Any US person (including H1B visa holders who are resident aliens) who had financial interest in or signature authority over foreign financial accounts with an aggregate value exceeding $10,000 at any point during the calendar year.
Who Must File FBAR?
Any US person (including H1B visa holders who are resident aliens) who had financial interest in or signature authority over foreign financial accounts with an aggregate value exceeding $10,000 at any point during the calendar year.
"Aggregate" means add up all accounts. If you have three accounts with ₹3 lakh each (~$3,600 each), total = ~$10,800 → FBAR required.
FBAR Penalty Structure
| Violation Type | Penalty |
|---|---|
| Non-willful (forgot, didn't know) | Up to $10,000 per account per year |
| Willful (knew and chose not to) | Up to $100,000 or 50% of balance, per account per year |
| Pattern of willful violations | Criminal charges possible |
Example of how bad it gets:
- 5 Indian accounts
- 3 years of non-filing (willful)
- Average balance: $50,000
- Potential penalty: 5 accounts × 3 years × $25,000 (50% of $50K) = $375,000
The IRS has the authority to assess these penalties, though in practice they negotiate.
Non-Willful vs. Willful: The Critical Distinction
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Non-willful: You genuinely didn't know about FBAR, or it was an oversight. This is the vast majority of H1B cases who "just didn't know."
Willful: You knew about the requirement and deliberately chose not to file, or you were reckless.
The IRS can argue willfulness based on:
- You checked a "No" box on Schedule B (Do you have foreign accounts?)
- You consulted a tax professional who told you about FBAR
- You filed FBAR some years but not others
How to Catch Up: The Streamlined Program
If you missed FBAR filings due to non-willful non-compliance:
Streamlined Domestic Offshore Procedures (if you lived in the US during non-compliance):
- File amended tax returns for 3 most recent years
- File FBARs for 6 most recent years
- Pay back taxes and interest
- Pay 5% miscellaneous offshore penalty on highest aggregate balance in 6 years
Streamlined Foreign Offshore Procedures (if you lived outside US):
- Same returns/FBARs
- No offshore penalty
- Pay back taxes and interest only
Most H1B holders who discover they've missed FBAR can use Streamlined Domestic. Work with a tax attorney or CPA specializing in international tax.
How to Prevent FBAR Penalties
- File FBAR (FinCEN 114) every year by April 15 (auto-extended to October 15)
- File at fincen.gov/bsaefiling — it's free
- Report ALL foreign accounts — savings, NRE, NRO, PPF, EPFO, mutual funds
- Keep records of highest balance dates
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