FBAR for Indians in America: The $16,536 Mistake Most NRIs Don't Know They're Making

If you are a US person and your foreign accounts added together came to more than $10,000 at any moment during the year, you must file an FBAR, which is FinCEN Form 114. Indian savings, NRE and NRO accounts, fixed deposits, PPF, EPF, mutual funds, Demat and cash-value LIC policies all count toward that total. If you have missed past years, you are almost certainly still able to fix it without penalties, and that is the part most people never find out.

The FBAR is the Report of Foreign Bank and Financial Accounts. It is not part of your tax return. It does not go to the IRS with your Form 1040, it is not something your employer withholds for, and it will not show up in most consumer tax software unless you go looking for it.

That is exactly why so many people miss it. You can file a completely correct tax return every single year, pay every dollar you owe, and still be out of compliance, because the FBAR is filed separately through the BSA E-Filing System run by FinCEN.

The form is short. It asks what accounts you hold outside the United States, where they are held, and the highest balance each one reached during the year. It is an information report, not a tax. Filing it does not, by itself, create any tax bill.

The deadline is April 15, and there is an automatic extension to October 15. You do not have to request that extension or file anything to get it. If you miss April 15, you still have until October.

Most people assume the FBAR is about secret offshore accounts. It is not. It is about ordinary accounts that happen to sit outside the US, and the list is broader than almost anyone expects.

• Savings accounts in any Indian bank, including the one your parents opened for you years ago.
• NRE and NRO accounts, the standard accounts for non-residents.
• Fixed deposits, which quietly become the largest holding for many families.
• PPF, the Public Provident Fund.
• EPF, the Employees Provident Fund from your working years in India.
• Mutual funds and Demat accounts holding shares.
• LIC policies with a cash value, which surprises nearly everyone.

An account counts even if it earns almost no interest. It counts even if you have not touched it in a decade. It counts if you are only a joint holder with a parent or sibling. And it counts if you merely have signature authority over it, meaning you can direct the money, even when none of it is yours.

This is the point that trips up the most people, so it is worth slowing down on.

The threshold is not per account. It is the total of every foreign account you hold, added together. And it is not measured on December 31. It is the highest point reached at any moment during the year.

So three accounts holding $4,000 each never feel like much money. Added together they are $12,000, and the filing requirement is triggered.

It also means a single day matters. If money passed through your NRO account on its way to buying property, and the balance touched $40,000 for one afternoon before moving on, that year requires an FBAR. The account can be back to a few hundred rupees by the end of the month and the requirement still stands.

One more thing worth knowing. Balances in rupees are converted to US dollars using the Treasury year-end exchange rate, not the rate on the day of the transaction.

Here are the real numbers, and then the far more important context that goes with them.

For a non-willful violation, meaning you simply did not know, the penalty for 2026 runs up to $16,536. The Supreme Court settled an important question about this in Bittner v. United States in 2023: the non-willful penalty applies per form, which is to say per year, and not per account. Before that decision, the IRS had argued it could charge that amount for every single account on every form, which for a family with six Indian accounts was a devastating difference.

For a willful violation, meaning you knew and chose not to report, the penalty is the greater of $165,353 or 50% of the account balance, and that one does apply per account, per year. In extreme cases there are criminal provisions as well.

Now the context. Those are ceilings, not standard outcomes, and they are aimed at people hiding money. If you did not know the form existed, you are in an entirely different category, and there is a route designed specifically for you.

Consider a software engineer in Cerritos who moved from Hyderabad on an H-1B in 2015 and became a green card holder in 2020.

She has an NRO account that receives rent from a flat her family still owns, and it usually holds about $6,000. She has two fixed deposits her father set up in her name years ago, worth roughly $5,000 together. She also has a small mutual fund SIP she has not looked at since she left.

None of these feel like offshore wealth. She has never thought of herself as someone with foreign accounts. She files her US return every year, on time, through a well-known tax software product, and pays what she owes.

But her combined balance crossed $10,000 several years ago, and no year has an FBAR on file. Her US tax returns are fine. Her FBAR position is not. This is the single most common situation we see, and it is entirely fixable.

This is the part worth reading twice, because it is genuinely good news.

The IRS knows perfectly well that a large number of people never heard of this form. It created specific programs for exactly that situation.

The Streamlined Filing Compliance Procedures are the main route. If your failure to file was non-willful, you file the missing FBARs, amend the affected returns, and certify that the omission was not deliberate. For people who qualify under the foreign offshore version, the penalty is waived entirely.

The Delinquent FBAR Submission Procedures cover a narrower case. If your income was properly reported and all your tax was paid, and the only thing missing was the FBAR itself, you can file the late reports with a statement of reasonable cause and typically face no penalty at all.

There is one condition that matters more than any other. These options are available to people who come forward before the IRS contacts them. Once a letter arrives, the penalty-free doors begin to close. That is the whole reason acting sooner is worth so much.

Start by listing every account you hold outside the US, including the dormant ones and the ones where you are only a joint holder. Then find the highest balance each reached in each year. Bank statements and passbooks are usually enough.

If the combined total ever crossed $10,000, you have a filing requirement for that year, and it is worth having someone look at it properly before you file anything. The certification in a streamlined submission is a legal statement, and how it is written matters.

Libre Tax Service is an Enrolled Agent firm based in Cerritos, California, and we work with Indian and NRI families across the country on exactly this. You can read more about how we handle these filings on our FBAR filing service page, or work through the detail yourself in our complete FBAR guide.

If you would rather just talk it through, call (562) 925-7100 or email [email protected] and book a free consultation. Nothing about that conversation commits you to anything.