willful.

The IRS often reduces or waives non-willful penalties for first-time filers who use the amnesty programs, especially when there's no tax due on the unreported income.

Willful Violations (Deliberate Non-Compliance)

If the IRS determines you knew about the requirement and deliberately didn't file: penalty is the greater of $165,353 or 50% of account balance per violation per year.

What counts as willful:

• You knew about FBAR and intentionally didn't file
• You checked "yes" on Schedule B (which asks about foreign accounts) but didn't file FBAR
• You received IRS notices about foreign accounts and ignored them
• You deliberately hid accounts from your tax preparer

The 50% penalty can wipe out your entire account balance in just two years if applied to multiple years.

Example: Vikram knew about FBAR (his CPA mentioned it multiple times) but deliberately didn't file for five years while maintaining $500,000 in Indian accounts. This is willful. The maximum penalty could reach $250,000 per year (50% of $500,000) for five years, totaling over $1 million.

Criminal Penalties (Extreme Cases)

For severe willful violations: fines up to $250,000 and up to 5 years in prison.

These are reserved for true tax evaders involved in money laundering, fraud, or other serious crimes. The average NRI who simply forgot to file won't face criminal charges. Criminal prosecution is rare and targets egregious cases.

How the IRS Discovers Unreported Accounts

FATCA Data Exchange: India and the US exchange financial information automatically. Indian banks report accounts held by US persons directly to the IRS every year. This includes:

• Your name and US taxpayer identification number
• Account balances and values
• Interest, dividends, and other income

If the IRS receives information from your Indian bank but you haven't filed FBAR, red flags go up immediately.

Schedule B Cross-Check: When you file your tax return, Schedule B asks: "At any time during the year, did you have a financial interest in or signature authority over a financial account in a foreign country?" If you check "yes" but don't file FBAR, the IRS's systems flag the discrepancy.

Audit Discovery: During regular tax audits, IRS agents often ask about foreign accounts. Lying to an IRS agent compounds the problem significantly.

The Reality of Enforcement

The IRS has significantly increased FBAR enforcement over the past decade. According to recent data, FinCEN receives over 1.2 million FBARs annually, but many US persons with foreign accounts still don't file.

The IRS uses sophisticated data analytics to identify non-filers. With automatic information exchange under FATCA, it's becoming nearly impossible to hide foreign accounts.

Bottom line: The cost of non-compliance far exceeds the 30 minutes it takes to file FBAR correctly.

What If You Missed Filing FBAR in Previous Years?

If you just discovered you should have been filing FBAR for the past several years, take a deep breath. You're not alone, and the IRS provides multiple programs specifically designed to help people like you get compliant.

The worst thing you can do is ignore the problem. The second worst thing is to just start filing going forward without addressing past years (called a "quiet disclosure").

Here are your options:

Delinquent FBAR Submission Procedures (Best for Simple Cases)

Who qualifies:

• Your violations were non-willful (you genuinely didn't know)
• You're not currently under IRS audit or investigation
• The IRS hasn't already contacted you about missing FBARs
• Your tax returns are otherwise up to date

How it works:

1. File all missing FBARs through the BSA E-Filing system (you can file for past years)
2. Include a statement explaining why you didn't file on time ("I was unaware of the FBAR requirement until now")
3. If you have reasonable cause, there are often zero penalties

Example: Deepak worked in California on an H1B for seven years. He maintained an NRE account and two fixed deposits in India totaling about $75,000. He filed his tax returns correctly every year but never heard of FBAR. His CPA didn't ask about foreign accounts.

In 2024, a colleague mentioned FBAR. Deepak immediately researched and realized he should have been filing. He used the Delinquent FBAR Procedures, filed seven years of FBARs with an explanation, and received no penalties because his violation was clearly non-willful and there was no tax due.

Best for: NRIs who have been filing tax returns correctly but simply didn't know about FBAR.

Streamlined Filing Compliance Procedures (For Cases with Unreported Income)

If you not only missed FBAR but also failed to report foreign income on your tax returns, this program is designed for you.

