Foreign Bank and Financial Account Reporting Requirements for Mobile and Remote Employees

With today’s ability to work from anywhere, understanding and staying on top of the reporting and ongoing US filing requirements can be difficult. And for employees working outside of their typical Home location, not only understanding these requirements but also being diligent in adhering to them is especially important. For US citizens, permanent residents working outside of the US, and nationals of other countries who become tax residents of the US, there is a specific annual filing requirement related to non-US financial accounts held.

Despite efforts from the US Department of the Treasury to provide information, many taxpayers remain unaware of the potential reporting requirements for their non-US (foreign) financial accounts. A US person (as defined below) may have to file the Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR), if the aggregate value of their non-US financial accounts exceeds USD $10,000 at any time during the calendar year.

Recent enforcement activity and evolving US case law make it critical for taxpayers to understand and comply with FBAR rules. Below are key questions and answers relating to FBAR filing requirements. By understanding the rules and taking the appropriate steps to achieve compliance, US persons can safely maintain their non-US accounts and have peace of mind.

Who must file an FBAR?

A US person with financial interest in or signature authority over non-US financial accounts must report these accounts to the US Department of the Treasury annually if the aggregate account balances exceed USD $10,000 at any time and for even one day during the calendar year. The filing deadline is April 15, with an automatic extension available to October 15.

Who is a “US person” for FBAR purposes?

Any “US person” is subject to the foreign account reporting rules. A “US person” includes US citizens, permanent residents and tax residents, and legal entities such as corporations, partnerships, and trusts created under US laws. It is important to note that the ability to claim non-residency for income tax purposes (through application of a US income tax treaty with another country) does not automatically enable a US person to avoid the FBAR filing requirement.

What is a Foreign Bank / Financial Account?

When people think of foreign financial accounts, a bank account is usually the first type that comes to mind. Savings and checking accounts maintained with a branch of a financial institution (such as a bank) that is physically located outside the US are certainly included in the definition of an account needing consideration for FBAR reporting purposes.

However, the definition is broader than this. It includes securities or brokerage accounts, whole life insurance accounts, and annuities with a cash value maintained outside the US. Certain foreign retirement or pension arrangements may also be reportable for FBAR purposes depending on the facts and circumstances.

The treatment of virtual currency for FBAR purposes continues to evolve. Certain foreign accounts that hold virtual currency may trigger reporting depending on how the account is structured and the assets held within it. Taxpayers with foreign digital asset holdings should consult a qualified advisor regarding their reporting obligations.

Additionally, the reporting rules apply to US persons who have either a financial interest in, or signature authority over, a foreign account. This affects officers or employees who have the ability to control the disposition of assets in a company’s foreign account by direct communication (in writing or otherwise) to the foreign financial institution. For example, the Treasurer of a company may have signature authority over (but no financial interest in) their employer’s foreign account or the foreign account of a subsidiary of their employer. In this situation, the Treasurer would be subject to the FBAR filing and disclosure requirements, unless an applicable exception applies.

What information must be reported on the FBAR?

The account information required to be reported includes the maximum value of the account during the year, the type of account, the account number, and the name and address of the institution where the account is held. The form must be electronically signed by the account owner. Special rules may apply if the account is jointly owned.

If the form is filed after the extended October 15 deadline, the form includes a place where the reason for late filing must be provided. As previously mentioned, the form needs to be filed electronically; paper filings are not accepted.

Isn’t the FBAR part of the US Form 1040?

People often assume the foreign financial account reporting process is part of their US individual income tax return preparation, but the FBAR is a separate report and submission.

Though the filing of US Form 1040 does not satisfy the filing reporting requirements for foreign bank accounts, there is a connection to US Form 1040. As appropriate, earnings from foreign accounts must be reported and taxed on US Form 1040 and applicable state income tax returns. In addition, the taxpayer is required to disclose on Schedule B whether they own any foreign bank accounts and may be required to report the accounts on Form 8938, Statement of Specified Foreign Financial Assets. Failure to answer the question appropriately on Schedule B has been used as evidence of willful noncompliance in recent court cases (see the question regarding potential penalties for noncompliance below).

When is the FBAR filing due?

The FBAR reports financial information for a given calendar year. The report must be received by the US Department of the Treasury on or before April 15 of the year following the calendar year being reported, i.e., the FBAR reporting information for calendar year 2026 is due April 15, 2027. A six-month automatic extension to October 15 is available. This extension is automatically granted; a specific extension request is not required.

What are the potential penalties for noncompliance?

Current penalties for noncompliance with the FBAR rules are severe. The IRS provides a list of potential penalties in the IRS FBAR Reference Guide. A sample of potential FBAR non-reporting penalties (not income tax related penalties) are as follows:

• Taxpayers who are found to have willfully failed to file or retain records of account can receive a civil penalty as high as the greater of $165,353 (as of 2026, adjusted for inflation) or 50% of the amount in the account at the time of the violation.
• Criminal penalties can apply for cases of willful noncompliance and can include prison and fines of up to $500,000.
• Non-willful violations are subject to a civil penalty of up to $16,536 (as of 2026, adjusted for inflation) per violation.

Clearly, the penalty structure is such that US persons should take their obligation to file FBAR forms very seriously as well as to pay the tax associated with income from the accounts.

What can I do if I have not complied with the FBAR filing requirements?

The IRS recognizes that some taxpayers may be unaware of their foreign financial account reporting obligations and has established procedures to help eligible taxpayers address prior noncompliance. If you discover that required FBAR filings were not submitted and the IRS has not yet contacted you regarding the issue, it is generally advisable to address the matter promptly. Depending on the circumstances, taxpayers may be able to file delinquent FBARs or use other available compliance procedures. The IRS provides guidance for late FBAR filings, and taxpayers should consult those instructions and seek professional advice to determine the most appropriate course of action.

For taxpayers who have non-willfully failed to report foreign financial assets, submit information returns, report income, and pay tax due, the IRS provides Streamlined Filing Compliance Procedures. Depending on whether the taxpayer resides in the US or outside of the US, separate procedures will apply. While the submission requirements for taxpayers residing in or out of the US are similar, the most notable difference is that taxpayers residing in the US are subject to a miscellaneous offshore penalty of 5%. The IRS provides detailed information for those eligible for these procedures: IRS Streamlined Filing Compliance Procedures.

If the IRS has initiated a civil examination of your returns for any taxable year, you are not eligible for the IRS Streamlined Filing Compliance Procedures.

Because many foreign financial institutions share account information with US authorities under international reporting regimes, taxpayers who fail to comply with foreign account reporting obligations face an increased risk of IRS detection. Given the complexity and potential penalties, we recommend you contact your tax or legal advisor should you have any questions regarding delinquent FBAR filings.

Given the potential cost and personal risk associated with improperly reporting non-US financial and bank accounts, it is critical to understand and comply with the rules. At GTN, our focus is exclusively on handling the tax challenges faced by today’s mobile workforce, including the complexities surrounding FBAR reporting and filing. Schedule your free, 30-minute consultation with our team to learn more.