FBAR and Form 8938: reporting Indian accounts and assets

These two reports are about the existence of assets, not tax on them. They are the most common source of large NRI penalties.

FBAR (FinCEN Form 114)

A US person must file an FBAR if the combined highest balances of all foreign financial accounts exceeded $10,000 at any time in the year. That is the total across all accounts, so ten accounts with Rs 70,000 each can cross the line.

• Filed electronically through FinCEN's BSA E-Filing system, not with the tax return.
• Due 15 April, with an automatic extension to 15 October.
• Each account's maximum balance during the year is converted to dollars at the Treasury's year-end rate.

Accounts that count include NRE, NRO and FCNR deposits, savings and fixed deposits, demat and brokerage accounts, mutual fund folios held directly with the fund house, and accounts where you only have signing authority, for example a parent's or employer's account. A joint account is reported by each holder in full.

Form 8938 (FATCA)

Form 8938 is attached to your tax return and covers a wider range of "specified foreign financial assets", which includes foreign cash-value insurance and annuity contracts, and interests in foreign entities. Thresholds depend on filing status and residence:

Both forms may be required for the same account, and filing one does not replace the other.

Penalties

• FBAR: a non-wilful failure carries a penalty of up to about $16,500 per unfiled report (the 2025 adjusted figure is $16,536), regardless of the number of accounts on it. Wilful failure can reach the greater of about $165,000 (2025: $165,353) or 50% of the balance, and in extreme cases criminal charges. Amounts are adjusted for inflation periodically; we found no 2026 increase, but check the current figures.
• Form 8938: $10,000, rising by up to $50,000 for continued failure after IRS notice. The time the IRS has to assess tax on items related to the unreported assets also stays open until the form is filed.

"I did not know" is not a defence for willfulness in the way people hope, but a good-faith, reasonable-cause explanation is accepted in many cases. This is why the procedure matters.

Items that get missed

• Accounts opened for you as a child or student in India.
• A joint holder or nominee on parents' accounts. A joint holder is reportable; a nominee generally is not, though facts matter.
• PPF, EPF and NPS (see retirement article).
• Accounts you have closed during the year but held earlier.
• Prepaid cards, wallets and crypto held on foreign exchanges. Rules here are evolving.

If earlier years were missed

Do not ignore it, and do not simply start filing correctly. The IRS has:

1. Delinquent FBAR submission procedures, for people who have no unreported income and owe no tax.
2. Streamlined filing procedures, for non-wilful failures. They require three years of amended or delinquent returns and six years of FBARs, a certification, and a penalty of 5% of the highest account balance for US residents (none for taxpayers abroad).
3. A full voluntary disclosure for wilful cases.

The right route depends on facts. Late filings made before the IRS contacts you are treated far better.

Practical steps

Keep a master list of every account, the opening and closing dates, joint holders, and annual maximum balance in rupees and dollars. Update it each year in January.