Streamlined Domestic Offshore Procedures (for US residents):

Requirements:

• You must certify that your failure was non-willful
• You weren't living abroad for at least 330 days in any of the past 3 years
• You're not under examination or criminal investigation

What you file:

• Amend or file last 3 years of tax returns (Forms 1040)
• File last 6 years of FBARs
• Pay any taxes owed (with interest)
• Pay a 5% penalty on the highest aggregate balance (December 31 value) across all 6 years

The 5% penalty calculation:

Review the December 31 balance of all your foreign accounts for the past 6 years. Find the year with the highest combined December 31 balance. Pay 5% of that amount.

Example: Ravi had failed to report interest income from his Indian accounts. His maximum December 31 balance over 6 years was $180,000 (in 2020). His Streamlined penalty: 5% of $180,000 = $9,000.

This $9,000 replaces potentially hundreds of thousands in FBAR penalties. Without this program, Ravi could have faced up to $16,536 per year for 6 years ($99,216) plus additional penalties for unreported income.

Streamlined Foreign Offshore Procedures (for expats abroad):

Same as above, except:

• You must have lived outside the US for at least 330 days in one of the past 3 years
• Zero penalty (no 5% charge)

This is designed for US citizens or Green Card holders who moved abroad and didn't realize they still had US filing requirements.

Voluntary Disclosure Practice (For Willful Violations)

If your non-compliance was willful (you knew about FBAR and intentionally didn't file), or if you're facing potential criminal liability, the Voluntary Disclosure Practice may be your only option.

This requires working with an experienced tax attorney. The IRS won't prosecute you criminally if you come forward voluntarily, but you'll pay significant civil penalties.

Don't attempt this without professional legal representation.

Why You Should Never Do a "Quiet Disclosure"

A quiet disclosure means you start filing FBARs and corrected tax returns for current years without formally addressing the past through one of the IRS programs.

Why this is dangerous:

• The IRS has sophisticated systems that flag when someone suddenly starts filing FBARs after years of not filing
• It looks like you're trying to hide something
• The IRS often responds with audits and maximum penalties
• You lose access to the penalty relief programs

The IRS has explicitly warned taxpayers against quiet disclosures. If caught, they may assume your violations were willful and impose the harshest penalties.

How to Decide Which Program to Use

Use Delinquent FBAR Procedures if:

• You've been filing tax returns correctly
• You just didn't know about FBAR
• All your foreign income was reported on tax returns
• Your accounts are relatively simple (personal savings, FDs)

Use Streamlined Procedures if:

• You failed to report foreign income on tax returns
• You have investment income (interest, dividends, capital gains) that wasn't reported
• Your situation is more complex
• You want penalty protection through the formal program

Consult a tax attorney if:

• Your violations might be considered willful
• You have very large unreported amounts
• You're facing potential criminal issues
• You've already been contacted by the IRS

Take Action Now

The longer you wait, the worse it gets. Interest accumulates on unpaid taxes. The IRS's data systems are constantly improving. Indian banks are reporting your accounts right now under FATCA.

Don't let fear paralyze you into inaction. The amnesty programs exist specifically to help people in your situation. Use them.

FBAR vs FATCA: What's the Difference?

Many NRIs confuse FBAR with FATCA (Form 8938). They're two separate requirements with different thresholds.

The Bottom Line

FBAR is mandatory if you're a US person with more than $10,000 in foreign accounts at any point during the year. The filing is free, takes 30-45 minutes, and must be done separately from your tax return by April 15 (automatic extension to October 15).

Thousands of NRIs discover FBAR years too late. Now that you know about it, you can stay compliant and avoid penalties that can reach $16,536 per year or even 50% of your account balance.

Action steps:

1. Calculate your aggregate maximum for 2024 (add up peak balances from all Indian accounts)
2. If it exceeds $10,000, mark April 15, 2025 on your calendar
3. Gather your bank statements now
4. File through the BSA E-Filing system
5. Keep your confirmation number

If you missed previous years, don't ignore it. Use the Delinquent FBAR Procedures or Streamlined Compliance to catch up with reduced penalties.

The key is action, not fear.