FBAR: the threshold is aggregate, and that changes everything

The FBAR is the form people most often tell us they do not need to file. The reasoning is always the same: none of my accounts has that much in it. And that reasoning is wrong, for a reason the threshold's wording makes easy to miss.

The test is not per account. It is whether the total value of all your foreign financial accounts, added together, exceeded the threshold at any point during the year. One day is enough. If it was exceeded, every account is reportable — including the ones with almost nothing in them.

More than people expect. Current and savings accounts, obviously. Investment and brokerage accounts. Many pensions. Certain insurance products with a cash value. Accounts you do not own but can sign on — a parent's account you have authority over, a business account you are a signatory for, a club or charity account you administer.

That last category catches people who have never thought of themselves as having foreign accounts at all.

Nothing is paid with an FBAR. It reports balances; it does not tax them. Which is exactly why it gets skipped — it feels administrative — and exactly why skipping it is a mistake. The penalties for not filing are calculated on the accounts, not on any tax due, and they are severe where the failure is treated as wilful.

We have seen people with no US tax liability at all, year after year, exposed to penalties that dwarfed anything the returns themselves ever involved.

FATCA reporting on Form 8938 covers overlapping ground with different thresholds, a wider definition of assets and a different agency. Filing one does not satisfy the other. Plenty of people need both, and it is worth establishing which applies before assuming neither does.

This is one of the most fixable problems in cross-border tax. Where the failure was not wilful, there are defined routes to catching up without penalty. The condition is that you act before the IRS makes contact. It is worth a conversation sooner rather than later.